Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q2 2020 Earnings Presentation
22 slides from Canadian National Railway's earnings presentation, Jul 21, 2020
Slide 1: Second Quarter 2020 Financial Results
Second Quarter 2020 Financial Results July 21, 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: Q2 Highlights – Resiliency during Unprecedented Economic Times
Q2 Highlights – Resiliency during Unprecedented Economic Times Diluted EPS OperatingOperating ratio Ratio Revenues Reported Adjusted (1) Reported Adjusted (1) $0.77 75.5% 60.4% $3.2B $1.28 59% 26% 1,800 bps 290 bps 19% Free Cash Flow (1) Fuel Efficiency (2) RTMs $1.0B 0.88 52.5B Almost dou
Slide 5: Rob Reilly, Chief Operating Officer
Rob Reilly Executive VP, Chief Operating Officer and interim Chief Information and Technology Officer
Slide 6: Productivity and Cost Control
Productivity and Cost Control • Adjusted resources quickly and aggressively as volumes started declining mid-March and bottomed in May • Nimble and connected with our customers in early stage of recovery Rightsizing our Resources Focusing on Train Productivity • 26% YoY reduction in Train & Engine (
Slide 7: Delivering Long-Term Value
Delivering Long-Term Value • Focus on our long-term agenda: cost, ESG and technology • Some of the improvements made in the recent months will remain going forward Fuel Efficiency / Carbon Footprint Lasting Structural Changes • Quarterly record fuel efficiency of 0.88 US gallons of • Transportation
Slide 8: James Cairns and Keith Reardon
James Cairns Senior VP, Rail Centric Supply Chain Keith Reardon Senior VP, Consumer Product Supply Chain
Slide 9: Unprecedented Q2 Across the Board
Unprecedented Q2 Across the Board Resiliency in bulk commodities and Domestic Intermodal - The team focusing on opportunities Highlights Volumes by Business Unit Rail Centric -38% Revenues (19%) -25% Petroleum & Chemicals -43% Metals & Minerals -19% -17% Forest Products RTMs (18%) -17% -10% Coal ¢ /
Slide 10: Strategic Pipeline of Growth
Strategic Pipeline of Growth Advancing during the pandemic New wood pellet Ramp-up of Future plastic exports Coalspur exports plants Prince Rupert container expansion Prince Rupert New country grain elevators Propane export terminals (Altagas, Quebec City Pembina) container port Hutchison Collaborat
Slide 11: Ghislain Houle, Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 12: Q2 Earnings – Disciplined Financial Management
Q2 Earnings – Disciplined Financial Management Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2020) 2019) (Unfavorable) Revenues $ 3,209) $ 3,959) (19%) Operating expenses 2,424) 2,277) Operating income 785) 1,682) (53%) Interest expense (144) (136) Oth
Slide 13: Solid Cost Control and Rightsizing of Resources
Solid Cost Control and Rightsizing of Resources Change at constant Change currency (1) In millions of Canadian dollars, unless Favorable Favorable otherwise indicated 2020 2019 (Unfavorable) (Unfavorable) Labor and fringe benefits $ 563 $ 681 17% 18% Largely due to lower average headcount, incentive
Slide 14: Impressive Free Cash Flow Generation in an Unprecedented Lower Demand Quarter
Impressive Free Cash Flow Generation in an Unprecedented Lower Demand Quarter In millions of Canadian dollars, unless otherwise indicated YTD 2020) Solid Cash Flow Generation Net income $ 1,556) • $1.0B of free cash flow generated in Q2 Non-cash adjustments 1,561 Income taxes refunded 11 Opportunist
Slide 15: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 16: A Culture of Resiliency – Solid Team that can Weather any Situation
A Culture of Resiliency – Solid Team that can Weather any Situation • Demonstrated again our ability to adapt and be nimble • Disciplined rightsizing of resources as volumes improve sequentially • Work ongoing on our strategic pipeline of growth opportunities • Positive on our future • Investing in
Slide 17: Appendix
Appendix
Slide 18: Uniquely Positioned to Further Leverage the Consumer Economy
Uniquely Positioned to Further Leverage the Consumer Economy CN-EXCLUSIVE PORT OF PRINCE RUPERT Prince Rupert CN-EXCLUSIVE 1.35M TEU capacity (+450K by 2022) PORT OF HALIFAX (2 terminals) CN-EXCLUSIVE (NEW) PSA Halifax 550K TEU capacity Prince George PORT OF QUEBEC CITY (+290K TEU by 2023) Edmonton
Slide 19: 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
Slide 20: Advancing Technology Deployment as Strategic Driver of Value
Advancing Technology Deployment as Strategic Driver of Value Transforming our operations Train Inspections Track Inspections Handheld Technology 7 portals operational 8 ATIP (1) cars in service 11,000 tablets deployed • Over 41,000 defects detected by the portals U.S. • Deployed for train crews and
Slide 21: Building the Intermodal of the Future
Building the Intermodal of the Future Brampton Intermodal Terminal (Toronto) – First terminal to be upgraded Smart Map New yard design Improving capacity, productivity and service levels, including new container slot locations, storage methods, and traffic flows Telematics Installing sensors on cran
Slide 22: Committed to ESG Leadership
Committed to ESG Leadership 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
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