Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q1 2019 Earnings Presentation
22 slides from Canadian National Railway's earnings presentation, Apr 29, 2019
Slide 1: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results April 29, 2019 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: Q1 highlights
Q1 highlights Reported diluted EPS Operating ratio Revenues $1.08 69.5% $3.5B 8% 170 bps 11% Adjusted diluted EPS (1) Adjusted operating ratio (1) RTMs $1.17 67.2% 59.1B 17% 60 bps 3% (1) Please see website, First Quarter Results, www.cn.ca/financial-results, for an explanation of these
Slide 5: Market outlook remains solid
Market outlook remains solid Rail Centric Supply Consumer Product Supply Chain Growth Chain Growth • Short-term softness in crude by rail related to mandated • International intermodal traffic remains steady production curtailment and crude spread below US$15 • Zim Integrated Shipping Services now c
Slide 6: Mike Cory, Executive VP and Chief Operating Officer
Mike Cory Executive VP and Chief Operating Officer
Slide 7: Recovering network and workload
Recovering network and workload • Solid operating performance in January under Tier 1 train restrictions (-25°C / -13°F) – air car innovation proven • Experienced double the number of Tiers 3 and 4 train restrictions on the network (below -35°C / -31°F) vs. last year • Reduced train length operation
Slide 8: Ghislain Houle, Executive VP and Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 9: Solid Q1 earnings driven by record revenues
Solid Q1 earnings driven by record revenues Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2019) 2018) (Unfavorable) Revenues $ 3,544) $ 3,194) 11% Operating expenses 2,464) 2,164) Operating income 1,080) 1,030) 5% Interest expense (131) (122) Other com
Slide 10: Q1 operating expenses impacted by extreme winter conditions
Q1 operating expenses impacted by extreme winter conditions Change at constant Change currency (1) Favorable Favorable In millions of Canadian dollars, unless otherwise indicated 2019 2018 (Unfavorable) (Unfavorable) Labor and fringe benefits $ 798 $ 714 (12%) (10%) Purchased services and material 5
Slide 11: Free cash flow affected by the upfront delivery of new locomotives
Free cash flow affected by the upfront delivery of new locomotives In millions of Canadian dollars, unless otherwise indicated 2019) Net income $ 786) Non-cash adjustments 540) Payments for income taxes (242) Working capital items and other (87) Net cash provided by operating activities 997) Propert
Slide 12: Reaffirming 2019 financial outlook
Reaffirming 2019 financial outlook • Expect to deliver adjusted diluted EPS growth in the low double-digits range versus 2018 adjusted diluted EPS of $5.50 based on (1) (2): • Volume growth expected to be in the high single-digit range in terms of RTMs • Overall pricing above rail inflation • Canadi
Slide 13: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 14: Positioned to deliver solid results going forward
Positioned to deliver solid results going forward • Network fluidity and service metrics at scheduled railroading levels • Solid growth opportunities – organic business development and starting to integrate TransX, following its acquisition • Capex plan for long-term growth and service resiliency •
Slide 15: Appendix
Appendix
Slide 16: 2019 network infrastructure and HHP locomotive additions
2019 network infrastructure and HHP locomotive additions Prince Rupert Taverna – Prince Rupert 3 miles double track 1 new siding ~ $400M – infrastructure capacity Edmonton Winnipeg – Edmonton New locomotive delivery: 49 miles double track Taverna Q1 063 (delivered) Vancouver Q2 052 Winnipeg Edmonton
Slide 17: Investing in local Vancouver rail capacity
Investing in local Vancouver rail capacity North Shore Capacity Projects Staging track and tunnel improvements to increase capacity for expanding North Shore terminals • $214M, jointly funded by CN, PMV, Federal • Q3 2017 – expression of interest filed with Government of Canada • April 2019 – agreem
Slide 18: Crude oil by rail
Crude oil by rail Crude oil shipments: carloads ~127,000 ~98,000 ~36,000 ~82,000 • Significant ramp-up in crude volumes ~61,000 ~52,000 ~15,000 ~20,000 ~20,000 ~13,000 in H2 2018, with December as peak ~11,000 ~10,000 ~6,000 • Volumes in Q1 2019 declined from ~4,000 2014 2015 2016 2017 2018 Q1-18 Q2
Slide 19: Challenging winter conditions impacted volumes in Q1
Challenging winter conditions impacted volumes in Q1 2019 RTM Growth (YoY) Normal winter Extreme winter Recovery period 20% conditions conditions 15% No restrictions 10% 20% of days with 45% of days with Tier 3 / 4 restriction Tier 3 / 4 restriction on a portion of the on a portion of the Easter 201
Slide 20: Q1 operating metrics
Q1 operating metrics Workload 2% Train Productivity 4% Through Dwell 12% Total GTMs, billions vs Q1-18 GTMs per train mile vs Q1-18 Entire railroad, hours vs Q1-18 130.8 9,336 9.9 123.5 123.0 9,112 9,136 8.1 8.7 9,068 7.8 7.5 113.0 115.9 8,684 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4
Slide 21: 2019 technology deployment in progress
2019 technology deployment in progress Train Inspection Mobile Device for Train Crews Robotic Process Automation x 9,000 personalized devices 7 inspection portals expected by end of 2019 c Track Inspection 9,000 personalized devices Permanent team in place Digitized Network Capacity Mobile Device fo
Slide 22: Talent Wins | Talent for the Future | 2019 Nominations
Talent Wins | Talent for the Future | 2019 Nominations James Thompson Doug Doug VP Western Region MacDonald Ryhorchuk Scheduled VP Eastern Region VP Network Operations Railroaders • Deep operational capability • Bringing commercial depth to operations • Deep operational knowledge of network • Focuse
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