Canadian National Railway Company · TSX:CNR
Canadian National Railway — Q4 2017 Earnings Presentation
19 slides from Canadian National Railway's earnings presentation, Jan 23, 2018
Slide 1: Fourth Quarter and Full-Year 2017 Financial Results
Fourth Quarter and Full-Year 2017 Financial Results January 23, 2018
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. By their nature, forward-looking statements involve risks,
Slide 3: Luc Jobin
Luc Jobin President and Chief Executive Officer
Slide 4: 2017 Highlights
2017 Highlights Top-line driving solid performance Q4 results impacted by challenging operating conditions, including harsh early winter weather across the network Over C$1B of incremental revenues in 2017 − Reported diluted EPS of C$7.24 (1) for 2017, up 55% over 2016 diluted EPS of C$4.67 − Adjust
Slide 5: Mike Cory
Mike Cory Executive VP and Chief Operating Officer
Slide 6: Operating Highlights
Operating Highlights Record GTMs handled in 2017 Train Productivity Yard Productivity Terminal Dwell (GTMs per train mile) (Cars per yard switching hour) (Entire railroad, hours) 8% 6% 8% vs 2015 vs 2015 vs 2015 1,430 53 18.4 9,449 9,359 1,380 16.2 9,314 9,424 1,330 50 50 51 51 14.3 14.5 15.0 14.0 9
Slide 7: Investing for the Long Term
Investing for the Long Term Stepping up investments to increase network capacity and resiliency People − Continued hiring to accommodate growth − Approximately 400 new conductors fully qualified in Q1 2018 Locomotives − Acquiring 200 locomotives over the next 3 years – with 60 to be delivered in 201
Slide 8: JJ Ruest
JJ Ruest Executive VP and Chief Marketing Officer
Slide 9: Q4 Top Line Performance
Q4 Top Line Performance Volume growth driven by international intermodal, frac sand and export coal Highlights Volumes % of Total % Change Revenues (2) at constant % Change currency (1) Bulk Favorable Favorable (9%) (Unfavorable) (Unfavorable) Grain & Fertilizers 18% (10%) (17%) Coal 4% Revenues 2%
Slide 10: 2017 Top Line Performance
2017 Top Line Performance Over C$1B of incremental revenues with broad-based growth Highlights Volumes % of Total % Change Revenues (2) at constant % Change currency (1) Bulk Favorable Favorable 3% (Unfavorable) (Unfavorable) Grain & Fertilizers 17% 9% (9%) Coal 4% Revenues 8% 10% 32% Merchandise Ca
Slide 11: Market Outlook
Market Outlook Demand environment remains positive with stronger shipments post Q1 Intermodal Merchandise Bulk 25% of revenues 47% of revenues 22% of revenues • International • North American drilling activity • Canadian grain harvest above Container trade into North momentum expected to continue
Slide 12: Ghislain Houle
Ghislain Houle Executive VP and Chief Financial Officer
Slide 13: Q4 Results
Q4 Results Results impacted by challenging operating conditions % Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2017 2016 (Unfavorable) Revenues $ 3,285 $ 3,217 2% Operating expenses 1,984 1,822 Operating income 1,301 1,395 (7%) Interest expense (117)
Slide 14: Q4 Operating Expenses
Q4 Operating Expenses Impacted by higher fuel costs, less fluid network and higher volumes % Change at constant % Change currency (1) Favorable Favorable In millions of Canadian dollars, unless otherwise indicated 2017 2016 (Unfavorable) (Unfavorable) Labor and fringe benefits $ 589 $ 565 (4%) (6%)
Slide 15: Full-Year Results
Full-Year Results Solid results driven by strong top-line growth Change Favorable In millions of Canadian dollars, except EPS data, unless otherwise indicated 2017 2016 (Unfavorable) Revenues $ 13,041 $ 12,037 8% Operating expenses 7,483 6,725 Operating income 5,558 5,312 5% Interest expense (481) (
Slide 16: Full-Year Free Cash Flow
Full-Year Free Cash Flow In millions of Canadian dollars, unless otherwise indicated 2017 Net income $ 5,484 Non-cash adjustments 86 Payments for income taxes (712) Other working capital items 658 Net cash provided by operating activities 5,516 Capital expenditures (net) (2,673) Other investing acti
Slide 17: 2018 Financial Outlook
2018 Financial Outlook Aiming to deliver adjusted diluted EPS in the range of C$5.25 to C$5.40 versus 2017 adjusted diluted EPS of C$4.99 (1) (2) − Volume growth in the range of 3-5% in terms of RTMs, with overall pricing above inflation Record capital program of C$3.2B in 2018 − Approximately C$1.6
Slide 18: Luc Jobin
Luc Jobin President and Chief Executive Officer
Slide 19: Looking Ahead
Looking Ahead Creating value for our customers and shareholders Economic backdrop remains favorable in North America with strong pipeline of growth opportunities Hiring and record capital investments planned to increase network resiliency Key priority for superior service to our customers Committed
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