Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q3 2021 Earnings Presentation
17 slides from Canadian National Railway's earnings presentation, Oct 19, 2021
Slide 1: Third Quarter 2021 Financial and Operating Results
Third Quarter 2021 Financial and Operating Results October 19, 2021 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, including statements based on management’s assessment and a
Slide 3: On the call today
On the call today JJ Ruest President and CEO Ghislain Houle Executive Vice-President and Chief Financial Officer Rob Reilly Executive Vice-President and Chief Operating Officer James Cairns Senior Vice-President, Rail Centric Supply Chain Helen Quirke Senior Vice-President and Chief Strategy Officer
Slide 4: JJ Ruest, President and Chief Executive Officer
JJ Ruest President and Chief Executive Officer
Slide 5: Solid Q3 results – well-positioned to end the year on a strong note
Solid Q3 results – well-positioned to end the year on a strong note Adjusted Diluted EPS (1) Adjusted Operating Ratio (1) YTD Free Cash Flow (1) $1.52 59.0% $2,034M 10% 90 bps 3% (1) Please see website, Third Quarter Results, www.cn.ca/financial-results, for an explanation of these non-GAAP me
Slide 6: Ghislain Houle, Executive VP and Chief Financial Officer
Ghislain Houle Executive VP and Chief Financial Officer
Slide 7: Solid top line performance and cost control in Q3
Solid top line performance and cost control in Q3 Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2021) 2020) (Unfavorable) Revenues $ 3,591) $ 3,409) 5%) Operating expenses 2,250) 2,043) Operating income 1,341 1,366) (2%) Interest expense (197) (137) Ot
Slide 8: Q3 operating expenses reflect solid underlying performance and fluid network
Q3 operating expenses reflect solid underlying performance and fluid network Change at constant Change currency (1) In millions of Canadian dollars, unless otherwise Favorable Favorable indicated 2021 2020 (Unfavorable) (Unfavorable) Higher wages mostly due to the higher average headcount, general L
Slide 9: Free cash flow of over $2B YTD
Free cash flow of over $2B YTD In millions of Canadian dollars, unless otherwise indicated YTD 2021) Net income $ 3,693) Non-cash adjustments 1,532) Income tax payments (582) Working capital items and other 242) Net cash provided by operating activities 4,885) Property additions (1,977) Acquisition-
Slide 10: Reaffirming 2021 financial outlook
Reaffirming 2021 financial outlook (1) • CN expects to deliver ~10% adjusted diluted EPS growth versus 2020 adjusted diluted EPS of $5.31(2) • Immediate action to modify cost and labor structure • Now assuming low single-digit volume growth in terms of RTMs and overall pricing well above rail inflat
Slide 11: Update on Strategic Plan
Update on Strategic Plan
Slide 12: Confident in delivering on our Strategic Plan 2022 targets
Confident in delivering on our Strategic Plan 2022 targets (1) 20% 15% ~$700M 17% EPS Growth ROIC (2) Operating income Capex as a % of improvements revenue ~57% ~$4B Operating Ratio FCF (2) (1) Please see Forward-Looking Statements at the beginning of the presentation for a summary of key assumption
Slide 13: Evidence of progress to achieve $700M in 2022 operating income improvements
Evidence of progress to achieve $700M in 2022 operating income improvements (1) ~$700M • ~75% of labor force reduction has already been completed Labor • Remainder of reductions will be complete by end of year Labor • ~$100M of cost saving initiatives already secured in 2021 Purchased Services, Mate
Slide 14: Driving progress towards building the Premier Railway of the 21st century
Driving progress towards building The Premier Railway of the 21st century (1) Car Velocity Train Length Through Network Train Speed Operational Excellence Car miles per day In feet miles per hour 20.4 20.5 211 8,800 207 207 8,728 19.8 8,641 8,664 18.9 191 c Jul Aug Sep 2022 + Jul Aug Sep 2022 + Jul
Slide 15: Well-Positioned to grow profitably over the long term
Well-Positioned to grow profitably over the long term Market drivers CN positioned to win West Coast - Prince Rupert and Vancouver container terminal expansions - bulk terminals Intermodal - grain terminals Industry leading CargoCool capacity and experience - exclusive green energy gateway Customers
Slide 16: The best measure of Price… is Price
The best measure of Price… is Price Growth in cents/RTM since we pivoted to our CN’s Same Store Price has exceeded rail inflation by customer-centric mindset nearly 2% (1) Change in cents/RTM (Freight Revenue) 6.0% 10.0% Q4 2018 – Q2 2021 5.1% 5.0% 8.0% 7.6% 7.7% 4.0% 4.1% 6.3% 4.0% 3.5% 3.5% 6.0% 5
Slide 17: The future of CN: Powering sustainable growth for our customers, people and investors
The future of CN: Powering sustainable growth for our customers, people and investors (1) • Deliver industry leading profitable growth • Drive operational excellence and operating cost improvements with smart use of technology • Lead in sustainability: in safety, for our people, stakeholders and the
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