Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q2 2014 Earnings Presentation
18 slides from Canadian National Railway's earnings presentation, Jul 21, 2014
Slide 1: Second Quarter 2014 Financial Results
Second Quarter 2014 Financial Results July 21, 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements The financial results in this presentation were determined on the basis of U.S. GAAP. Important risk factors that could affect the forward-looking statements include, but Please refer to the website www.cn.ca/nonGAAP for the reconciliation of certain non- are not limited t
Slide 3: Claude Mongeau, President & Chief Executive Officer
Claude Mongeau President & Chief Executive Officer
Slide 4: Q2 Highlights
Q2 Highlights Swift recovery following Q1 winter weather challenges ─ Just as our customers would expect ─ Core metrics in-line or better than last year Moved all-time record volumes to resync our key supply chains ─ RTMs up 14%; carloads up 11% ─ Strongest quarter ever for Canadian grain Balancing
Slide 5: Jim Vena, Executive VP & Chief Operating Officer
Jim Vena Executive VP & Chief Operating Officer
Slide 6: Operating Highlights
Operating Highlights Train Productivity Yard Productivity Terminal Dwell (GTMs per train mile) (Cars per yard switching hour) (Entire railroad, hours) 8,765 19.8 8,429 43 46 15.4 8,355 39 15.0 Q2-13 Q1-14 Q2-14 Q2-13 Q1-14 Q2-14 Q2-13 Q1-14 Q2-14 Locomotive Utilization Car Velocity Train Velocity (T
Slide 7: Balancing Operational and Service Excellence
Balancing Operational and Service Excellence Productivity Service Capacity Safety Fuel efficiency Customer centric metrics Winnipeg to Chicago Culture and engagement Volume absorption End-to-end approach Symington Yard Mentoring, peer-to-peer Front-line decision making Rolling out i-Advise Locomotiv
Slide 8: Jean-Jacques Ruest, Executive VP & Chief Marketing Officer
Jean-Jacques Ruest Executive VP & Chief Marketing Officer
Slide 9: Solid Q2 Top Line Performance
Solid Q2 Top Line Performance Revenues Volumes % Change at % constant In millions of Canadian dollars, unless Change currency (1) Favorable Favorable Carloads: RTMs: otherwise indicated 2014 2013 (Unfavorable) (Unfavorable) % Change % Change Petroleum and chemicals $ 564 $ 481 17% 12% 7% 18% Metals
Slide 10: Current Market Outlook
Current Market Outlook Intermodal Bulk Merchandise • Very solid growth in international • Aiming to deliver record Canadian • Strong energy markets: frac sand, grain through the summer crude oil, drilling pipes • Balancing price and volume growth in domestic • Rebuilding stockpiles of thermal • Cont
Slide 11: Negotiating Value for Our Service and Our Capacity
Negotiating Value for Our Service and Our Capacity Same Store Price Consistent measure of all past renewals Delivering in-line with our goal of achieving 3% Turnaround in regulated grain in August, from -1.8% to +4.2% Capacity Yield Management North American rail capacity is getting snug Up-scaling
Slide 12: Luc Jobin, Executive VP and Chief Financial Officer
Luc Jobin Executive VP and Chief Financial Officer
Slide 13: Q2 Results
Q2 Results Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2014 2013 (Unfavorable) Revenues $ 3,116 $ 2,666 17% Operating expenses 1,858 1,624 Operating income 1,258 1,042 21% Interest expense (91) (88) Other income 2 28 Income before income taxes 1,169
Slide 14: Q2 Operating Expenses
Q2 Operating Expenses % Change at % constant Change currency (1) In millions of Canadian dollars, unless otherwise indicated 2014 2013 Favorable Favorable (Unfavorable) (Unfavorable) Labor and fringe benefits $ 560 $ 498 (12%) (10%) Purchased services and material 390 341 (14%) (11%) Fuel 484 402 (2
Slide 15: YTD Free Cash Flow
YTD Free Cash Flow In millions of Canadian dollars, unless otherwise indicated Net income $ 1,470 Non-cash adjustments 581 Payments for income taxes (284) Other working capital items 151 Net cash provided by operating activities 1,918 Capital expenditures (net) (730) Major asset sales 97 Other inves
Slide 16: Updating 2014 Financial Outlook
Updating 2014 Financial Outlook Strong rebound from Q1 weather challenges, with solid momentum going into the second half - Growing faster than the economy, and at low incremental cost Now aiming to achieve solid double-digit diluted EPS growth, versus 2013 adjusted diluted EPS of C$3.06 (1) - With
Slide 17: Claude Mongeau, President & Chief Executive Officer
Claude Mongeau President & Chief Executive Officer
Slide 18: Becoming a True Supply Chain Enabler
Becoming a True Supply Chain Enabler Delivering high service levels to meet strong customer demand ─ Supply chain mindset and capabilities key to our success Disciplined investment to support growth, productivity and safety ─ Accommodating growth at low incremental cost Creating solid value for our
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