Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q1 2020 Earnings Presentation
23 slides from Canadian National Railway's earnings presentation, Apr 27, 2020
Slide 1: First Quarter 2020 Financial Results
First Quarter 2020 Financial Results April 27, 2020 TSX: CNR NYSE: CNI
Slide 2: Forward-Looking Statements and Non-GAAP Measures
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: Solid Performance
Solid Performance Diluted EPS OperatingOperating ratio Ratio Revenues $1.42 65.7% $3.5B 31% 380 bps 150 bps (1) Flat reported adjusted Adjusted diluted EPS (1) Fuel Efficiency RTMs (GTMs per US gallon consumed) $1.22 1,047 58.4B 4% 6% 1% $20M savings, 102K ton of CO2 saved (1) Please see
Slide 5: Rob Reilly, Executive VP and Chief Operating Officer
Rob Reilly Executive VP, Chief Operating Officer and interim Chief Information and Technology Officer
Slide 6: Solid Performance and Recovery After Illegal Blockades Lifted
Solid Performance and Recovery After Illegal Blockades Lifted • One month of illegal blockades across Canada in February impacted revenue, network fluidity and costs • Strong productivity recovery in March – moved demand efficiently, proving resiliency of operations • Safety performance also improvi
Slide 7: Right Sizing Our Resources
Right Sizing Our Resources • Strong collaboration with Marketing to stay on top of market dynamics – ability to adjust weekly and quickly • All resources adjusted accordingly – headcount, locomotives, railcars, train starts, local yards, mechanical shops, intermodal terminals, last mile trucking ope
Slide 8: James Cairns and Keith Reardon
James Cairns Senior VP, Rail Centric Supply Chain Keith Reardon Senior VP, Consumer Product Supply Chain
Slide 9: Leveraging a Strong Franchise and Diverse Portfolio
Leveraging a Strong Franchise and Diverse Portfolio Resilient Economic sensitive d • All-time record of Canadian grain in • Pockets of resiliency in Domestic • Crude by rail and frac sand impacted March intermodal by weak oil prices around the World • Moving essential goods during COVID-19 • Coalspu
Slide 10: Ghislain Houle, Executive VP and Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 11: Earnings Growth Despite Month-Long Illegal Rail Blockades
Earnings Growth Despite Month-Long Illegal Rail Blockades Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2020) 2019) (Unfavorable) Revenues $ 3,545) $ 3,544) -% Operating expenses 2,330) 2,464) Operating income 1,215) 1,080) 13% Interest expense (139) (
Slide 12: Operating Expenses – Quick Cost Management
Operating Expenses – Quick Cost Management Change at constant Change currency (1) In millions of Canadian dollars, unless Favorable Favorable otherwise indicated 2020 2019 (Unfavorable) (Unfavorable) Labor and fringe benefits $ 743 $ 798 7% 7% Largely due to lower incentive compensation, average hea
Slide 13: Strong Free Cash Flow
Strong Free Cash Flow Reinvesting in the Business In millions of Canadian dollars, unless otherwise indicated 2020) Continuing to harden our track infrastructure, Net income $ 1,011) allocating ~$1.6B towards track and railway Non-cash adjustments 686) infrastructure maintenance Income taxes refunde
Slide 14: Prudent Financial Management in Unprecedented Economic Uncertainty
Prudent Financial Management in Unprecedented Economic Uncertainty • Withdrawing 2020 financial guidance and 3-year targets provided at the 2019 Investor Day due to uncertainty caused by COVID-19 pandemic • Strong balance sheet to weather the storm • Best credit rating in the industry, with ability
Slide 15: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 16: Ready for the Recovery and Remain Focused on the Long-Term
Ready for the Recovery and Remain Focused on the Long-Term • Strong performance in Q1 amidst month-long illegal blockades • Solid team in place to weather the current storm • Our structural advantages position us well to benefit from the recovery • Continue to work on our strategic pipeline of growt
Slide 17: Appendix
Appendix
Slide 18: Track Record in Previous Downturns
Track Record in Previous Downturns Great Recession (2008-2009) Freight Recession (2015-2016) • RTMs declined 10% in 2009 • RTMs declined 5% in 2016 • Undertook cost takeout efforts including ~900 net • Aggressive cost reduction including tight labor cost reduction in average headcount (approximately
Slide 19: Strategic Pipeline of Growth Opportunities
Strategic Pipeline of Growth Opportunities Prince Rupert Ramp-up of container expansion Coal Spur Prince Rupert New plastic Propane terminals plants (Altagas, Pembina) New country Quebec City Collaboration with Kitimat LNG grain elevators container port Ridley Coal Terminal terminal Hutchison partne
Slide 20: Protection of Our Employees during COVID-19 Pandemic
Protection of Our Employees during COVID-19 Pandemic Social distancing Cleaning Protecting our dispatchers • We are: • We have reinforced cleaning activities in all • Split dispatchers in different locations - Conducting job briefings over radio or work areas: • Assigned dedicated parking spots and
Slide 21: Measuring Service as Defined by Customers
Measuring Service as Defined by Customers • Working closely with our customers during disruptions and volume uncertainty • Delivering on our commitments Intermodal Bulk Merchandise Intermodal service index Bulk service index Bulk service index 100% 100% 100% 75% 75% 75% 50% 50% 50% Q1 Q2 Q3 Q4 Q1 Q2
Slide 22: Approval of FRA Test Program
(1) Approval of FRA Test Program Autonomous Track Inspection Program (ATIP) 8 ATIP cars deployed across the network FRA Test Program XXX ~70% • CN’s ATIP Test Program approved by the FRA of core mainline protected • Multi-phased approach will ultimately lead to - Less on-track inspection time for tr
Slide 23: A Strong Track Record of Fuel and Carbon Efficiency
A Strong Track Record of Fuel and Carbon Efficiency CN is approximately 15% more carbon efficient than the industry average Areas of focus – Opportunities Areas of Focus – Opportunities Rail locomotive carbon emissions intensity vs Gross Ton Miles (GTMs) 19.0 600 Achieved 39% 18.0 500 Locomotive emi
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