Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q1 2018 Earnings Presentation
16 slides from Canadian National Railway's earnings presentation, Apr 23, 2018
Slide 1: First Quarter 2018 Financial Results
First Quarter 2018 Financial Results April 23, 2018
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, Interim President and Chief Executive Officer
JJ Ruest Interim President and Chief Executive Officer
Slide 4: Highlights
Highlights Challenging quarter but improving performance metrics Top-line drivers − Regained momentum in March – Q1 revenues essentially flat compared to last year − Demand environment strong for the full year Restoring capacity and service excellence − Significantly higher costs in Q1 driven by low
Slide 5: Q1 Top Line Performance
Q1 Top Line Performance Revenues were in-line with available capacity Highlights Volumes % of Total % Change Revenues (3) at constant Bulk % Change currency (1) (12%) Favorable Favorable (Unfavorable) (Unfavorable) Grain & Fertilizers (12%) 17% 10% Coal 3% 4% RTMs (4%) (4%) Merchandise (3%) (2) Petr
Slide 6: Market Outlook
Market Outlook Demand is strong for the full year Intermodal Merchandise Bulk 26% of revenues 49% of revenues 21% of revenues • International • Strong demand for frac sand, • Strong Canadian grain program − Canadian West Coast steel and aluminum expected in Q2 with 5,000+ terminals expected to be ve
Slide 7: Mike Cory, Executive VP and Chief Operating Officer
Mike Cory Executive VP and Chief Operating Officer
Slide 8: Operating Highlights
Operating Highlights Sequential improvement since March Train Productivity Yard Productivity Terminal Dwell (GTMs per train mile) (Cars per yard switching hour) (Entire railroad, hours) 3% 4% 8% 13% 37% 16% 9,389 9,068 9,282 22.5 8,959 51 21.3 51 18.9 47 15.6 45 Q1-17 Q1-18 Jan-Feb Mar-Apr Q1-17 Q1-
Slide 9: Plan to Improve Service
Plan to Improve Service Execution well underway to improve capacity and supply chain resiliency Network – 29 major infrastructure capacity projects in 2018: Prince Rupert − New double track and sidings − Various yard expansions across the network, including Edmonton and Winnipeg Edmonton − Aiming to
Slide 10: Ghislain Houle, Executive VP and Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 11: Q1 Results
Q1 Results Reflective of challenging operating conditions Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2018 2017 (Unfavorable) Revenues $ 3,194 $ 3,206 - Operating expenses (1) 2,164 1,982 Operating income (1) 1,030 1,224 (16%) Interest expense (122)
Slide 12: Q1 Operating Expenses
Q1 Operating Expenses Costs hampered by low network resiliency and harsh winter conditions Change at constant Change currency (1) Favorable Favorable In millions of Canadian dollars, unless otherwise indicated 2018 2017 (Unfavorable) (Unfavorable) Labor and fringe benefits (2) $ 714 $ 659 (8%) (10%)
Slide 13: Free Cash Flow
Free Cash Flow Partly impacted by early cash outlays preparing for infrastructure investment projects In millions of Canadian dollars, unless otherwise indicated 2018 YTD Net income $ 741 Non-cash adjustments 438 Payments for income taxes (275) Other working capital items (149) Net cash provided by
Slide 14: Revised 2018 Financial Outlook
Revised 2018 Financial Outlook Expect to deliver adjusted diluted EPS in the range of C$5.10 to C$5.25 versus 2017 adjusted diluted EPS of C$4.99 (1) (2) − Volume growth in the range of 2-4% in terms of RTMs − Pricing above rail inflation and trending up Increasing our capital envelope by C$200M to
Slide 15: JJ Ruest, Interim President and Chief Executive Officer
JJ Ruest Interim President and Chief Executive Officer
Slide 16: In Summary
In Summary Execute to improve network fluidity Expect sequential and progressive improvement during Q2 and Q3 Pipeline of opportunities for 2018-19 is solid Capacity capex plan positions CN for long- term organic growth 16 16
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