Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q1 2014 Earnings Presentation
19 slides from Canadian National Railway's earnings presentation, Apr 22, 2014
Slide 1: First Quarter 2014 Financial Results
First Quarter 2014 Financial Results April 22, 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 3
Slide 4: Q1 Highlights
Q1 Highlights • Worst winter in decades reduced our capacity to serve all customers • Recovery well underway with key safety, operating and service metrics returning to pre-winter levels • Progressing our agenda of supply chain collaboration to drive growth at low incremental cost Delivered solid re
Slide 5: Jim Vena, Executive VP & Chief Operating Officer
Jim Vena Executive VP & Chief Operating Officer 5
Slide 6: The Worst Winter in Decades
The Worst Winter in Decades Winter Severity Index* 2013/14 Winter started early, hit hard, 2011/12 and was wide (Easier winter) spread * Severity Index - represents the number of CN corridors requiring winter operating restrictions for temperatures below -25oC. Over 4, major problems surface across
Slide 7: Recovery Underway
Recovery Underway • Outstanding team effort in the face of very challenging conditions • Investing smartly to support growth, efficiency and safety • Determined to grow faster than base market conditions at low incremental cost Recovering fluidity, regaining momentum 7
Slide 8: Jean-Jacques Ruest, Executive VP & Chief Marketing Officer
Jean-Jacques Ruest Executive VP & Chief Marketing Officer 8
Slide 9: Revenues
Revenues First Quarter % Change at % constant In millions of Canadian dollars, unless Change currency (1) otherwise indicated Favorable Favorable 2014 2013 (Unfavorable) (Unfavorable) Petroleum and chemicals $ 568 $ 461 23% 16% Worst winter in decades impacted Metals and minerals 308 288 7% - availa
Slide 10: Intermodal Markets
Intermodal Markets First Quarter (2014 vs 2013) Revenues (1) 9% RTMs 9% Carloads 6% Revenue / RTM (1) Flat Revenue / Carload (1) 3% Average length of haul Flat Outlook • Focused on the end-to-end supply chain • Strong demand for our services in Domestic, International and NAFTA segments (1) Revenues
Slide 11: Bulk Markets
Bulk Markets First Quarter (2014 vs 2013) Revenues (1) 1% RTMs 2% Carloads 11% Revenue / RTM (1) Flat -9% Revenue / Carload (1) Average length of haul -10% Outlook • Aiming to deliver peak Canadian grain volumes through the spring and summer • Midwest thermal coal market looks positive – rebuilding
Slide 12: Manufacturing Markets
Manufacturing Markets First Quarter (2014 vs 2013) Revenues (1) 3% RTMs 7% Carloads -8% -3% Revenue / RTM (1) 12% Revenue / Carload (1) Average length of haul 15% Outlook • Positive demand outlook for energy, housing-related and automotive • Merchandise and automotive supply chain being challenged b
Slide 13: Luc Jobin, Executive VP and Chief Financial Officer
Luc Jobin Executive VP and Chief Financial Officer 13
Slide 14: Q1 Results
Q1 Results Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2014 2013 (Unfavorable) Revenues $ 2,693 $ 2,466 9% Operating expenses 1,873 1,686 Operating income 820 780 5% Interest expense (92) (89) Other income 94 42 Income before income taxes 822 733 Inc
Slide 15: Q1 Operating Expenses
Q1 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 $ 587 $ 569 (3%) - Purchased services and material 388 328 (18%) (15%) Fuel 468 405 (16%) (
Slide 16: Q1 Free Cash Flow
Q1 Free Cash Flow In millions of Canadian dollars, unless otherwise indicated Net income $ 623 Non-cash adjustments 271 Payments for income taxes (132) Other working capital items (117) Net cash provided by operating activities 645 Capital expenditures (net) (248) Major asset sales 97 Other investin
Slide 17: Reaffirming 2014 Financial Outlook
Reaffirming 2014 Financial Outlook • Quickly rebounding from extreme weather challenges • Aiming for double-digit earnings growth over 2013 adjusted diluted EPS of C$3.06 (1) • With mid-single digit carload growth and pricing above inflation • Targeting free cash flow in the range of C$1.6B - C$1.7B
Slide 18: Claude Mongeau, President & Chief Executive Officer
Claude Mongeau President & Chief Executive Officer 18
Slide 19: Our Strategic Agenda is Delivering
Our Strategic Agenda is Delivering • Regaining network fluidity • Restoring customer service levels • Investing in support of growth, efficiency and safety Momentum to deliver solid 2014 results 19 19
Canadian National Railway Company — Q1 2014 Earnings Presentation on 6ix