Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q3 2020 Earnings Presentation
22 slides from Canadian National Railway's earnings presentation, Oct 20, 2020
Slide 1: Third Quarter 2020 Financial Results
Third Quarter 2020 Financial Results October 20, 2020 TSX: CNR NYSE: CNI
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements included in this presentation constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. By their nature, forward-looking statements involve risks,
Slide 3: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 4: Q3 Highlights – Proud of CN People
Q3 Highlights – Proud of CN People Diluted EPS OperatingOperating ratio Ratio Revenues $1.38 59.9% $3.4B 17% 200 bps 11% YTD Free Cash Flow (1) Fuel Efficiency (2) RTMs $2,087M 0.85 56.3B $588M 3% 7% ~$10M savings, 50k tons of CO2 avoided (1) Please see website, Third Quarter Results, ww
Slide 5: Rob Reilly, Executive VP and Chief Operating Officer
Rob Reilly Executive VP and Chief Operating Officer
Slide 6: Solid Operating Momentum in Q3 – Pivoting to Recovery
Solid Operating Momentum in Q3 – Pivoting to Recovery • Bringing back resources in a methodical way (not one-for-one) while continuing to push on efficiencies • Continue to focus on permanent cost take-out initiatives Operating performance Safety performance Operational efficiencies • Sequential vol
Slide 7: James Cairns and Keith Reardon
James Cairns Senior VP, Rail Centric Supply Chain Keith Reardon Senior VP, Consumer Product Supply Chain
Slide 8: Volume Recovery in Certain Markets Underway
Volume Recovery in Certain Markets Underway Significant shift in business mix in Q3 Driving Profitable Growth in Key Markets V-shaped recovery Ports business • Grain – 7 consecutive months of record export Canadian Lumber grain movement with potential for record crop Automotive • Lumber/panels – Imp
Slide 9: Ghislain Houle, Executive VP and Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 10: Q3 Earnings Underscore CN's Agility and Resiliency
Q3 Earnings Underscore CN’s Agility and Resiliency Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2020) 2019) (Unfavorable) Revenues $ 3,409) $ 3,830) (11%) Operating expenses 2,043) 2,217) Operating income 1,366) 1,613) (15%) Interest expense (137) (13
Slide 11: Disciplined Cost Control in the Recovery
Disciplined Cost Control in the Recovery % Change at % Change constant currency In millions of Canadian dollars, unless Favorable Favorable otherwise indicated 2020 2019 (Unfavorable) (Unfavorable) (1) Labor and fringe benefits $ 662 $ 694 5% 5% Lower average headcount, partly offset by higher incen
Slide 12: Generated over $2 billion of Free Cash Flow YTD
Generated over $2 billion of Free Cash Flow YTD Strong Balance Sheet is a Competitive In millions of Canadian dollars, unless otherwise indicated YTD 2020) Advantage Net income $ 2,541) Continual access to low cost financing supports steady Non-cash adjustments 2,045 reinvestment and enables strateg
Slide 13: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 14: The Economic Recovery is Underway
The Economic Recovery is Underway • Managing yield and driving productivity • Network is fluid, operating metrics improving – ready for winter • We generate steady and solid free cash flow • We are the industry leader to modernize rail operations • We are the industry leader in ESG Good sequential m
Slide 15: Appendix
Appendix
Slide 16: Strategic Pipeline of CN-Specific Growth Opportunities
Strategic Pipeline of CN-Specific Growth Opportunities Advancing during the pandemic Prince Rupert New wood pellet Ramp-up of Future plastic container terminal exports Coalspur exports plants for export expansion Prince Rupert New country grain elevators Propane export terminals (AltaGas, Quebec Cit
Slide 17: Leveraging Unique 3-Coast Advantage as Trade Flows Shift
Leveraging Unique 3-Coast Advantage as Trade Flows Shift Prince Rupert (NEW) CN-EXCLUSIVE CN-EXCLUSIVE PORT OF QUEBEC CITY PORT OF PRINCE RUPERT 700K TEU capacity by 2024 PORT OF HALIFAX (2 terminals) Prince George 1.35M TEU capacity (+450K by 2023) JV with Hutchison Ports PSA Halifax 550K TEU capac
Slide 18: Well Positioned to Capitalize on the Future of E-commerce
Well Positioned to Capitalize on the Future of E-commerce TransX and H&R acquisitions Member of EMP Interline partnership Service-sensitive refrigerated segment Providing nationwide supply chain Extending reach and developing new flexibility markets Producing best operating ratio within intermodal c
Slide 19: Massive Investments in Canadian Grain Supply Chain
Massive Investments in Canadian Grain Supply Chain • Step function change in CN Canadian grain supply chain capabilities • Investments coming together just in time to move this year’s potential all-time record crop Positive Trends for Canadian Grain Production Achieving Synergies Across the Entire S
Slide 20: Q3 Operating Metrics – Sequential Improvements During the Quarter
Q3 Operating Metrics – Sequential Improvements During the Quarter Workload 9% Train length 6% Through Dwell 25% Total GTMs, billions vs Q3-19 In feet vs Q3-19 Entire railroad, hours vs Q3-19 9.6 10.2 10.0 124.4 38.8 39.6 9,173 9,091 8.5 8,987 7.7 113.7 35.3 8,733 8,462 Q3-19 Q3-20 Jul Aug Sep
Slide 21: Leading the Industry in ESG
Leading the Industry in ESG Delivering Responsibly is at the heart of how CN is building for a sustainable future. It means moving customer goods safely and efficiently, being environmentally responsible, attracting and developing the best and diverse railroaders, helping build safer, stronger commu
Slide 22: Measuring Service as Defined by Customers
Measuring Service as Defined by Customers • Working closely with our customers during disruptions and volume uncertainty • Delivering on our commitments Intermodal Bulk Merchandise Intermodal service index Bulk service index Merchandise service index 100% 100% 100% 75% 75% 75% 50% 50% 50% Q1 Q2 Q3 Q
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