Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q2 2021 Earnings Presentation
21 slides from Canadian National Railway's earnings presentation, Jul 20, 2021
Slide 1: Second Quarter 2021 Financial and Operating Results
Second Quarter 2021 Financial and Operating Results July 20, 2021 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, including statements based on management’s assessment and a
Slide 3: Non-GAAP Measures; No Offer or Solicitation
Non-GAAP Measures CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN also uses non-GAAP measures in this presentation that do not have any standardized meaning prescribed by GAAP, including adjusted performance measures, constant cur
Slide 4: On the call today
On the call today JJ Ruest President and CEO Rob Reilly Executive VP and Chief Operating Officer Ghislain Houle Executive VP and Chief Financial Officer Sean Finn Executive VP, Corporate Services and Chief Legal Officer Keith Reardon Senior VP, Consumer Product Supply Chain James Cairns Senior VP, R
Slide 5: JJ Ruest
JJ Ruest President and Chief Executive Officer
Slide 6: Q2 highlights – broad economic recovery and solid operating performance
Q2 highlights – broad economic recovery and solid operating performance Diluted EPS Operating Income YTD Free Cash Flow (1) Reported Adjusted (1) $1,382M $1,280M $1.46 $1.49 90% 16% 76% 9% 19% Reported Adjusted (1) Revenues RTMs Safety (2) Injury Frequency Accident Rate (4) $3.6B 59.2B Rat
Slide 7: Rob Reilly
Rob Reilly Executive VP and Chief Operating Officer
Slide 8: Fluid network to meet the demand of the North American economy
Fluid network to meet the demand of the North American economy Fuel Efficiency Train Length Through Dwell U.S. Gallons per 1,000 GTMs In feet Entire railroad, hours 0.88 8,886 8.4 0.86 8,749 7.7 2% 2% 8% vs Q2-20 vs Q2-20 vs Q2-20 Q2-20 Q2-21 Q2-20 Q2-21 Q2-20 Q2-21 Car Velocity Labour Product
Slide 9: James Cairns and Keith Reardon
James Cairns Senior VP, Rail Centric Supply Chain Keith Reardon Senior VP, Consumer Product Supply Chain
Slide 10: More balanced growth as North American economy rebounds
More balanced growth as North American economy rebounds Continued progress on yield management Rail Centric Supply Chain Consumer Product Supply Chain Merchandise International intermodal • Strong renovation sector and housing market promoting • U.S. West Coast congestion driving incremental volumes
Slide 11: Ghislain Houle
Ghislain Houle Executive VP and Chief Financial Officer
Slide 12: Strong underlying performance in Q2
Strong underlying performance in Q2 Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2021) 2020) (Unfavorable) Revenues $ 3,598) $ 3,209) 12% Operating expenses 2,216) 2,424) Operating income 1,382 785) 76% Interest expense (158) (144) Other components of
Slide 13: Q2 operating expenses – driving productivity with higher volumes
Q2 operating expenses – driving productivity with higher volumes Average headcount up 9% vs GTMs up 14% Change at constant Change currency (1) In millions of Canadian dollars, unless Favorable Favorable otherwise indicated 2021 2020 (Unfavorable) (Unfavorable) Higher incentive compensation and avera
Slide 14: Free Cash Flow of close to $1.3B YTD
Free Cash Flow of close to $1.3B YTD In millions of Canadian dollars, unless otherwise indicated YTD 2021) Net income $ 2,008) Non-cash adjustments 954) Income tax payments (381) Working capital items and other (154) Net cash provided by operating activities 2,427) Property additions (1,141) Pending
Slide 15: Reaffirming 2021 financial outlook
Reaffirming 2021 financial outlook (1) • Targeting double-digit adjusted diluted EPS growth versus 2020 adjusted diluted EPS of $5.31(2) based on: • High single-digit volume growth in terms of RTMs • Overall pricing above rail inflation at a minimum • Canadian to U.S. dollar exchange rate of approxi
Slide 16: JJ Ruest
JJ Ruest President and Chief Executive Officer
Slide 17: CN-KCS: Safer. Faster. Cleaner. Stronger.
CN-KCS: Safer. Faster. Cleaner. Stronger. A fully end-to-end merger Preserve all existing gateways & create new single-line routes Specific supply chain benefits Significant environmental benefits Support across broad stakeholder network We are committed to work with the STB to address any
Slide 18: CN and KCS combination is pro-competitive and will benefit all stakeholders
CN and KCS combination is pro-competitive and will benefit all stakeholders • Pro-competitive deal will deliver more choices to customers through the creation of new, single line service options, including direct and efficient rail options for truck freight between the U.S., Canada and Mexico • Keep
Slide 19: Overwhelming support from our customers and communities
Overwhelming support from our customers and communities Outpouring of Support from our Customers, Commentary from Dr. William Huneke on CN’s open gateways commitment Communities, and Industry Experts Former Director of the Office of Economics and Chief Economist at STB At end of comment period, ov
Slide 20: Path to completion ‒ expected second-half of 2022
Path to completion ‒ expected second-half of 2022 2021 2022 CN-KCS CN-KCS Response to Public CN-KCS File Jointly for Comments, including 1750+ KCS Definitive KCS Special Obtain common control approval Enter into Definitive Voting Trust Letters of Support Filed Proxy Statement Shareholder from STB an
Slide 21: Concluding thoughts
Concluding thoughts The CN-KCS combination is pro-competitive and will yield significant public benefits − We will increase customer options and keep all existing major gateways (existing options) available − We will enhance rail-to-rail competition with larger Class I’s − We are a true “end-to-en
Canadian National Railway Company — Q2 2021 Earnings Presentation on 6ix