CN (TSX: CNR) (NYSE: CNI) today reported its financial and
operating results for the first quarter ended March 31, 2024.
“Our team of railroaders delivered to plan in
the first quarter and our scheduled operating model continued to
enhance our service to customers. Looking forward, we are confident
for 2024. We are seeing the expected improvements in the economy,
and our CN-specific growth opportunities are materializing. We
remain committed to delivering on our growth agenda and powering
the economy.”
— Tracy Robinson, President and
Chief Executive Officer, CN
Quarterly
highlights
- Revenue ton miles (RTMs) remained
flat at 59,749 (millions).
- Revenues of C$4,249 million, a
decrease of C$64 million, or 1%.
- Operating income of C$1,546
million, a decrease of C$116 million, or 7%.
- Operating ratio, defined as
operating expenses as a percentage of revenues, of 63.6% an
increase of 2.1-points.
- Diluted earnings per share (EPS) of
C$1.72, a decrease of 5%.
Reaffirming 2024 and
long-term financial outlook (1)CN
reaffirms its 2024 outlook and expects to deliver adjusted diluted
EPS growth of approximately 10% and expects to invest approximately
C$3.5 billion in its capital program, net of amounts reimbursed by
customers. The Company also expects return on invested capital
(ROIC) to be within the targeted range of 15%-17%.
CN reiterates its longer-term financial
perspective and continues to target compounded annual diluted EPS
growth in the range of 10%-15% over the 2024-2026 period driven by
growing volumes more than the economy, pricing above rail inflation
and incrementally improving efficiency, all of which assumes a
supportive economy. (2)
CONFERENCE CALL DETAILSCN's
senior officers will review the results and the railway's outlook
in a conference call starting at 4:30 p.m. Eastern Time on April
23. Tracy Robinson, CN President and Chief Executive Officer, will
lead the call. Parties wishing to participate via telephone may
dial 1-800-715-9871 (Canada/U.S.), or 1-647-932-3411
(International), using 7188340 as the passcode. Participants are
advised to dial in 10 minutes prior to the call.
(1) Non-GAAP MeasuresCN's
full-year adjusted diluted EPS outlook (2) excludes certain
adjustments, which are expected to be comparable to adjustments
made in prior years. However, management cannot individually
quantify on a forward-looking basis the impact of these adjustments
on its adjusted diluted EPS because these items, which could be
significant, are difficult to predict and may be highly variable.
As a result, CN does not provide a corresponding GAAP measure for,
or reconciliation to, its adjusted diluted EPS outlook.
(2) Forward-Looking
StatementsCertain statements included in this news release
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 assumptions and publicly available
information with respect to CN. By their nature, forward-looking
statements involve risks, uncertainties and assumptions. CN
cautions that its assumptions may not materialize and that current
economic conditions render such assumptions, although reasonable at
the time they were made, subject to greater uncertainty.
Forward-looking statements may be identified by the use of
terminology such as "believes," "expects," "anticipates,"
"assumes," "outlook," "plans," "targets", or other similar
words.
2024 key
assumptionsCN has made a number of economic and market
assumptions in preparing its 2024 outlook. The Company continues to
assume slightly positive North American industrial production in
2024. For the 2023/2024 crop year, the grain crop in Canada was
below its three-year average (also below when excluding the
significantly lower 2021/2022 crop year) and the U.S. grain crop
was above its three-year average. The Company continues to assume
that the 2024/2025 grain crop in Canada will be in line with its
three-year average (excluding the significantly lower 2021/2022
crop year) and the U.S. grain crop will also be in line with its
three-year average. CN continues to assume RTM growth in the
mid-single digit range. CN assumes continued pricing above rail
inflation upon contract renewals. CN also continues to assume that
in 2024, the value of the Canadian dollar in U.S. currency will be
approximately $0.75, and now assumes that in 2024 the average price
of crude oil (West Texas Intermediate) will be approximately in the
US$80 - US$90 range per barrel (compared to its January 23, 2024
assumption of approximately US$70 - US$80 per barrel).
2024-2026 key
assumptionsCN has made a number of economic and market
assumptions in preparing its three-year financial perspective. CN
assumes that the North American industrial production will increase
by at least two percent CAGR over the next three years. CN assumes
continued pricing above rail inflation. CN assumes that the value
of the Canadian dollar in U.S. currency will be approximately $0.75
and that the average price of crude oil (West Texas Intermediate)
will be approximately US$80 per barrel during this period.
Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other
factors which may cause actual results, performance or achievements
of CN to be materially different from the outlook or any future
results, performance or achievements implied by such statements.
Accordingly, readers are advised not to place undue reliance on
forward-looking statements. Important risk factors that could
affect the forward-looking statements in this news release include,
but are not limited to, general economic and business conditions,
including factors impacting global supply chains such as pandemics
and geopolitical conflicts and tensions; industry competition;
inflation, currency and interest rate fluctuations; changes in fuel
prices; legislative and/or regulatory developments; compliance with
environmental laws and regulations; actions by regulators;
increases in maintenance and operating costs; security threats;
reliance on technology and related cybersecurity risk; trade
restrictions or other changes to international trade arrangements;
transportation of hazardous materials; various events which could
disrupt operations, including illegal blockades of rail networks,
and natural events such as severe weather, droughts, fires, floods
and earthquakes; climate change; labor negotiations and
disruptions; environmental claims; uncertainties of investigations,
proceedings and other types of claims and litigation; risks and
liabilities arising from derailments; timing and completion of
capital programs; the availability of and cost competitiveness of
renewable fuels and the development of new locomotive propulsion
technology; reputational risks; supplier concentration; pension
funding requirements and volatility; and other risks detailed from
time to time in reports filed by CN with securities regulators in
Canada and the United States. Reference should also be made to
Management’s Discussion and Analysis (MD&A) in CN’s annual and
interim reports, Annual Information Form and Form 40-F, filed with
Canadian and U.S. securities regulators and available on CN’s
website, for a description of major risk factors relating to
CN.
Forward-looking statements reflect information
as of the date on which they are made. CN assumes no obligation to
update or revise forward-looking statements to reflect future
events, changes in circumstances, or changes in beliefs, unless
required by applicable securities laws. In the event CN does update
any forward-looking statement, no inference should be made that CN
will make additional updates with respect to that statement,
related matters, or any other forward-looking statement.
Information contained on, or accessible through, our website is not
incorporated by reference into this news release.
This earnings news release, as well as
additional information, including the Financial Statements, Notes
thereto and MD&A, is contained in CN’s Quarterly Review
available on the Company's website at
www.cn.ca/financial-results and on SEDAR+ at
www.sedarplus.ca as well as on the U.S. Securities and
Exchange Commission's website at www.sec.gov through
EDGAR.
About CNCN is a world-class
transportation leader and trade-enabler. Essential to the economy,
to the customers, and to the communities it serves, CN safely
transports more than 300 million tons of natural resources,
manufactured products, and finished goods throughout North America
every year. CN's network connects Canada’s Eastern and Western
coasts with the U.S. South through an 18,800 mile rail network. CN
and its affiliates have been contributing to community prosperity
and sustainable trade since 1919. CN is committed to programs
supporting social responsibility and environmental stewardship.
Contacts: |
|
Media |
Investment
Community |
Jonathan Abecassis |
Stacy Alderson |
Director |
Assistant Vice-President |
Public Affairs and Media
Relations |
Investor Relations |
(438) 455-3692 |
(514) 399-0052 |
media@cn.ca |
investor.relations@cn.ca |
|
|
SELECTED RAILROAD STATISTICS – UNAUDITED
|
Three months ended March 31 |
|
2024 |
2023 |
Financial measures |
|
|
Key financial performance indicators
(1) |
|
|
Total revenues ($ millions) |
4,249 |
4,313 |
Freight revenues ($ millions) |
4,137 |
4,219 |
Operating income ($ millions) |
1,546 |
1,662 |
Net income ($ millions) |
1,103 |
1,220 |
Diluted earnings per share ($) |
1.72 |
1.82 |
Free cash flow ($ millions) (2) |
529 |
593 |
Gross property additions ($ millions) |
576 |
461 |
Share repurchases ($ millions) |
955 |
1,199 |
Dividends per share ($) |
0.8450 |
0.7900 |
Financial ratio |
|
|
Operating ratio (%) (3) |
63.6 |
61.5 |
Operational measures (4) |
|
|
Statistical operating data |
|
|
Gross ton miles (GTMs) (millions) |
115,627 |
115,442 |
Revenue ton miles (RTMs) (millions) |
59,749 |
59,961 |
Carloads (thousands) |
1,343 |
1,353 |
Route miles (includes Canada and the U.S.) |
18,800 |
18,600 |
Employees (end of period) |
25,179 |
24,718 |
Employees (average for the period) |
25,191 |
24,403 |
Key operating measures |
|
|
Freight revenue per RTM (cents) |
6.92 |
7.04 |
Freight revenue per carload ($) |
3,080 |
3,118 |
GTMs per average number of employees (thousands) |
4,590 |
4,731 |
Operating expenses per GTM (cents) |
2.34 |
2.30 |
Labor and fringe benefits expense per GTM (cents) |
0.77 |
0.70 |
Diesel fuel consumed (US gallons in millions) |
103.6 |
104.1 |
Average fuel price ($ per US gallon) |
4.50 |
4.79 |
Fuel efficiency (US gallons of locomotive fuel consumed per 1,000
GTMs) |
0.896 |
0.902 |
Train weight (tons) |
9,087 |
9,135 |
Train length (feet) |
7,787 |
7,756 |
Car velocity (car miles per day) |
205 |
211 |
Through dwell (entire railroad, hours) |
7.1 |
7.1 |
Through network train speed (miles per hour) |
18.7 |
20.1 |
Locomotive utilization (trailing GTMs per total horsepower) |
188 |
194 |
Safety indicators (5) |
|
|
Injury frequency rate (per 200,000 person hours) |
1.20 |
0.98 |
Accident rate (per million train miles) |
1.68 |
1.53 |
(1) |
Amounts expressed in Canadian dollars and prepared in accordance
with United States generally accepted accounting principles (GAAP),
unless otherwise noted. |
(2) |
This non-GAAP measure does not have any standardized meaning
prescribed by GAAP and therefore, may not be comparable to similar
measures presented by other companies. See the supplementary
schedule entitled Non-GAAP Measures – Free cash flow for an
explanation of this non-GAAP measure. |
(3) |
Operating ratio is defined as operating expenses as a percentage of
revenues. |
(4) |
Statistical operating data, key operating measures and safety
indicators are unaudited and based on estimated data available at
such time and are subject to change as more complete information
becomes available. Definitions of gross ton miles, revenue ton
miles, freight revenue per RTM, fuel efficiency, train weight,
train length, car velocity, through dwell and through network train
speed are included within the Company’s Management’s Discussion and
Analysis. Definitions of all other indicators are provided on CN's
website, www.cn.ca/glossary. |
(5) |
Based on Federal Railroad Administration (FRA) reporting
criteria. |
SUPPLEMENTARY INFORMATION – UNAUDITED
|
Three months ended March 31 |
|
2024 |
2023 |
% Change Fav (Unfav) |
|
% Change at constant currency (1) Fav (Unfav) |
|
Revenues ($ millions) (2) |
|
|
|
|
Petroleum and chemicals |
857 |
828 |
4 |
% |
4 |
% |
Metals and minerals |
530 |
529 |
— |
% |
1 |
% |
Forest products |
494 |
511 |
(3 |
%) |
(3 |
%) |
Coal |
221 |
263 |
(16 |
%) |
(16 |
%) |
Grain and fertilizers |
860 |
861 |
— |
% |
— |
% |
Intermodal |
959 |
1,012 |
(5 |
%) |
(5 |
%) |
Automotive |
216 |
215 |
— |
% |
1 |
% |
Total freight revenues |
4,137 |
4,219 |
(2 |
%) |
(2 |
%) |
Other revenues |
112 |
94 |
19 |
% |
19 |
% |
Total revenues |
4,249 |
4,313 |
(1 |
%) |
(1 |
%) |
Revenue ton miles (RTMs) (millions) (3) |
|
|
|
|
Petroleum and chemicals |
11,714 |
11,019 |
6 |
% |
6 |
% |
Metals and minerals |
7,350 |
7,088 |
4 |
% |
4 |
% |
Forest products |
5,769 |
6,056 |
(5 |
%) |
(5 |
%) |
Coal |
4,638 |
5,848 |
(21 |
%) |
(21 |
%) |
Grain and fertilizers |
17,032 |
17,018 |
— |
% |
— |
% |
Intermodal |
12,531 |
12,259 |
2 |
% |
2 |
% |
Automotive |
715 |
673 |
6 |
% |
6 |
% |
Total RTMs |
59,749 |
59,961 |
— |
% |
— |
% |
Freight revenue / RTM (cents) (2)(3) |
|
|
|
|
Petroleum and chemicals |
7.32 |
7.51 |
(3 |
%) |
(2 |
%) |
Metals and minerals |
7.21 |
7.46 |
(3 |
%) |
(3 |
%) |
Forest products |
8.56 |
8.44 |
1 |
% |
2 |
% |
Coal |
4.76 |
4.50 |
6 |
% |
6 |
% |
Grain and fertilizers |
5.05 |
5.06 |
— |
% |
— |
% |
Intermodal |
7.65 |
8.26 |
(7 |
%) |
(7 |
%) |
Automotive |
30.21 |
31.95 |
(5 |
%) |
(5 |
%) |
Total freight revenue / RTM |
6.92 |
7.04 |
(2 |
%) |
(1 |
%) |
Carloads (thousands) (3) |
|
|
|
|
Petroleum and chemicals |
165 |
161 |
2 |
% |
2 |
% |
Metals and minerals |
240 |
237 |
1 |
% |
1 |
% |
Forest products |
78 |
81 |
(4 |
%) |
(4 |
%) |
Coal |
112 |
130 |
(14 |
%) |
(14 |
%) |
Grain and fertilizers |
171 |
178 |
(4 |
%) |
(4 |
%) |
Intermodal |
527 |
512 |
3 |
% |
3 |
% |
Automotive |
50 |
54 |
(7 |
%) |
(7 |
%) |
Total carloads |
1,343 |
1,353 |
(1 |
%) |
(1 |
%) |
Freight revenue / carload ($) (2)(3) |
|
|
|
|
Petroleum and chemicals |
5,194 |
5,143 |
1 |
% |
1 |
% |
Metals and minerals |
2,208 |
2,232 |
(1 |
%) |
(1 |
%) |
Forest products |
6,333 |
6,309 |
— |
% |
1 |
% |
Coal |
1,973 |
2,023 |
(2 |
%) |
(2 |
%) |
Grain and fertilizers |
5,029 |
4,837 |
4 |
% |
4 |
% |
Intermodal |
1,820 |
1,977 |
(8 |
%) |
(8 |
%) |
Automotive |
4,320 |
3,981 |
9 |
% |
9 |
% |
Total freight revenue / carload |
3,080 |
3,118 |
(1 |
%) |
(1 |
%) |
(1) |
This non-GAAP measure does not have any standardized meaning
prescribed by GAAP and therefore, may not be comparable to similar
measures presented by other companies. See the supplementary
schedule entitled Non-GAAP Measures – Constant currency for an
explanation of this non-GAAP measure. |
(2) |
Amounts expressed in Canadian dollars. |
(3) |
Statistical operating data and related key operating measures are
unaudited and based on estimated data available at such time and
are subject to change as more complete information becomes
available. |
NON-GAAP MEASURES – UNAUDITED
In this supplementary schedule, the "Company" or
"CN" refers to Canadian National Railway Company, together with its
wholly-owned subsidiaries. Financial information included in this
schedule is expressed in Canadian dollars, unless otherwise
noted.
CN reports its financial results in accordance
with United States generally accepted accounting principles (GAAP).
The Company also uses non-GAAP measures that do not have any
standardized meaning prescribed by GAAP, including adjusted
performance measures, free cash flow, constant currency and
adjusted debt-to-adjusted EBITDA multiple. These non-GAAP measures
may not be comparable to similar measures presented by other
companies. From management's perspective, these non-GAAP measures
are useful measures of performance and provide investors with
supplementary information to assess the Company's results of
operations and liquidity. These non-GAAP measures should not be
considered in isolation or as a substitute for financial measures
prepared in accordance with GAAP.
The Company did not present any adjusted
performance measures as there were no adjustments in the first
quarter of 2024 and 2023.
Free cash flow
Free cash flow is a useful measure of liquidity
as it demonstrates the Company's ability to generate cash for debt
obligations and for discretionary uses such as payment of
dividends, share repurchases, and strategic opportunities. The
Company defines its free cash flow measure as the difference
between net cash provided by operating activities and net cash used
in investing activities, adjusted for the impact of (i) business
acquisitions and (ii) merger transaction-related payments, cash
receipts and cash income taxes, which are items that are not
indicative of operating trends. Free cash flow does not have any
standardized meaning prescribed by GAAP and therefore, may not be
comparable to similar measures presented by other companies.
The following table provides a reconciliation of
Net cash provided by operating activities in accordance with GAAP,
as reported for the three months ended March 31, 2024 and 2023, to
the non-GAAP free cash flow presented herein:
|
Three months ended March 31 |
In millions |
|
2024 |
|
|
2023 |
|
Net cash provided by operating activities |
$ |
1,117 |
|
$ |
1,055 |
|
Net cash used in investing activities |
|
(588 |
) |
|
(462 |
) |
Free cash flow |
$ |
529 |
|
$ |
593 |
|
Constant currency
Financial results at constant currency allow
results to be viewed without the impact of fluctuations in foreign
currency exchange rates, thereby facilitating period-to-period
comparisons in the analysis of trends in business performance.
Measures at constant currency are considered non-GAAP measures and
do not have any standardized meaning prescribed by GAAP and
therefore, may not be comparable to similar measures presented by
other companies. Financial results at constant currency are
obtained by translating the current period results denominated in
US dollars at the weighted average foreign exchange rates used to
translate transactions denominated in US dollars of the comparable
period of the prior year.
The average foreign exchange rates were $1.349
and $1.352 per US$1.00 for the three months ended March 31, 2024
and 2023 respectively. On a constant currency basis, the Company's
net income for the three months ended March 31, 2024 would have
been higher by $3 million ($nil per diluted share).
The following table provides a reconciliation of
the impact of constant currency and related percentage change at
constant currency on the financial results, as reported for the
three months ended March 31, 2024:
|
Three months ended March 31 |
In millions, except per share data |
|
2024 |
|
Constant currency impact |
|
|
2023 |
|
% Change at constant currency Fav (Unfav) |
|
Revenues |
|
|
|
|
Petroleum and chemicals |
$ |
857 |
|
$ |
2 |
|
$ |
828 |
|
4 |
% |
Metals and minerals |
|
530 |
|
|
2 |
|
|
529 |
|
1 |
% |
Forest products |
|
494 |
|
|
1 |
|
|
511 |
|
(3 |
%) |
Coal |
|
221 |
|
|
— |
|
|
263 |
|
(16 |
%) |
Grain and fertilizers |
|
860 |
|
|
1 |
|
|
861 |
|
— |
% |
Intermodal |
|
959 |
|
|
1 |
|
|
1,012 |
|
(5 |
%) |
Automotive |
|
216 |
|
|
1 |
|
|
215 |
|
1 |
% |
Total freight revenues |
|
4,137 |
|
|
8 |
|
|
4,219 |
|
(2 |
%) |
Other revenues |
|
112 |
|
|
— |
|
|
94 |
|
19 |
% |
Total revenues |
|
4,249 |
|
|
8 |
|
|
4,313 |
|
(1 |
%) |
Operating expenses |
|
|
|
|
|
|
Labor and fringe benefits |
|
894 |
|
|
2 |
|
|
812 |
|
(10 |
%) |
Purchased services and material |
|
571 |
|
|
— |
|
|
593 |
|
4 |
% |
Fuel |
|
514 |
|
|
1 |
|
|
557 |
|
8 |
% |
Depreciation and amortization |
|
462 |
|
|
1 |
|
|
448 |
|
(3 |
%) |
Equipment rents |
|
99 |
|
|
— |
|
|
90 |
|
(10 |
%) |
Other |
|
163 |
|
|
— |
|
|
151 |
|
(8 |
%) |
Total operating expenses |
|
2,703 |
|
|
4 |
|
|
2,651 |
|
(2 |
%) |
Operating income |
|
1,546 |
|
|
4 |
|
|
1,662 |
|
(7 |
%) |
Interest expense |
|
(210 |
) |
|
— |
|
|
(165 |
) |
(27 |
%) |
Other components of net periodic benefit income |
|
113 |
|
|
— |
|
|
119 |
|
(5 |
%) |
Other income |
|
2 |
|
|
— |
|
|
1 |
|
100 |
% |
Income before income taxes |
|
1,451 |
|
|
4 |
|
|
1,617 |
|
(10 |
%) |
Income tax expense |
|
(348 |
) |
|
(1 |
) |
|
(397 |
) |
12 |
% |
Net income |
$ |
1,103 |
|
$ |
3 |
|
$ |
1,220 |
|
(9 |
%) |
Diluted earnings per share |
$ |
1.72 |
|
$ |
— |
|
$ |
1.82 |
|
(5 |
%) |
Adjusted debt-to-adjusted EBITDA multiple
Management believes that the adjusted
debt-to-adjusted EBITDA multiple is a useful credit measure because
it reflects the Company's ability to service its debt and other
long-term obligations. The Company calculates the adjusted
debt-to-adjusted EBITDA multiple as adjusted debt divided by the
last twelve months of adjusted EBITDA. Adjusted debt is defined as
the sum of Long-term debt and Current portion of long-term debt as
reported on the Company’s Consolidated Balance Sheets as well as
Operating lease liabilities, including current portion and pension
plans in deficiency recognized on the Company's Consolidated
Balance Sheets due to the debt-like nature of their contractual and
financial obligations. Adjusted EBITDA is calculated as Net income
excluding Interest expense, Income tax expense, Depreciation and
amortization, operating lease cost, Other components of net
periodic benefit income, Other income (loss), and other significant
items that are not reflective of CN's underlying business
operations and which could distort the analysis of trends in
business performance. Adjusted debt and adjusted EBITDA are
non-GAAP measures used to compute the Adjusted debt-to-adjusted
EBITDA multiple. These measures do not have any standardized
meaning prescribed by GAAP and therefore, may not be comparable to
similar measures presented by other companies.
The following table provides a reconciliation of
debt and Net income in accordance with GAAP, reported as at and for
the twelve months ended March 31, 2024 and 2023, to the adjusted
measures presented herein, which have been used to calculate the
non-GAAP adjusted debt-to-adjusted EBITDA multiple:
In millions, unless otherwise indicated |
As at and for the twelve months ended March 31, |
|
2024 |
|
|
2023 |
|
Debt |
$ |
19,761 |
|
$ |
16,648 |
|
Adjustments: |
|
|
|
|
Operating lease liabilities, including current portion (1) |
|
387 |
|
|
441 |
|
Pension plans in deficiency (2) |
|
360 |
|
|
352 |
|
Adjusted debt |
$ |
20,508 |
|
$ |
17,441 |
|
Net income |
$ |
5,508 |
|
$ |
5,420 |
|
Interest expense |
|
767 |
|
|
587 |
|
Income tax expense |
|
814 |
|
|
1,748 |
|
Depreciation and amortization |
|
1,831 |
|
|
1,757 |
|
Operating lease cost (3) |
|
151 |
|
|
144 |
|
Other components of net periodic benefit income |
|
(473 |
) |
|
(492 |
) |
Other loss (income) |
|
(135 |
) |
|
12 |
|
Adjustment: |
|
|
|
|
Advisory fees related to shareholder matters (4) |
|
— |
|
|
12 |
|
Adjusted EBITDA |
$ |
8,463 |
|
$ |
9,188 |
|
Adjusted debt-to-adjusted EBITDA multiple
(times) |
|
2.42 |
|
|
1.90 |
|
(1) |
Represents the present value of operating lease payments. |
(2) |
Represents the total funded deficit of all defined benefit pension
plans with a projected benefit obligation in excess of plan
assets. |
(3) |
Represents the operating lease costs recorded in Purchased services
and material and Equipment rents within the Consolidated Statements
of Income. |
(4) |
Relates to advisory fees related to shareholder matters recorded in
Other expense within the Consolidated Statements of Income. See the
section entitled Non-GAAP measures - Adjusted performance measures
of the Company's 2023 Annual MD&A for additional
information. |
Grafico Azioni Canadian National Railway (TSX:CNR)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Canadian National Railway (TSX:CNR)
Storico
Da Gen 2024 a Gen 2025