Canadian National Railway Company · TSX:CNR
Canadian National Railway — Investor Presentation (October 2023)
49 slides from Canadian National Railway's investor presentation, October 2023
Slide 1: Accelerating Sustainable, Profitable Growth
Accelerating Sustainable, Profitable Growth INVESTOR PRESENTATION October 2023 TSX: CNR NYSE: CNI
Slide 2: Forward-looking statements
Forward-looking statements Certain statements included in this news release 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 2022 HIGHLIGHTS (1) • CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the 23,900+ $109B 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
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% Other Domestic Coal Intermodal Automotive 5% 3% 11% Transborder 32% 5% Southbound 21% Global East Metals and Northbound 11
Slide 6: CN leadership
CN leadership Backed by a dedicated team of ~25,000 railroaders Ed Harris Ghislain Houle Doug MacDonald Dominique Malenfant Executive Vice-President & Executive Vice-President & Executive Vice-President & Executive Vice-President & Chief Operating Officer Chief Financial Officer Chief Marketing Offi
Slide 7: A solid foundation
A solid foundation • 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 p
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 890,000 Hours in 2022, covering skills, re-certification, and various leadership development programs as well as entry-level training Ensuring continuous learning for our employees is critical to having a skilled, safe a
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% 5% Automotive 5% Intermodal 7 major ports 29% Served across North America Metals and Minerals 11% 300M tons $17.1B Annual cargo carried 2022 Total Revenues 65% Forest Products 12% Of traffic originating and Petroleum and terminating on CN’s Network Chemicals Gr
Slide 13: Petroleum and Chemicals
Petroleum and Chemicals Diverse book of profitable business Post-pandemic rebound providing solid foundation for P&C franchise • Well-positioned to serve chemicals production centers • Strong origination franchise in AB, OH, ON and QC for refined petroluem products • Propane exports via Prince Ruper
Slide 14: Metals and minerals
Metals and minerals North American economy driving solid demand Aluminum and Steel • Sustainably sourced aluminum supporting shift towards lighter weight electric vehicles Frac Sand • Volumes support oil and gas exploration Minerals • Longer term opportunity on sourcing critical minerals such as lit
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 • Continued expansion o
Slide 16: Coal
Coal Export supply chains served solely by CN Strong volumes supported by high international commodity price • 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
Slide 17: Grain and fertilizers
Grain and fertilizers CN is a critical link in the grain supply chain 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 customer
Slide 18: Intermodal
Intermodal Offering the best of both worlds to our customers Close collaboration with all supply chain stakeholders allow our customers to reach new markets • Supply chain collaboration agreements with key ports ensures maximum efficiency for International Intermodal customers • CargoCool® has one o
Slide 19: Automotive
Automotive New storefronts and capacity expansions • New auto compound in New Richmond, WI (operational March 2021) to access Minnesota market with direct, single-line CN service • AutoMobile International Terminal (2021) – Roll-on/Roll-off (RORO) terminal for imports and short sea shipping from Mex
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 (+200K by 2024) PORT OF HALIFAX (2 terminals) Edmonton •PSA Halifax Atlantic Hub Saskatoon Vancouver •PSA Halifax Fairview Cove 1.15M T
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 Est. Existing Projects Status Fairview today Timeline 1.6M TEUs Westview Wood South Kaien Pellet Terminal Logistics Park Prince Rupert Marine Fuels Q4 2023 Under (Marine fuel delivery service) Construction +200K Total 1.8M Second Container TEUs Term
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 Halifax can replicate the success of the “Prince Rupert” model Drive incremental volumes through our uncongested Eastern gateway Leveraging existing port infrastructure to handle growth CN-PSA Halifax partnership: Montreal Halifax founded on growth Rail t
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 10 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 Named to Dow Jones CN only railroad and Focus on transparency and 1st North American Sustainability World Index for Canadian company increased disclosures – 1st railroad to secure a Joined the the first of 11 consecutive listed on the CDP’s North American railroad to Estab
Slide 31: Our approach to a more sustainable future
Our approach to a more sustainable future Aligned to United Nations’ sustainable development goals Environment Safety People Community Governance Conduct our Aim to be the safest Provide a safe, Build safer, stronger Continuously improve operations railroad in North supportive communities by our cul
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: Our goal of driving shareholder value creation
Our goal of driving shareholder value creation 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 Ability to adjust resources through economic cycles C
Slide 36: Financial performance
Financial performance Total Revenues Diluted EPS (1) Net Income (1) $M $ per share $M 7.44 17,107 6.90 4,899 5,118 14,321 14,917 14,477 5.85 5.81 13,819 4,312 4,198 4.97 3,545 CAGR 5% CAGR 6% CAGR 4% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 (1)(2) (2) Volumes (reven
Slide 37: Maintaining a strong balance sheet
Maintaining a strong balance sheet Prudent financial management Adjusted debt-to-adjusted EBITDA multiple (1) 2.01 1.98 1.93 1.82 1.86 2018 2019 2020 2021 2022 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 20+ siding projects and 150+ miles of double track since 2016 • Siding projects enhance Prince Prince Rupert Rupert corridor capacity • Double track projects improve network capacity and fluidity Edmonton • Continuously adapting fleet needs
Slide 40: Rewarding shareholders
Rewarding shareholders Consistent dividend growth and opportunistic approach to share repurchases 27 consecutive years of dividend growth Share repurchases • Dividend has increased every year since 1995 IPO • Nearly $30B of share repurchases since 2000 • 15% cumulative annual growth rate in dividend
Slide 41: Achieved our 2022 full year guidance
Achieved our 2022 full year guidance Full year adjusted diluted EPS (1) growth of 25% was aligned with our guidance, and the output of running a scheduled railroad with a focus on velocity Full year Free Cash Flow (1) of nearly $4.3B exceeded our guidance 2022 adjusted ROIC (1) of 15.9% also e
Slide 42: 2023 financial outlook
2023 financial outlook (1) Expecting to deliver flat to slightly negative adjusted diluted EPS (1)(2) growth over 2022 Volumes expected to outpace North American industrial production which is still assumed to be negative in 2023, improvement in consumer demand now pushed to 2024 Continuing to
Slide 43: Creating Value for Shareholders: 2024-2026 Outlook
Creating Value for Shareholders: 2024-2026 Outlook Bringing top line Disciplined Consistent approach growth to the investment in to capital allocation bottom line the business • Growing faster than the • Investing capital to support • Reinvesting in the business economy and pricing ahead of the safe
Slide 44: Appendix
Appendix 44
Slide 45: Financial highlights
Financial highlights 2018 2019 2020 2021 2022 CAGR Total revenues ($M) 14,321 14,917 13,819 14,477 17,107 5% Total revenue ton miles (RTMs) (B) 248.4 242.0 230.4 233.1 235.8 -1% Operating income ($M) 5,493 5,593 4,777 5,616 6,840 6% Net income ($M) (1) 4,312 4,198 3,545 4,899 5,118 4% 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 2022 (in $ millions) 2018 2019 2020 2021 2022 CAGR revenue Petroleum & chemicals 2,660 3,052 2,631 2,816 3,229 5% 19% • Well-diversified book of Metals and minerals 1,689 1,643 1,409 1,548 1,911 3% 11% business Forest products 1,886 1,808 1,700 1,740 2,006 2% 12% Coal 661
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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