Canadian National Railway Company · TSX:CNR
Canadian National Railway — Investor Presentation (January 2024)
49 slides from Canadian National Railway's investor presentation, January 2024
Slide 1: Accelerating Sustainable, Profitable Growth
Accelerating Sustainable, Profitable Growth INVESTOR PRESENTATION January 2024 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, including statements based on management’s assessment and a
Slide 3: CN at a glance
CN at a glance TSX: CNR NYSE: CNI 2023 HIGHLIGHTS (1) • CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the ~25,000 $108B employees (at end of year) market capitalization customers, and to the communities it serves, CN safely transports more than 300 million
Slide 4: CN's foundation of excellence and core strengths
CN’s foundation of excellence and core strengths Among the best rail networks in North America; three coast-access and a fluidity advantage around Chicago Pioneer of scheduled railroading; focus on driving car velocity Powering sustainable growth; focus on long-term profitable growth opportuni
Slide 5: Great Franchise: Well-positioned for growth
Over 85% of traffic Great Franchise originates on CN’s network and over 65% originates and terminates on CN’s network Global West 26% Domestic Canada A diversified portfolio 18% Domestic Other Coal Intermodal 3% 9% Automotive 6% Transborder 6% International 32% Global East Intermodal 5% Metals and M
Slide 6: CN leadership
CN leadership Backed by a dedicated team of ~25,000 railroaders Ghislain Houle Remi Lalonde Doug MacDonald Dominique Malenfant Derek Taylor Executive Vice-President & Executive Vice-President & Executive Vice-President & Executive Vice-President & Executive Vice-President & Chief Financial Officer S
Slide 7: CN's key strengths
CN’s key strengths • Advantaged three-coast network with port optionality; diversified portfolio • Driving scheduled railroading with a focus on car velocity • Preparing the next generation of railroading talent • Deploying technology – a strategic driver of value • Strong balance sheet provides fin
Slide 8: Operational excellence
Operational excellence • Unwavering focus on continuous improvement • Operational fluidity driving improved customer service and lower operating costs • Resources in place to accommodate growth opportunities Workload Car velocity Through network train speed average daily GTMs (in millions) car miles
Slide 9: Safety is a core value
Safety is a core value An uncompromising commitment to the health and safety of our employees, the customers we serve, and the communities and environment in which we operate Employee Health & Safety – Focusing on prevention Injury frequency rate (per 200,000 person hours) • Putting safety at the ce
Slide 10: Building the next generation of railroaders
Building the next generation of railroaders Continuous learning and development 16,000 + Students through CN Campuses and other CN-sponsored training in 2023; includes new- hire onboarding and employee skills re-certification. Ensuring continuous learning for our employees is critical to having a sk
Slide 11: Our markets
Our markets • Pursuing long-term profitable growth • Strategic pipeline of growth opportunities, growing with our customers and partners across the network • Fostering consumer product and rail centric supply chain organic opportunities • Balanced growth across carload and consumer products segments
Slide 12: Market overview
Market overview Other Revenues Coal 3% 6% 7 major ports Automotive Intermodal 6% 23% Served across North America Metals and Minerals 65% $16.8B 12% Of traffic originating and terminating on CN’s Network 2023 Total Revenues Petroleum and ~700+ miles Chemicals Forest Products 19% Average length of hau
Slide 13: Petroleum and Chemicals
Petroleum and Chemicals The global demand for secure, clean energy continues to drive growth along our energy corridors • Serves three key petrochemical hubs in North America: Alberta, Louisiana and Ontario • Handles over 50% of all Canadian chemicals production • Export of propane and plastics broa
Slide 14: Metals and minerals
Metals and minerals CN has a proven track record as a matchmaker by connecting producers with end markets Metals • Serves 10 aluminum smelters, more than any other railroad in North America • The top mover of aluminum, iron ore and base metal ore in North America Frac Sand • Reaches all the top shal
Slide 15: Forest products
Forest products The CN Network serves key fiber sourcing regions • Largest North American forest products railcar fleet: 10,000+ centerbeams car and 10,000+ boxcars • Driven by new housing, repair and renovation • Packaging demand backed by internet sales and general deliveries Pulp & Lumber & Paper
Slide 16: Coal
Coal Consistency and resiliency for our customers by leveraging our multiple coal export outlets • Unique single access to Trigon (Prince Rupert) and Convent Marine Terminal (Louisiana) terminals, offering opportunities for growth in Canadian and U.S. export coal • Coalspur (Vista) coal mine (starte
Slide 17: Grain and fertilizers
Grain and fertilizers CN is focused on helping power the agriculture economy • CN has the hopper fleet, locomotive fleet, and operating crew base to move the anticipated volume of grain over the course of the 2023-2024 crop year • 3,000+ new CN high-capacity grain hoppers now in service • Increased
Slide 18: Intermodal
Intermodal Growth in CN’s intermodal market is expected to come from port capacity, inland capacity and partnerships over the next 2-3 years • Close collaboration with all supply chain stakeholders allow our customers to reach new markets • Supply chain collaboration agreements with key ports ensure
Slide 19: Automotive
Automotive CN has the auto industry covered with direct access to ports on three coasts and major North American vehicle assembly and parts production facilities • Average of 1.6 million finished vehicles handled annually • 18 automotive compounds accessing 10 North American vehicle assembly plants
Slide 20: International Intermodal – leveraging the 3-coast access
International Intermodal – leveraging the 3-coast access Prince Rupert CN-EXCLUSIVE SERVED CN-EXCLUSIVE SERVED PORT OF PRINCE RUPERT Prince George 1.6M TEU capacity PORT OF HALIFAX (2 terminals) (+200K shovel-ready) Edmonton •PSA Halifax Atlantic Hub Saskatoon Vancouver •PSA Halifax Fairview Cove 1.
Slide 21: Domestic Intermodal
Domestic Intermodal Well-positioned to capitalize on the future of e-commerce Member of EMP (1) CargoCool® • CN is the Sole Canadian partner in UP/NS EMP • 1,000 CN-owned next generation Program refrigerated containers • Providing nationwide supply chain flexibility • Door-to-door latest tracking te
Slide 22: Canadian West Coast port expansions: Vancouver
Canadian West Coast port expansions: Vancouver Customer investments – Over $2B in private sector 2 investments 1 1 Centerm – 1.5M TEU capacity Vanterm – 1.1M TEU capacity A 2 Neptune – investments to support incremental coal and potash capacity Fibreco – legacy wood pellet facility, addition of grai
Slide 23: Canadian West Coast port expansions: Prince Rupert
Canadian West Coast port expansions: Prince Rupert Existing Fairview today Est. 1.6M TEUs Westview Wood South Kaien Projects Status Pellet Terminal Logistics Park Timeline Fairview Terminal Expansion To be +200K Second Container Shovel-ready Total 1.8M +200K for total 1.8M TEUs Determined TEUs Termi
Slide 24: Canadian East Coast ports: available capacity
Canadian East Coast ports: available capacity Leveraging our Eastern network capacity • Ability to accommodate additional volumes with little incremental capex Moncton • Network flexibility to accommodate shifting global trade flows Saint John Halifax • Competitive gateways for Southeast Asia, Europ
Slide 25: Halifax – well-positioned for growth
Halifax – well-positioned for growth The closest North American East Coast port to Europe and the Suez Canal, Halifax is a naturally deep, wide, ice-free harbour Drive incremental volumes through our uncongested Eastern gateway Leveraging existing port infrastructure to handle growth Montreal
Slide 26: The Chicago Advantage
The Chicago Advantage Chicago rail congestion slows traffic ~ 25% of North American rail passing through the city; railroads must volumes touch Chicago use one of the multi-user inner belt railways to interchange traffic Waukegan Leithton ILLINOIS Munger UNRIVALED West Chicago Chicago EFFICIENT, BYP
Slide 27: Our Investments in Technology for Safety and Efficiency
Our Investments in Technology for Safety and Efficiency Advanced technology is our next strategic driver of value Improving safety Creating capacity Reducing costs Driving service reliability View the following videos for more information on our Autonomous Track Inspection Program (ATIP): https://vi
Slide 28: Embracing Technology
Embracing Technology Improving safety, creating capacity, reducing costs and driving service reliability Autonomous Track Inspection Program Automated Inspection Portals Handheld Technology for Field Employees Fleet of 11 ATIP cars 7 portals across the network Deployed network-wide ATIP cars run i
Slide 29: Our commitment to building a sustainable future
Our commitment to building a sustainable future 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 railroaders, helping build safer, stronge
Slide 30: Our sustainability journey
Our sustainability journey Officially joined the Listed on the Dow Announced commitment United Nations 1st North American Only railroad and Jones Sustainability to setting a target to Global Compact railroad to publish Canadian company World Index for the achieve net-zero carbon Initiative and GRI s
Slide 31: Our approach to a more sustainable future
Our approach to a more sustainable future Environment Safety People Community Governance Conduct our Aim to be the safest Provide a safe, Build safer, stronger Continuously operations railroad in North supportive communities by improve in a way that America by and diverse work investing our culture
Slide 32: Memberships & commitments
Memberships & commitments Reporting conformance Adopting the TCFD Reporting conformance Responding to the CDP on actions to cut to the GRI Standards: recommendations in to the SASB, emissions, mitigate climate risks and Core Option our reporting Rail Transportation Standards develop the low-carbon e
Slide 33: Increasing focus on diversity, equity and inclusion
Increasing focus on diversity, equity and inclusion As we prepare the next generation of railroaders, our focus is to attract diverse top talent, onboard and coach them successfully, and to create an environment in which our employees can grow to their full potential and be recognized for their cont
Slide 34: Our board of directors
Our board of directors Shauneen Bruder Jo-ann dePass David Freeman Denise Gray Justin Howell Chair of the Board Olsovsky Director since Apr 2017 Director since Oct 2021 Director since May 2022 Director since Apr 2021 Director since Apr 2021 Independent Independent Independent Independent Independent
Slide 35: Value creation for the long-term
Value creation for the long-term Sustainable financial performance through profitable top-line growth, strong free cash flow and adequate return on invested capital Strong balance sheet and disciplined approach to capital allocation Capital investments support the safety of our network, improve effi
Slide 36: Financial performance
Financial performance Total Revenues Diluted EPS (1) Net Income (1) $M $ per share $M 8.53 5,625 17,107 16,828 5,118 7.44 4,899 14,917 14,477 6.90 13,819 4,198 5.81 3,545 4.97 CAGR 3% CAGR 10% CAGR 8% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 (1)(2) (2) Volumes (reve
Slide 37: Maintaining a strong balance sheet
Maintaining a strong balance sheet Prudent financial management Adjusted debt-to-adjusted EBITDA multiple (1) 2.25 2.01 1.98 1.82 1.86 2019 2020 2021 2022 2023 Investment Grade Credit Ratings (2) Rating agency Long-term debt rating Commercial Paper Rating DBRS Morningstar A R-1 (low) Moody’s A2 P-1
Slide 38: Disciplined approach to capital investments
Disciplined approach to capital investments Investing to support our business and committed to investing for the long-term Capital Investments and Adjusted ROIC (1) Investing to support the safety of our network, 4,500 in $M & % respectively improve efficiency and resilience, and enable 4,000 3,86
Slide 39: Infrastructure and equipment investments to support growth
Infrastructure and equipment investments to support growth 30+ siding projects and 200+ miles of double track over the last decade Prince Rupert • Siding projects enhance West Coast-to-Chicago corridor capacity • Double track projects improve Edmonton network capacity and fluidity • Continuously ada
Slide 40: Rewarding shareholders
Rewarding shareholders Consistent dividend growth and opportunistic approach to share repurchases 28 consecutive years of dividend growth Share repurchases • Dividend has increased every year since 1995 IPO • Nearly $35B of share repurchases since 2000 • 15% cumulative annual growth rate in dividend
Slide 41: Strong relative 2023 full-year financial performance
Strong relative 2023 full-year financial performance Full year earnings aligned with our revised guidance – the result of disciplined execution through a volume downturn and challenging operating conditions Strategic use of cash to strengthen and expand the network through bolt-on acquisitions a
Slide 42: Confidence in our strategic plan – 2024 financial outlook
Confidence in our strategic plan – 2024 financial outlook(1) Expecting to deliver approximately 10% adjusted diluted EPS(2) growth over 2023, in the context of a slightly positive economic environment 2024 CAPEX in line with Investor Day outlook Continuing to reward long-term shareholders with
Slide 43: Creating Value for Shareholders: 2024-2026 Outlook
Creating Value for Shareholders: 2024-2026 Outlook Bringing top line Disciplined Consistent approach growth to the investment in to capital allocation bottom line the business • Growing faster than the • Investing capital to support • Reinvesting in the business economy and pricing ahead of the safe
Slide 44: Appendix
Appendix 44
Slide 45: Financial highlights
Financial highlights 2019 2020 2021 2022 2023 CAGR Total revenues ($M) 14,917 13,819 14,477 17,107 16,828 3% Total revenue ton miles (RTMs) (B) 242.0 230.4 233.1 235.8 232.6 -1% Operating income ($M) 5,593 4,777 5,616 6,840 6,597 4% Net income ($M) (1) 4,198 3,545 4,899 5,118 5,625 8% Adjusted net i
Slide 46: Non-GAAP measures
Non-GAAP measures This presentation makes reference to non-GAAP measures that do not have any standardized meaning prescribed by GAAP, including adjusted dividend payout ratio, ROIC and adjusted ROIC. These non-GAAP measures may not be comparable to similar measures presented by other companies. The
Slide 47: Non-GAAP measures
Non-GAAP measures ROIC and Adjusted ROIC ROIC and adjusted ROIC are useful measures for management and investors to evaluate the efficiency of the Company's use of capital funds and allow investors to assess the operating and investment decisions made by management. The Company calculates ROIC as re
Slide 48: 5-year revenue summary
5-year revenue summary % of 2023 (in $ millions) 2019 2020 2021 2022 2023 CAGR revenue Petroleum & chemicals 3,052 2,631 2,816 3,229 3,195 1% 19% • Well-diversified book of Metals and minerals 1,643 1,409 1,548 1,911 2,048 6% 12% business Forest products 1,808 1,700 1,740 2,006 1,943 2% 12% Coal 658
Slide 49: Investor relations contacts
Investor relations contacts Stacy Alderson Assistant Vice President, Investor Relations Stacy.Alderson@cn.ca 514-399-0052 Mariusz Chojnacki Senior Manager, Investor Relations Mariusz.Chojnacki@cn.ca 514-399-6464 Greg Hamilton Senior Manager, Investor Relations Greg.Hamilton@cn.ca 514-399-4654 Follow
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