CN Announces Third Quarter Results
MONTREAL, Oct. 22, 2024 (GLOBE NEWSWIRE) -- CN (TSX:CNR) (NYSE:CNI) today reported its financial and operating results for the third quarter ended September 30, 2024.
"Our scheduled operating plan demonstrated its resilience in the third quarter, allowing us to adapt our operations to challenges posed by wildfires and prolonged labor issues. Our operations recovered quickly and the railroad is running well. As we close 2024, we will continue to focus on recovering volumes, growth, and ensuring our resources are aligned to demand."
– Tracy Robinson, President and Chief Executive Officer, CN
Quarterly highlights
Revenue ton miles (RTMs) of 56,548 (millions), an increase of 2%.
Revenues of C$4,110 million, an increase of C$123 million, or 3%.
Operating income of C$1,515 million was in line with prior year.
Operating ratio, defined as operating expenses as a percentage of revenues, of 63.1%, an increase of 1.1-points.
Diluted earnings per share (EPS) of C$1.72, an increase of 2%.
2024 guidance and long-term financial outlook (1)(2) CN continues to expect to deliver adjusted diluted EPS growth in the low single-digit range and continues to expect to invest approximately C$3.5 billion in its capital program, net of amounts reimbursed by customers. The Company also continues to expect adjusted return on invested capital (ROIC) to be in the 13%-15% range.
Over the 2024-2026 period, CN continues to target compounded annual adjusted diluted EPS growth in the high single-digit range.
CONFERENCE CALL DETAILS CN'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 October 22. 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 5497429 as the passcode. Participants are advised to dial in 10 minutes prior to the call.
(1) Non-GAAP Measures CN's full-year and long-term adjusted diluted EPS outlook and full-year adjusted ROIC outlook (2) exclude 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 or its adjusted ROIC 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 or its adjusted ROIC outlook.
(2) Forward-Looking Statements Certain 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 assumptions CN 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 (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 that the U.S. grain crop will be above its three-year average. CN continues to assume RTM growth will be at the low end of the 3%-5% range assumed previously. CN assumes continued pricing above rail inflation. CN also continues to assume that in 2024, the value of the Canadian dollar in U.S. currency will be approximately $0.75, and that in 2024 the average price of crude oil (West Texas Intermediate) will be in the range of US$80 - US$90 per barrel. Additionally, CN assumes that there will be no further rail or port labor disruptions in 2024.
2024-2026 key assumptions CN has made a number of economic and market assumptions in preparing its three-year financial perspective. CN continues to assume that the North American industrial production will increase by approximately 1% CAGR over the 2024 to 2026 period. 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 CN CN powers the economy by safely transporting more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year for its customers. With its nearly 20,000-mile rail network and related transportation services, CN connects Canada's Eastern and Western coasts with the U.S. Midwest and the Gulf of Mexico, contributing to sustainable trade and the prosperity of the communities in which it operates since 1919.
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
SELECTED RAILROAD STATISTICS, UNAUDITED
Three months ended September 30
Nine months ended September 30
2024
2023
2024
2023
Financial measures
Key financial performance indicators (1)
Total revenues ($ millions)
4,110
3,987
12,688
12,357
Freight revenues ($ millions)
3,922
3,820
12,212
11,933
Operating income ($ millions)
1,515
1,517
4,619
4,779
Adjusted operating income ($ millions) (2)(3)
1,515
1,517
4,697
4,779
Net income ($ millions)
1,085
1,108
3,302
3,495
Adjusted net income ($ millions) (2)(3)
1,085
1,108
3,360
3,495
Diluted earnings per share ($)
1.72
1.69
5.19
5.27
Adjusted diluted earnings per share ($) (2)(3)
1.72
1.69
5.28
5.27
Free cash flow ($ millions) (2)(4)
584
581
2,060
2,274
Gross property additions ($ millions)
1,176
934
2,605
2,270
Share repurchases ($ millions)
427
1,196
2,498
3,438
Dividends per share ($)
0.8450
0.7900
2.5350
2.3700
Financial ratio
Operating ratio (%) (5)
63.1
62.0
63.6
61.3
Adjusted operating ratio (%) (2)(3)
63.1
62.0
63.0
61.3
Operational measures (6)
Statistical operating data
Gross ton miles (GTMs) (millions)
110,555
108,221
344,034
333,356
Revenue ton miles (RTMs) (millions)
56,548
55,640
176,233
171,478
Carloads (thousands)
1,304
1,326
4,066
4,048
Route miles (includes Canada and the U.S.)
18,800
18,600
18,800
18,600
Employees (end of period)
25,428
25,101
25,428
25,101
Employees (average for the period)
25,593
25,168
25,451
24,859
Key operating measures
Freight revenue per RTM (cents)
6.94
6.87
6.93
6.96
Freight revenue per carload ($)
3,008
2,881
3,003
2,948
GTMs per average number of employees (thousands)
4,320
4,300
13,518
13,410
Operating expenses per GTM (cents)
2.35
2.28
2.35
2.27
Labor and fringe benefits expense per GTM (cents)
0.72
0.71
0.74
0.70
Diesel fuel consumed (US gallons in millions)
94.4
90.0
301.0
291.5
Average fuel price ($ per US gallon)
4.43
4.66
4.50
4.56
Fuel efficiency (US gallons of locomotive fuel consumed per 1,000 GTMs)
0.854
0.832
0.875
0.874
Train weight (tons)
9,130
9,246
9,104
9,146
Train length (feet)
7,849
7,927
7,885
7,870
Car velocity (car miles per day)
208
209
208
212
Through dwell (entire railroad, hours)
7.1
7.1
7.0
7.0
Through network train speed (miles per hour)
19.2
19.7
18.7
19.9
Locomotive utilization (trailing GTMs per total horsepower)
182
189
186
191
Safety indicators (7)
Injury frequency rate (per 200,000 person hours)
1.04
1.08
1.08
1.03
Accident rate (per million train miles)
1.46
2.10
1.62
1.86
(1)
Amounts expressed in Canadian dollars and prepared in accordance with United States generally accepted accounting principles (GAAP), unless otherwise noted.
(2)
These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.
(3)
See the supplementary schedule entitled Non-GAAP Measures, Adjusted performance measures for an explanation of these non-GAAP measures.
(4)
See the supplementary schedule entitled Non-GAAP Measures, Free cash flow for an explanation of this non-GAAP measure.
(5)
Operating ratio is defined as operating expenses as a percentage of revenues.
(6)
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.
(7)
Based on Federal Railroad Administration (FRA) reporting criteria.
SUPPLEMENTARY INFORMATION, UNAUDITED
Three months ended September 30
Nine months ended September 30
2024
2023
% Change Fav (Unfav)
% Change at constant currency (1) Fav (Unfav)
2024
2023
% Change Fav (Unfav)
% Change at constant currency (1) Fav (Unfav)
Revenues ($ millions) (2)
Petroleum and chemicals
839
758
11
%
9
%
2,546
2,334
9
%
8
%
Metals and minerals
502
515
(3
%)
(4
%)
1,560
1,541
1
%
—
%
Forest products
467
466
—
%
(1
%)
1,462
1,457
—
%
—
%
Coal
229
242
(5
%)
(6
%)
691
768
(10
%)
(10
%)
Grain and fertilizers
786
722
9
%
8
%
2,384
2,271
5
%
4
%
Intermodal
882
880
—
%
—
%
2,881
2,875
—
%
—
%
Automotive
217
237
(8
%)
(9
%)
688
687
—
%
(1
%)
Total freight revenues
3,922
3,820
3
%
2
%
12,212
11,933
2
%
2
%
Other revenues
188
167
13
%
11
%
476
424
12
%
11
%
Total revenues
4,110
3,987
3
%
2
%
12,688
12,357
3
%
2
%
Revenue ton miles (RTMs) (millions) (3)
Petroleum and chemicals
11,398
10,470
9
%
9
%
34,763
31,915
9
%
9
%
Metals and minerals
7,275
7,630
(5
%)
(5
%)
22,183
21,458
3
%
3
%
Forest products
5,323
5,719
(7
%)
(7
%)
16,843
17,529
(4
%)
(4
%)
Coal
4,908
5,421
(9
%)
(9
%)
14,839
17,234
(14
%)
(14
%)
Grain and fertilizers
15,072
14,528
4
%
4
%
46,690
45,138
3
%
3
%
Intermodal
11,793
11,048
7
%
7
%
38,538
35,918
7
%
7
%
Automotive
779
824
(5
%)
(5
%)
2,377
2,286
4
%
4
%
Total RTMs
56,548
55,640
2
%
2
%
176,233
171,478
3
%
3
%
Freight revenue / RTM (cents) (2)(3)
Petroleum and chemicals
7.36
7.24
2
%
1
%
7.32
7.31
—
%
—
%
Metals and minerals
6.90
6.75
2
%
1
%
7.03
7.18
(2
%)
(3
%)
Forest products
8.77
8.15
8
%
6
%
8.68
8.31
4
%
4
%
Coal
4.67
4.46
5
%
4
%
4.66
4.46
4
%
4
%
Grain and fertilizers
5.21
4.97
5
%
4
%
5.11
5.03
2
%
1
%
Intermodal
7.48
7.97
(6
%)
(7
%)
7.48
8.00
(6
%)
(7
%)
Automotive
27.86
28.76
(3
%)
(4
%)
28.94
30.05
(4
%)
(4
%)
Total freight revenue / RTM
6.94
6.87
1
%
—
%
6.93
6.96
