Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q2 2022 Earnings Presentation
18 slides from Canadian National Railway's earnings presentation, Jul 26, 2022
Slide 1: Second Quarter 2022 Financial and Operating Results
Second Quarter 2022 Financial and Operating Results July 26, 2022 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: On the call today
On the call today Tracy Robinson President and CEO Rob Reilly Chief Operating Officer Doug MacDonald Chief Marketing Officer Ghislain Houle Chief Financial Officer 3
Slide 4: Tracy Robinson
Tracy Robinson President and Chief Executive Officer
Slide 5: Q2 results – Delivering on our plan
Q2 results – Delivering on our plan ▪ Adjusted earnings(1) up 30%, driven by improved operational performance and solid top-line growth ▪ Revenue growth of 21%, on 2% volume growth in terms of RTMs and higher fuel surcharge ▪ Adjusted OR(1) of 59.0%, an improvement of 260 bps over Q2 2021 Diluted EP
Slide 6: 100-day review – More confidence in the future of CN
100-day review – More confidence in the future of CN Organizational alignment Solid team of railroaders Traction on the Plan to power sustainable to drive results profitable growth 6
Slide 7: Rob Reilly
Rob Reilly Chief Operating Officer
Slide 8: Q2 results reflect improved operating performance
Q2 results reflect improved operating performance Running a scheduled railroad with a focus on car velocity ▪ Initial focus on 4 major hump yards starting in April (Memphis, Chicago, Toronto, Winnipeg) ▪ Expanded to flat switching yards in May (Vancouver, Prince George, Montreal, Fond du Lac) ▪ Reco
Slide 9: Getting resources in place for H2 volume growth
Getting resources in place for H2 volume growth ▪ New-hire conductors to address attrition and be in place for volume growth expectations ▪ 47 newly acquired locomotives will all be in service by September ▪ New grain hoppers delivered in Q1 will provide additional handling capacity to support a nor
Slide 10: Doug MacDonald
Doug MacDonald Chief Marketing Officer
Slide 11: Solid Q2 top-line performance
Solid Q2 top-line performance ▪ Positive volume growth (RTMs), despite a 40% decline in Canadian grain shipments ▪ Strong broad-based demand in the quarter ▪ Leveraging underutilized parts of the network • U.S volumes driven by Grain, Petroleum & Chemicals, and Metals & Minerals • Eastern Canada vol
Slide 12: Demand outlook remains positive
Demand outlook remains positive Merchandise Bulk Consumer Products ↑↑ Forest Products ↑ Western Canadian Coal ↑ International Intermodal ↑↑ Metals and Minerals ↑ U.S. Coal ↑↑ Domestic Intermodal ↑↑ Petroleum Products ↑↑ Grain ↑↑ Automotive ↑↑ Chemicals and Plastics ↑ Fertilizers 12
Slide 13: Halifax – Well-positioned for growth
Halifax – Well-positioned for growth ▪ Halifax can replicate the success of the “Prince Rupert” model ▪ Drive incremental volumes through our uncongested Eastern gateway ▪ Leveraging existing port infrastructure to handle growth ▪ CN-PSA Halifax partnership: Montreal Halifax founded on growth Transi
Slide 14: Ghislain Houle
Ghislain Houle Chief Financial Officer
Slide 15: Q2 results – Driving top-line growth to the bottom line
Q2 results – Driving top-line growth to the bottom line ▪ Adjusted operating income(1) up ~$400M, driven by revenue increases across most segments ▪ Adjusted diluted EPS(1) up 30%, despite an unfavorable fuel surcharge lag ▪ Q2 Free Cash Flow of almost $1B, up $256M or 35% Operating Income Diluted E
Slide 16: Reaffirming 2022 financial outlook
Reaffirming 2022 financial outlook (1) ▪ Still expecting to deliver approximately 15-20% adjusted diluted EPS growth in 2022 ▪ Targeting a full-year operating ratio below 60% ▪ Planning for full-year low single-digit volume growth (RTMs) with a normalized Canadian grain crop this fall ▪ Capex will r
Slide 17: Tracy Robinson
Tracy Robinson President and Chief Executive Officer
Slide 18: Moving forward
Moving forward Global West 27% ▪ Advantaged three-coast network Domestic Canada 18% ▪ Balanced book of business with solid pipeline of growth opportunities Transborder 31% ▪ Focused on running a scheduled operation Southbound 21% Global East 5% Northbound 10% ▪ Solid team of railroaders Domestic U.S
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