6-K
CANADIAN NATIONAL RAILWAY CO (CNI)
6-K
2024-08-09
For: 2024-08-08
View Original
Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Reportof Foreign Issuer Pursuant to Rule 13****a-16 or 15d-16
of theSecurities Exchange Act of 1934
For the month of August 2024
Commission File Number: 001-02413
Canadian National Railway Company
(Translation of registrant’s name into English)
935 de la Gauchetiere Street West
Montreal, Quebec
Canada H3B 2M9
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F | ¨ | Form 40-F | x |
|---|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Canadian National Railway Company | ||||
|---|---|---|---|---|
| Date: | August 8, 2024 | By: | /s/ Cristina Circelli | |
| Name: | Cristina Circelli | |||
| Title: | Vice-President, Corporate Secretary and General Counsel |
CANADIAN NATIONAL RAILWAY COMPANY
Table of Content
| Items | Description |
|---|---|
| 1 | 2024 Investor Fact Book Update |
Exhibit 99.1
| SUSTAINABLE, PROFITABLE GROWTH<br>ACCELERATING<br>2024 INVESTOR FACT BOOK<br>UPDATE | ||||
|---|---|---|---|---|
| As used herein, “Company” or “CN” refers to Canadian National Railway Company and, as the context requires, its wholly owned subsidiaries.<br>FORWARD-LOOKING STATEMENTS<br>Certain statements included in the CN 2024 Investor Fact Book Update constitute “forward-looking statements” within the meaning of the United States Private<br>Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management’s assessment and assumptions and publicly<br>available information with respect to CN. This forward-looking information also includes, but is not limited to, statements with respect to CN’s operations, business and<br>revenue growth opportunities, including those referring to general economic and business conditions; and statements relating to our environmental, social and<br>governance (ESG) strategies and targets, including our climate goals and sustainability commitments. By their nature, forward-looking statements involve risks,<br>uncertainties and assumptions. CN cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although<br>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,”<br> “expects,” “anticipates,” “assumes,” “outlook,” “plans,” “targets” or other similar words.<br>2024–2026 Key Assumptions: CN has made a number of economic and market assumptions in preparing its three-year financial perspective. CN assumes that the<br>North American industrial production will increase by at least two percent CAGR over the 2024 to 2026 period. CN assumes continued pricing above rail inflation. CN<br>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<br>approximately US$80 per barrel during this period.<br>Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors, which may cause actual results, performance<br>or achievements of CN to be materially different from the outlook or any future results, performance or achievements implied by such statements. Accordingly, readers<br>are advised not to place undue reliance on forward-looking statements. Important risk factors that could affect the forward-looking statements include, but are not<br>limited to, general economic and business conditions including factors impacting global supply chains such as pandemics and geopolitical conflicts and tensions; the<br>business opportunities referred to in the 2024 Investor Fact Book Update not fully materializing; industry competition; inflation, currency and interest rate fluctuations;<br>changes in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators; increases in maintenance<br>and operating costs; security threats; reliance on technology and related cybersecurity risk; trade restrictions or other changes to international trade arrangements;<br>transportation of hazardous materials; various events that could disrupt operations, including illegal blockades of rail networks and natural events such as severe<br>weather, droughts, fires, floods and earthquakes; climate change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings<br>and other types of claims and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; the availability of and cost<br>competitiveness of renewable fuels and the development of new locomotive propulsion technology; reputational risks; supplier concentration; pension funding<br>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<br>should also be made to “Management’s Discussion and Analysis” in CN’s annual and interim reports, Annual Information Form and Form 40-F, filed with Canadian and<br>U.S. securities regulators and available on CN’s website (www.cn.ca) for a description of major risk factors relating to CN.<br>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<br>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<br>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.<br>Information contained on, or accessible through, our website is not incorporated by reference into the 2024 Investor Fact Book Update.<br>MOVING FORWARD TOGETHER<br>CN powers the economy by safely transporting more than 300 million tons of natural<br>resources, manufactured products, and finished goods throughout North America every<br>year for its customers. With its 18,800-mile rail network and related transportation<br>services, CN connects Canada’s Eastern and Western coasts with the U.S. Midwest and the<br>Gulf of Mexico, contributing to sustainable trade and the prosperity of the communities<br>in which it operates since 1919. | ||||
| --- | ||||
| PICTURED:<br>(ABOVE): Snaring, AB. Photo by CN Employee Tim Stevens<br>(COVER): Alexis Vezina, Conductor, Joffre, QC<br>Chyle Christie, Mechanical Supervisor, Edmonton, AB<br>Contents<br>1 | OVERVIEW<br>Delivering Value for Our Shareholders 02<br>Competitive Strengths 04<br>Demonstrating the Power of Our Plan 06<br>Financial and Operating Measures 08<br>2 | MARKETS<br>Market Overview 10<br>Intermodal 12<br>Forest Products 14<br>Metals and Minerals 16<br>Grain and Fertilizers 18<br>Coal 20<br>Petroleum and Chemicals 22<br>Automotive 24<br>3 | FINANCIALS<br>Financial Overview 26<br>Quarterly Consolidated 27<br>Statements of Income<br>Quarterly Consolidated Balance Sheets 28<br>Quarterly Consolidated 29<br>Statements of Cash Flows<br>Quarterly Financial and Statistical Data 31<br>Non-GAAP Measures 32<br>Shareholder and Investor Information 40<br>TICKER SYMBOLS<br>CNR: Toronto Stock Exchange<br>CNI: New York Stock Exchange<br>Except where otherwise indicated, all financial information reflected in<br>this document is presented as at December 31, 2023 or for the applicable<br>year ended on December 31, and is expressed in Canadian dollars and<br>determined on the basis of United States generally accepted accounting<br>principles (GAAP).<br>This 2024 Investor Fact<br>Book Update includes<br>updated financial and<br>statistical data and<br>supplements the<br>2023 complete edition,<br>which is published<br>biennially and contains<br>additional information<br>about CN’s business,<br>strategy, markets, and<br>operations. It is available<br>at: www.cn.ca/investors/<br>reports-and-archives.<br>LEARN MORE<br>SUSTAINABLE, PROFITABLE GROWTH<br>ACCELERATING<br>2023 INVESTOR FACT BOOK<br>CN | 2024 INVESTOR FACT BOOK UPDATE 01 |
| --- | ||||
| (1) These non-GAAP measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented<br>by other companies. See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>(2) Operating ratio is defined as operating expenses as a percentage of revenues.<br>TOTAL REVENUES<br>$16.8B<br>FREE CASH FLOW (1)<br>$3.9B<br>DILUTED EARNINGS PER SHARE<br>(EPS)<br>$8.53<br>OPERATING RATIO(2)<br>60.8%<br>ADJUSTED DILUTED EPS(1)<br>$7.28<br>ADJUSTED RETURN ON<br>INVESTED CAPITAL (ROIC) (1)<br>14.5%<br>DELIVERING VALUE<br>FOR OUR SHAREHOLDERS<br>2023 Highlights<br>$22B<br>RETURNED TO SHAREHOLDERS OVER THE<br>LAST FIVE YEARS<br>CN’s strong financial position allowed us to return $6.6 billion<br>to our shareholders in 2023. With an 8% increase in 2023,<br>we have raised our dividend every year since our IPO in 1995<br>at an average CAGR of 10% since 2019.<br>65%<br>TOTAL SHARE PRICE RETURN<br>SINCE JANUARY 2019<br>CN’s share price on the TSX (CNR)<br>has increased at a compound annual<br>growth rate (CAGR) of 13% over the<br>last five years.<br>3,244<br>1,544<br>1,700<br>2,013<br>379<br>1,634<br>3,322<br>1,582<br>1,740<br>6,713<br>4,709<br>2,004<br>6,622<br>2,071<br>4,551<br>W Share Repurchases<br>W Dividends<br>SHAREHOLDER DISTRIBUTION<br>($ millions)<br>2019 2020 2021 2022 2023<br>1) See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>3,244<br>1,544<br>1,700<br>2,013<br>379<br>1,634<br>3,322<br>1,582<br>1,740<br>6,713<br>4,709<br>2,004<br>6,622<br>2,071<br>4,551<br>W Share Repurchases<br>W Dividends<br>SHAREHOLDER DISTRIBUTION<br>($ millions)<br>2019 2020 2021 2022 2023<br>1) See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>S&P<br>TSX<br>CNI<br>CNR<br>CNR (TSX)<br>CNI (NYSE)<br>S&P 500<br>TSX<br>CN’S STOCK PERFORMANCE (2019–2023)*<br>(Index: Closing price on December 31, 2018 = 100)<br>2019 2020 2021 2022 2023<br>Source: FactSet<br>200<br>175<br>150<br>125<br>100<br>75<br>50<br>* Data extracted on December 31, 2023<br>1 Overview Overview Markets Financials<br>02 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| PICTURED:<br>CN's high-capacity grain cars move through Fitzwilliam, BC, to market.<br>Photo by CN Employee Tim Stevens<br>CN | 2024 INVESTOR FACT BOOK UPDATE 03 | |||
| --- | ||||
| Kamloops<br>Fort Nelson<br>Hay River<br>Fort McMurray<br>Matane Baie-Comeau<br>Sept-Îles<br>Springfield<br>East St. Louis<br>East Peoria<br>Conneaut<br>Pittsburgh<br>New London<br>Duluth<br>Stevens<br> Point<br>Omaha<br>Sioux City<br>Sault<br>Ste.Marie<br>Fond<br>du Lac<br>Sarnia Buffalo<br>Baton Rouge<br>Minneapolis/St. Paul<br>Regina<br>Toledo<br>Decatur<br>Jackson<br>Prince George<br>Worcester Arcadia<br>Chippewa Falls<br>Auburn<br>Indianapolis<br>Joliet<br>Pascagoula<br>Green<br>Bay<br>Gulfport<br>Moncton<br>Syracuse<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Calgary<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>CN is an engine of North American economic growth and prosperity. We deliver reliable, efficient and<br>cost-effective transportation services with a focus on service, productivity and safety. CN’s role as a key<br>participant in end-to-end supply chains aims to generate long-term, profitable growth.<br>A FAR-REACHING AND DIVERSIFIED BUSINESS<br>COMPETITIVE<br>STRENGTHS<br>2023 REVENUES BY COMMODITY GROUP<br>(% of total revenues)<br>W 23% Intermodal<br>W 19% Petroleum and chemicals<br>W 19% Grain and fertilizers<br>W 12% Forest products<br>W 12% Metals and minerals<br>W 6% Automotive<br>W 6% Coal<br>W 3% Other revenues<br>2023 REVENUES BY COMMODITY GROUP<br>(% of total revenues)<br>W 23% Intermodal<br>W 19% Petroleum and chemicals<br>W 19% Grain and fertilizers<br>W 12% Forest products<br>W 12% Metals and minerals<br>W 6% Automotive<br>W 6% Coal<br>W 3% Other revenues<br>2023 REVENUES BY GEOGRAPHIC FLOW<br>(% of freight revenues)<br>W 34% Overseas<br>W 32% Transborder<br>W 18% Canadian domestic<br>W 16% U.S. domestic<br>2023 REVENUES BY GEOGRAPHIC FLOW<br>(% of freight revenues)<br>W 34% Overseas<br>W 32% Transborder<br>W 18% Canadian domestic<br>W 16% U.S. domestic<br>Robust Balance Sheet<br>CN aims to generate sustainable value for our shareholders.<br>Our first use of cash is to reinvest in the business to help<br>ensure the safety and efficiency of our network and to<br>enable growth. Second, we are focused on maintaining a<br>strong balance sheet with the aim of keeping a stable<br>investor grade and credit rating to facilitate liquidity in the<br>event of an economic downturn. CN also returns value to<br>shareholders through dividends and share repurchases.<br>Strong Team of Railroaders<br>Our team of talented and dedicated railroaders is a key<br>strength of our Company. We are evolving our workplace<br>culture to be more modern, innovative, inclusive and<br>reflective of the future we want for our Company. We are<br>investing in the development of our people, attracting<br>the right talent, and empowering them to act in line with<br>our values and strategic priorities.<br>Advantaged Network<br>CN spans the continent, reaching from coast to coast<br>to coast. Our network was built through key acquisitions<br>across Canada and in the U.S., and includes the former<br>Elgin, Joliet and Eastern Railway (EJ&E) that provides<br>our fluidity advantage around Chicago. CN’s exceptional<br>footprint provides our customers with optionality that<br>is of increasing importance in a world of emerging<br>and shifting trade patterns.<br>Scheduled Railroad<br>CN’s focus on scheduled railroading benefits customers<br>and shareholders alike. Disciplined adherence to<br>our operating plan allows us to optimize capacity and<br>drive car velocity and fluidity across the network.<br>This helps us meet our customers’ expectations, unlock<br>additional capacity, and helps position us for sustainable,<br>profitable growth.<br>Broad Geographic Exposure Balanced and Diverse Portfolio<br>CN’s freight revenues are derived from seven main commodity groups representing a diversified and balanced portfolio of goods transported between<br>a wide range of origins and destinations. This product and geographic diversity better position the Company to face economic fluctuations and<br>enhance its potential for growth opportunities.<br>1 Overview Overview Markets Financials<br>04 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Kamloops<br>Fort Nelson<br>Hay River<br>Fort McMurray<br>Matane Baie-Comeau<br>Sept-Îles<br>Springfield<br>East St. Louis<br>East Peoria<br>Conneaut<br>Pittsburgh<br>New London<br>Duluth<br>Stevens<br> Point<br>Omaha<br>Sioux City<br>Sault<br>Ste.Marie<br>Fond<br>du Lac<br>Sarnia Buffalo<br>Baton Rouge<br>Minneapolis/St. Paul<br>Regina<br>Toledo<br>Decatur<br>Jackson<br>Prince George<br>Worcester Arcadia<br>Chippewa Falls<br>Auburn<br>Indianapolis<br>Joliet<br>Pascagoula<br>Green<br>Bay<br>Gulfport<br>Moncton<br>Syracuse<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Calgary<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>45%<br>reduction since 1993<br> >300M<br>TONS OF CARGO<br>5.4M<br>CARLOADS<br>18,800<br>ROUTE MILES<br>~25,000<br>EMPLOYEES (end of period)<br>$52.7B<br>ASSETS<br>$3.1B<br>CAPITAL INVESTMENTS(2)<br>(1) As at or for the year ending December 31, 2023<br>(2) Net of amounts reimbursed by customers<br>2023 KEY STATISTICS(1)<br>* See section titled Non-GAAP Measures for an explanation of this non-GAAP measure.<br>CN main lines<br>Secondary and feeder lines<br>Shortline partners<br>Ports served by CN<br>LEGEND<br>Disciplined Capital Investment Decoupling Carbon Emissions from Growth<br>CN has a strong track record of capital investment. Over the past<br>five years we have invested over $15.5 billion to improve network<br>safety and fluidity and enable growth.<br>Since 1993, CN has reduced locomotive emissions intensity by 45%,<br>while continuing to grow our volumes and consuming approximately<br>15% less fuel per gross ton mile than the industry average.<br>COVID impact<br>Gary<br>Leithton<br>Munger<br>West<br>Chicago<br>Joliet<br>Matteson<br>Chicago<br>Heights<br>Griffith<br>Goose Lake<br>Markham<br>Waukegan<br>South Chicago<br>Chicago<br>Outer Belt<br>(former EJ&E)<br>Chicago<br>INDIANA<br>ILLINOIS<br>LAKE<br>MICHIGAN<br>FASTEST<br>RAIL ROUTE IN<br>AND AROUND<br>CHICAGO<br>500<br>400<br>300<br>200<br>100<br>0<br>20<br>16<br>12<br>8<br>4<br>0<br>Tonnes CO2e/Million GTMs<br>GTMs (Billions)<br>CARBON EMISSIONS INTENSITY VS. GROSS TON MILES (GTMs)<br> Locomotive Emissions Intensity (Tonnes CO₂e/Million GTMs)<br> Gross Ton Miles (Billions)<br>93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23<br>Locomotive Emissions Intensity Gross Ton Miles<br>CAPITAL INVESTMENTS VS. ADJUSTED ROIC<br> Capital Investments ($ millions)<br> Adjusted Return on Invested Capital (%)*<br>3,187<br>2,750 2,863 2,891<br>3,865<br>15.1%<br>13.3% 14.1%<br>15.9%<br>14.5%<br>Tonnes C,O2e/Million GTMs<br>2019 2020 2021 2022 2023<br>CN | 2024 INVESTOR FACT BOOK UPDATE 05 | |||
| --- | ||||
| Make the Plan<br>NETWORK OPERATIONS:<br>Analyzing network volumes to create an optimal train<br>plan that meets customer demand.<br>Assessing train movements, volumes, and performance to<br>adapt to fluctuations ensures network resiliency.<br>Optimizing assets such as crews, locomotives, rolling stock,<br>and rail infrastructure to maximize capacity.<br>Collaborating with Mechanical and Engineering teams to<br>coordinate projects while maintaining network fluidity.<br>DEMONSTRATING<br>THE POWER OF OUR PLAN<br>Jeff Anderson, Rail Traffic Controller,<br>Homewood, IL, coordinates<br>safe and efficient train traffic across<br>our network.<br>CN’S SCHEDULED OPERATING MODEL<br>Our disciplined approach to scheduled railroading — “Make the Plan,<br>Run the Plan, Sell the Plan” — is driving velocity and fluidity across<br>the network, helping us to meet the expectations of our customers and<br>creating the winning conditions for sustainable, profitable growth.<br>Everyone understands their role in the Plan. Network Operations makes a<br>plan that optimizes volumes for the entire rail network, and Field Operations<br>runs that plan. Together, they monitor the Plan’s effectiveness and make any<br>necessary adjustments to meet our customers’ needs while ensuring the<br>safety and efficiency of our operations. Our Commercial team sells to our<br>available capacity, which ensures we are aligned with our ability to deliver,<br>and works with the Network Operations team to ensure future capacity<br>expansions are timed to support growth.<br>PERFORMANCE (2023 vs. 2022)<br>(1) Based on Federal Railroad Administration (FRA) reporting criteria.<br>+9%<br>CAR VELOCITY<br>213 miles per day (average)<br>-8%<br>THROUGH DWELL<br>7.0 hours across all yards<br>-17%<br>TRAIN ACCIDENT RATE(1)<br>1.74 per million train miles<br>-13%<br>PERSONAL INJURY RATE(1)<br>0.96 per 200,000 person-hours<br>1 Overview Overview Markets Financials<br>06 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Sell the Plan<br>Run the Plan<br>COMMERCIAL TEAM:<br> Aligning sales with our available<br>capacity to deliver.<br>Collaborating with customers to determine<br>the best investments to expand our<br>network and build capabilities.<br>Analyzing customer trade flows and<br>growth plans to expand capacity, onboard<br>new business, and grow the business.<br>FIELD OPERATIONS:<br>Ensuring consistent execution of the Plan in<br>the field, focusing on safety, train speed,<br>and dwell time.<br> Monitoring that trains depart on time and<br>make their scheduled connections with the<br>correct blocks of cars.<br>Improving asset velocity, ensuring power<br>and crew utilization, and driving consistent<br>execution in the field.<br>Working with Network Operations to<br>identify and resolve network-level issues<br>and continuously refining the Plan.<br>Cory Klashinsky, Watchman/Engine Hostler, keeping trains on schedule<br>at Chappell Yard in Saskatoon, SK.<br>CN's Commercial teams engage with customers at their operations to<br>understand their business cycles, trade flows and growth plans.<br>CN | 2024 INVESTOR FACT BOOK UPDATE 07 | |||
| --- | ||||
| 14,917<br>13,819 14,477<br>17,10716,828<br>TOTAL REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>62.5 65.4<br>61.2 60.0 60.8<br>OPERATING RATIO<br>(%)<br>2019 2020 2021 2022 2023<br>Adjusted Operating Ratio(2)<br>5.81<br>4.97<br>6.90 7.44<br>8.53<br>DILUTED EARNINGS PER SHARE<br>($)<br>2019 2020 2021 2022 2023<br>Adjusted Diluted Earnings Per Share(2)<br>Financial Measures<br>2019 2020 2021 2022 2023(1)<br>KEY FINANCIAL PERFORMANCE INDICATORS<br>Total revenues ($ millions) 14,917 13,819 14,477 17,107 16,828<br>Freight revenues ($ millions) 14,198 13,218 13,888 16,569 16,236<br>Operating income ($ millions) 5,593 4,777 5,616 6,840 6,597<br>Adjusted operating income ($ millions)(2) 5,708 5,263 5,622 6,862 6,597<br>Net income ($ millions) 4,198 3,545 4,899 5,118 5,625<br>Adjusted net income ($ millions)(2) 4,171 3,767 4,225 5,134 4,800<br>Diluted earnings per share ($) 5.81 4.97 6.90 7.44 8.53<br>Adjusted diluted earnings per share ($)(2) 5.78 5.28 5.95 7.46 7.28<br>Free cash flow ($ millions)(2) 1,992 3,227 3,296 4,259 3,887<br>Gross property additions ($ millions) 4,079 2,863 2,897 2,757 3,217<br>Share repurchases ($ millions) 1,700 379 1,582 4,709 4,551<br>Dividends per share ($) 2.15 2.30 2.46 2.93 3.16<br>FINANCIAL POSITION<br>Total assets ($ millions) 43,784 44,804 48,538 50,662 52,666<br>Total liabilities ($ millions) 25,743 25,153 25,794 29,278 32,549<br>Shareholders’ equity ($ millions) 18,041 19,651 22,744 21,384 20,117<br>FINANCIAL RATIOS<br>Operating ratio (%) 62.5 65.4 61.2 60.0 60.8<br>Adjusted operating ratio (%) (2) 61.7 61.9 61.2 59.9 60.8<br>Adjusted debt-to-adjusted EBITDA multiple (times)(2) 2.01 1.98 1.82 1.86 2.25<br>Return on invested capital (ROIC) (%)(2) 15.2 12.7 16.4 15.8 16.8<br>Adjusted ROIC (%)(2) 15.1 13.3 14.1 15.9 14.5<br>(1) Financial data for full years ending on December 31.<br>(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<br>companies. See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>FINANCIAL AND<br>OPERATING MEASURES<br>Financial Highlights<br>CAGR (2023 VS. 2019) CAGR (2023 VS. 2019) VARIANCE (2023 VS. 2019)<br>+3.1% +10.1% -170 BPS (Favourable)<br>1 Overview Overview Markets Financials<br>08 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| 5.87 5.74 5.96<br>7.03 6.98<br>FREIGHT REVENUE PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>194 185 195 196<br>213<br>CAR VELOCITY<br>(car miles per day)<br>2019 2020 2021 2022 2023<br>7.9<br>8.6<br>7.9 7.6<br>7.0<br>THROUGH DWELL<br>(entire railroad, hours)<br>2019 2020 2021 2022 2023<br>Operating Measures(3)<br>2019 2020 2021 2022 2023<br>STATISTICAL OPERATING DATA<br>Gross ton miles (GTMs) (billions) 482.9 455.4 458.4 463.7 452.0<br>Revenue ton miles (RTMs) (billions) 242.0 230.4 233.1 235.8 232.6<br>Carloads (thousands) 5,912 5,595 5,701 5,697 5,436<br>Route miles (includes Canada and the U.S.) 19,500 19,500 19,500 18,600 18,800<br>Employees (end of period) 25,975 24,381 22,604 23,971 24,987<br>Employees (average for the period) 26,733 23,786 24,084 23,396 24,920<br>KEY OPERATING MEASURES<br>Freight revenue per RTM (cents) 5.87 5.74 5.96 7.03 6.98<br>Freight revenue per carload ($) 2,402 2,362 2,436 2,908 2,987<br>GTMs per average number of employees (thousands) 18,063 19,144 19,033 19,820 18,140<br>Operating expenses per GTM (cents) 1.93 1.99 1.93 2.21 2.26<br>Labor and fringe benefits expense per GTM (cents) 0.61 0.60 0.63 0.63 0.70<br>Diesel fuel consumed (US gallons in millions) 451.4 407.5 405.2 402.2 395.2<br>Average fuel price ($/US gallon) 3.17 2.42 3.28 5.42 4.62<br>Fuel efficiency (US gallons of locomotive fuel consumed per 1,000 GTMs) 0.935 0.895 0.884 0.867 0.874<br>OPERATING METRICS<br>Car velocity (car miles per day) 194 185 195 196 213<br>Locomotive utilization (trailing GTMs per total horsepower) 198 196 198 197 191<br>Train weight (tons) 9,125 9,501 9,658 9,324 9,186<br>Train length (feet) 8,232 8,572 8,559 8,160 7,891<br>Through dwell (entire railroad, hours) 7.9 8.6 7.9 7.6 7.0<br>Through network train speed (miles per hour) 18.5 18.5 19.2 18.9 19.8<br>CN ROLLING STOCK<br>Diesel locomotives (end of period) 2,398 2,382 2,302 2,351 2,300<br>Freight cars (end of period) 64,607 62,857 56,730 56,469 54,155<br>(3) Statistical operating data, key operating measures, operating metrics and rolling stock information are unaudited and based on estimated data available at such time and are<br>subject to change as more complete information becomes available. Definitions of these indicators are provided on our website, www.cn.ca/glossary.<br>Operational Highlights<br>CAGR (2023 VS. 2019) CAGR (2023 VS. 2019) CAGR (2023 VS. 2019)<br>+4.4% +2.4% -3.0% (Favourable)<br>CN | 2024 INVESTOR FACT BOOK UPDATE 09 | |||
| --- | ||||
| 85%<br>OF TRAFFIC ORIGINATES<br>ON CN’S NETWORK AND<br>OVER 65% ORIGINATES<br>AND TERMINATES ON<br>CN’S NETWORK<br>7<br>SERVED ACROSS<br>NORTH AMERICA<br>10,000+<br>ORIGIN-DESTINATION<br>PAIRS<br>MARKET<br>OVERVIEW<br>2023 REVENUES BY COMMODITY GROUP<br>(% of total revenues)<br>GROWING TOGETHER WITH OUR CUSTOMERS<br>Meeting our customers’ needs is at the heart of our drive for operational excellence. Excluding other<br>revenue, CN’s freight revenues are derived from seven main commodity groups representing a balanced<br>and diversified portfolio of 180 product types. This diversity helps position CN to better weather<br>economic fluctuations and enhances our potential for growth. All our business units collaborate with<br>their customers and supply chain partners to understand their market cycles and anticipate future<br>demand to unlock long-term, profitable growth.<br>Over<br>A Diversified Portfolio Helps Well-Position Us for Growth<br>major ports<br>Intermodal (23%) Bulk Products (25%) Automotive (6%)<br>Industrial Products (24%) Petroleum and Chemicals (19%) Other (3%)<br>3%<br>OTHER<br>REVENUES<br>19%<br>PETROLEUM<br>AND<br>CHEMICALS<br>6%<br>COAL<br>19%<br>GRAIN AND<br>FERTILIZERS<br>6%<br>AUTOMOTIVE<br>12%<br>FOREST<br>PRODUCTS<br>14%<br>INTERNATIONAL<br>INTERMODAL<br>9%<br>DOMESTIC<br>INTERMODAL<br>12%<br>METALS AND<br>MINERALS<br> 29% Intermodal<br> 5% Automotive<br> INDUSTRIAL PRODUCTS<br> 12% Forest products<br> 11% Metals and minerals<br> BULK PRODUCTS<br> 16% Grain and fertilizers<br> 5% Coal<br> 19% Petroleum and chemicals<br> 3% Other revenues<br> 29% Intermodal<br> 19% Petroleum and chemicals<br> 16% Grain and fertilizers<br> 12% Forest products<br> 11% Metals and minerals<br> 5% Automotive<br> 5% Coal<br> 3% Other revenues $16.8B<br>TOTAL<br>REVENUES<br>2 Markets Overview Markets Financials<br>10 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| REVENUES CARLOADS<br>$ millions thousands<br>2019 2020 2021 2022 2023<br>%<br>Change(1) 2019 2020 2021 2022 2023<br>%<br>Change(1)<br>Petroleum and chemicals 3,052 2,631 2,816 3,229 3,195 (1%) 688 597 596 636 634 0%<br>Metals and minerals 1,643 1,409 1,548 1,911 2,048 7% 1,008 935 969 956 1,002 5%<br>Forest products 1,808 1,700 1,740 2,006 1,943 (3%) 375 342 339 330 309 (6%)<br>Coal 658 527 618 937 1,017 9% 335 289 379 503 511 2%<br>Grain and fertilizers 2,392 2,609 2,475 2,783 3,265 17% 619 663 628 614 670 9%<br>Intermodal 3,787 3,751 4,115 4,906 3,823 (22%) 2,618 2,582 2,611 2,450 2,078 (15%)<br>Automotive 858 591 576 797 945 19% 269 187 179 208 232 12%<br>Total rail freight 14,198 13,218 13,888 16,569 16,236 (2%) 5,912 5,595 5,701 5,697 5,436 (5%)<br>Other 719 601 589 538 592 10%<br>Total 14,917 13,819 14,477 17,107 16,828 (2%)<br>RTMs FREIGHT REVENUE PER RTM<br>millions cents<br>2019 2020 2021 2022 2023<br>%<br>Change(1) 2019 2020 2021 2022 2023<br>%<br>Change(1)<br>Petroleum and chemicals 53,989 43,556 42,436 46,273 43,846 (5%) 5.65 6.04 6.64 6.98 7.29 4%<br>Metals and minerals 25,449 21,561 26,743 27,606 28,444 3% 6.46 6.53 5.79 6.92 7.20 4%<br>Forest products 27,187 25,602 25,948 25,020 23,141 (8%) 6.65 6.64 6.71 8.02 8.40 5%<br>Coal 17,653 16,173 18,471 22,679 22,682 0% 3.73 3.26 3.35 4.13 4.48 8%<br>Grain and fertilizers 55,597 61,736 58,733 55,359 63,479 15% 4.30 4.23 4.21 5.03 5.14 2%<br>Intermodal 58,344 59,165 58,412 56,029 47,886 (15%) 6.49 6.34 7.04 8.76 7.98 (9%)<br>Automotive 3,735 2,597 2,395 2,822 3,136 11% 22.97 22.76 24.05 28.24 30.13 7%<br>Total 241,954 230,390 233,138 235,788 232,614 (1%) 5.87 5.74 5.96 7.03 6.98 (1%)<br>(1) % change from 2022 to 2023.<br>Performance<br>Summary<br>$16.8B<br>REVENUES<br>5.4M<br>CARLOADS<br>233B<br>REVENUE TON MILES<br>(RTMs)<br>6.98 cents<br>FREIGHT REVENUE<br>PER RTM<br>722 miles<br>AVERAGE LENGTH<br>OF HAUL<br>2023 PERFORMANCE TOTALS<br>CN | 2024 INVESTOR FACT BOOK UPDATE 11 | |||
| --- | ||||
| Joliet<br>Jackson<br>MEXICO<br>Arcadia<br>Chippewa Falls<br>Indianapolis<br>Prince George<br>Duluth<br>Regina<br>Saskatoon<br>Halifax<br>Chicago<br>Detroit<br>Mobile<br>Toronto<br>Montreal<br>Memphis<br>Moncton<br>New Orleans<br>Edmonton<br>Calgary<br>Winnipeg<br>Prince Rupert<br>Vancouver<br>Saint John<br>INTERMODAL<br>GLOBAL CONNECTIVITY – MOVING GOODS ACROSS THE CONTINENT<br>International Intermodal, one of our largest segments, handles import and export container traffic in<br>collaboration with ocean carriers. With rail access to key exclusive ports in Prince Rupert and Halifax,<br>alongside serving other vital ports including Vancouver, Mobile, New Orleans, and Montreal, we facilitate<br>seamless global trade connections. Our Domestic Intermodal segment focuses on transporting consumer<br>products and manufactured goods within and between Canada, the U.S., and Mexico.<br>CN’S INTERMODAL SUPPLY CHAIN<br>For more information, please visit<br>www.cn.ca/our-services/intermodal<br>International<br>Domestic<br> Intermodal ports served by CN<br>P Intermodal terminals<br>P Logistics parks<br>MEXICO<br>Duluth<br>Chippawa Falls<br>Regina<br>Arcadia<br>New York<br>Cincinnati<br>Indianapolis<br>Columbus<br>Cleveland<br>Philadelphia<br>Wilmington<br>Montreal<br>Prince<br>George<br>Vancouver<br>Halifax<br>Moncton<br>Saskatoon<br>Chicago<br>Edmonton<br>Toronto<br>Detroit<br>Atlanta<br>Kansas City<br>Winnipeg<br>Monterrey<br>Silao<br>Calgary<br>EXPANDING ACCESS THROUGH<br>INTERLINE PARTNERSHIPS<br> CN line<br> Shortline partners<br> Union Pacific<br> Ferromex<br> Norfolk Southern<br> CSX<br> Interline partnership<br> destinations<br>2 Markets Overview Markets Financials<br>12 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| 3,787 3,751<br>4,115<br>4,906<br>3,823<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br> 2,618 2,582 2,611<br>2,450<br>2,078<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br> 58,344 59,165 58,412 56,029<br>47,886<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>6.49 6.34<br>7.04<br>8.76<br>7.98<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>KEY FACTS<br> • Supply chain collaboration agreements<br>with key ports<br> • CargoCool®, CN’s temperature-controlled transport business, has one<br>of Canada’s largest reefer fleets<br> • With CN-owned TransX and CNTL, one<br>of Canada’s largest trucking companies,<br>CN provides rail and trucking services<br>from the first mile to the last mile<br> • Full membership in the Equipment<br>Management Pool (EMP)<br> • Dedicated customer service desk<br>COMMODITIES<br>INTERNATIONAL<br> • Ocean-borne import and export dry and<br>temperature-controlled containerized traffic<br>DOMESTIC<br> • Consumer products for large retailers<br> • Raw materials, manufactured goods and<br>consumer products for wholesale trucking<br>and logistics clients<br> • International to domestic container transload<br>conversion options for shippers<br>MARKET DRIVERS<br>INTERNATIONAL<br> • North American economic<br>and trade conditions<br> • Global trade patterns<br>DOMESTIC<br> • North American economy<br>and consumer spending<br> • North American industrial<br>production<br>$3,823M<br>2023 REVENUES<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 60% International<br>W 40% Domestic<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>CAGR ( 2023 vs. 2019)<br>1,760miles AVERAGE LENGTH OF HAUL (2023)<br>+0.2 % -5.6 % -4.8 % +5.3 %<br>CN | 2024 INVESTOR FACT BOOK UPDATE 13 | |||
| --- | ||||
| Edson<br>Surrey<br>North Battleford<br>Atikokan<br>Brockville<br>Prince George<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>FOREST PRODUCTS<br>TAPPING INTO ONE OF CANADA’S MAJOR NATURAL RESOURCES<br>CN operates North America’s largest forest products railcar fleet with extensive access to Western<br>and Eastern Canadian fibre-rich producing regions. It is also strategically located to serve both the<br>Midwest and Southern U.S. corridors with interline connections to other Class I railroads. CN serves the<br>U.S. housing market by transporting high-quality Canadian lumber, panels and siding. CN also enables<br>customers to move forest products to offshore markets, with its direct access to West Coast ports.<br>CN’S FOREST PRODUCTS SUPPLY CHAIN<br>Lumber and panels<br>Pulp and paper<br>Wood pellets<br>Ports served by CN<br>P CN forest products<br> distribution centres<br>P Wood pellet producers<br>For more information, please visit www.cn.ca/your-industry/forest-products<br>2 Markets Overview Markets Financials<br>14 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Edson<br>Surrey<br>North Battleford<br>Atikokan<br>Brockville<br>Prince George<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>1,808 1,700 1,740<br>2,006 1,943<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>375<br>342 339 330 309<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br>27,187 25,602 25,948 25,020<br>23,141<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>6.65 6.64 6.71<br>8.02 8.40<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>KEY FACTS<br> • Largest rail carrier of forest products<br>in North America<br> • Upgraded fleet of approximately<br>20,000 premium cars, including<br>centrebeams and box cars for lumber,<br>panels, pulp and paper<br>COMMODITIES<br>LUMBER AND PANELS<br> • Lumber, oriented strand board (OSB)<br>panels, plywood, siding, engineered<br>wood products, timber mats<br>PULP AND PAPER<br> • Woodpulp, newsprint, printing paper,<br>paperboard, containerboard, logs,<br>wood chips, wood pellets<br>MARKET DRIVERS<br>LUMBER AND PANELS<br> • Residential construction,<br>repair and remodelling activity,<br>industrial activity<br>PULP AND PAPER<br> • Global consumption of pulp,<br>paper, tissue, packaging and coal<br>substitution for offshore power<br>generation requirements<br>$1,943M<br>2023 REVENUES<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 54% Lumber and Panels<br>W 46% Pulp and Paper<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>CAGR ( 2023 vs. 2019)<br>854 miles AVERAGE LENGTH OF HAUL (2023)<br>+1.8% -4.7% -3.9% +6.0 %<br>CN | 2024 INVESTOR FACT BOOK UPDATE 15 | |||
| --- | ||||
| Scotford<br>Bienfait<br>Flat Rock<br>Hamilton<br>Escanaba<br>Two Harbors<br>Surrey<br>North Vancouver<br>Saguenay<br>Fort McMurray<br>Baie-Comeau<br>Sept-Îles<br>Conneaut<br>Pittsburgh<br>Duluth<br>Sault<br>Ste.Marie<br>Minneapolis/St. Paul<br>Toledo<br>Decatur<br>Jackson<br>Prince George<br>Arcadia<br>Chippewa Falls<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>Calgary<br>Moncton<br>METALS AND MINERALS<br>MATCHMAKING BY CONNECTING PRODUCERS WITH END MARKETS<br>The Metals and Minerals commodity group consists of a wide variety of raw and semi-finished products<br>related to steel, non-ferrous ores and base metals, construction materials, machinery, railway equipment,<br>and dimensional (oversize) loads. Our rail access reaches deep into mining regions rich in metals, minerals,<br>iron ore, and frac sand. With our advantaged origin franchise and our access to key important end markets,<br>CN is one of the top movers of aluminum, iron ore and base metal ore in North America.<br>Metals<br>Minerals<br>Iron ore<br>Ports served by CN<br>E Aluminum smelters<br>P CN metals distribution centres<br>P CN iron ore docks<br>CN’S METALS AND MINERALS SUPPLY CHAIN<br>For more information, please visit www.cn.ca/your-industry/metals-minerals<br>2 Markets Overview Markets Financials<br>16 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Scotford<br>Bienfait<br>Flat Rock<br>Hamilton<br>Escanaba<br>Two Harbors<br>Surrey<br>North Vancouver<br>Saguenay<br>Fort McMurray<br>Baie-Comeau<br>Sept-Îles<br>Conneaut<br>Pittsburgh<br>Duluth<br>Sault<br>Ste.Marie<br>Minneapolis/St. Paul<br>Toledo<br>Decatur<br>Jackson<br>Prince George<br>Arcadia<br>Chippewa Falls<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>Calgary<br>Moncton<br>1,643<br>1,409<br>1,548<br>1,911<br>2,048<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>1,008<br>935 969 956 1,002<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br>25,449<br>21,561<br> 26,743 27,606 28,444<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>6.46 6.53<br>5.79<br>6.92 7.20<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>KEY FACTS<br> • Serves 10 aluminum smelters,<br>more than any other railroad in<br>North America<br> • CN is one of the top movers of<br>aluminum, iron ore and base metal<br>ore in North America<br> • Reaches all the top shale plays in<br>Canada, including the Western Canada<br>Sedimentary Basin<br>COMMODITIES<br>METALS AND MINERALS<br> • Steel, non-ferrous ore and base metals<br>such as aluminum, spodumene<br>(raw lithium), copper, nickel, and zinc<br> • Construction materials, machinery,<br>railway equipment and large loads<br>ENERGY MATERIALS<br> • Frac sand and pipe<br>IRON ORE<br>MARKET DRIVERS<br> • Oil and gas production<br> • Manufacturing production<br>(e.g., automobiles, railcars, heavy<br>equipment, aerospace)<br> • Non-residential construction activity<br> • Large infrastructure projects<br> • World demand for ores and metals<br> • Consumer goods production<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 29% Metals<br>W 26% Minerals<br>W 25% Energy Materials<br>W 20% Iron Ore<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>$2,048M<br>2023 REVENUES<br>CAGR ( 2023 vs. 2019)<br>353 miles AVERAGE LENGTH OF HAUL (2023)<br>+5.7% -0.1% +2.8% +2.7%<br>CN | 2024 INVESTOR FACT BOOK UPDATE 17 | |||
| --- | ||||
| Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>GRAIN AND FERTILIZERS<br>PROVIDING THE AGRICULTURAL INDUSTRY ACCESS TO EXPORT MARKETS<br>The grain and fertilizers segments are driven primarily by crop and fertilizer production in Western Canada<br>and the U.S. Midwest, the majority of which is exported via ports in Prince Rupert, Vancouver, Thunder Bay,<br>the St. Lawrence Seaway, and the U.S. Gulf Coast. The demand for grain, being a food product, is less subject<br>to economic cycles. Grain yields continue to be positive, driven by advancements in crop genetics and crop<br>management practices. CN also ships a variety of fertilizers, predominantly potash for export, as well as<br>ammonium nitrate, anhydrous ammonia, urea and other fertilizers across Canada and the U.S.<br>For more information, please visit:<br>www.cn.ca/your-industry/grain and www.cn.ca/your-industry/fertilizer<br>Canadian grain<br>U.S. grain<br>Fertilizers – potash<br>Fertilizers – other<br> Ports served by CN<br>Canadian grain<br>U.S. grain<br>Fertilizers – potash<br>Fertilizers – other<br> Ports served by CN<br>Canadian grain<br>U.S. grain<br>Fertilizers – potash<br>Fertilizers – other<br> Ports served by CN<br>CN’S GRAIN AND FERTILIZERS SUPPLY CHAIN<br>2 Markets Overview Markets Financials<br>18 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>2,392<br>2,609 2,475<br> 2,783<br>3,265<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>619 663 628 614<br>670<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br>55,597<br>61,736 58,733 55,359<br>63,479<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>4.30 4.23 4.21<br>5.03 5.14<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>COMMODITIES<br>GRAIN<br> • Wheat, canola, peas, oats, barley, corn,<br>soybeans, ethanol, distiller’s dried<br>grains, canola and soybean meal and<br>oil, other oils and fats, malt<br>FERTILIZER<br> • Potash, ammonia nitrate, urea,<br>phosphate fertilizers, anhydrous<br>ammonia, ammonium sulphate,<br>liquid fertilizers<br>MARKET DRIVERS<br>GRAIN<br> • Weather conditions, seeded and<br>harvested acreage, mix of grain<br>crops and crop yield, size and quality<br>of individual crops, international<br>market conditions, foreign<br>government policy<br>FERTILIZER<br> • Input prices, demand, government<br>policies, international competition<br>$3,265M<br>2023 REVENUES<br>W 37% Canadian Grain – Regulated<br>W 13% Canadian Grain – Commercial<br>W 19% U.S. Grain – Domestic<br>W 6% U.S. Grain – Exports<br>W 16% Fertilizers – Potash<br>W 9% Fertilizers – Other<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>KEY FACTS<br> • Canadian grain accounts for roughly<br>2/3 of CN’s grain-related revenue<br> • CN moves Western Canadian grain<br>for export via the ports of Vancouver,<br>Prince Rupert and Thunder Bay<br> • Our U.S. grain footprint stretches<br>from the Midwest to the Gulf Coast<br> • We transport fertilizer throughout<br>North America and to/from ports on<br>the Canadian West and East coasts<br>for import/export<br>CAGR ( 2023 vs. 2019)<br>915miles AVERAGE LENGTH OF HAUL (2023)<br>+8.1% +2.0% +3.4% +4.6%<br>CN | 2024 INVESTOR FACT BOOK UPDATE 19 | |||
| --- | ||||
| East Dubuque<br>Grand Rivers<br>Calvert City<br>Metropolis Mound City<br>Lloydminster<br>Kamloops<br>Fort McMurray<br>East St. Louis<br>Sarnia<br>Baton Rouge<br>Regina<br>Prince George<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>CONNECTING GLOBAL MARKETS – FROM MINE TO EXPORT TERMINALS<br>CN’s Coal commodity group consists of thermal coal used in power plants to generate electricity,<br>metallurgical coal used in steel production, as well as petroleum coke. Canadian coal is predominantly<br>metallurgical coal exported via terminals on the Canadian West Coast. U.S. thermal coal is exported to<br>offshore markets via terminals on the Gulf Coast or shipped domestically to utility plants in the Midwest<br>and Southeast. CN also ships petroleum coke to industrial users in domestic or export markets.<br>COAL<br>For more information, please visit www.cn.ca/your-industry/coal<br>Canadian coal<br>U.S. coal<br>Petroleum coke<br>Ports served by CN<br>P Coal mines<br>P Petroleum coke sourcing<br>P Barge transload terminals<br>E Export terminals<br>CN’S COAL SUPPLY CHAIN<br>2 Markets Overview Markets Financials<br>20 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| East Dubuque<br>Grand Rivers<br>Calvert City<br>Metropolis Mound City<br>Lloydminster<br>Kamloops<br>Fort McMurray<br>East St. Louis<br>Sarnia<br>Baton Rouge<br>Regina<br>Prince George<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg Moncton<br>Calgary<br>658<br>527<br>618<br>937<br>1,017<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>335<br>289<br>379<br>503 511<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br> 17,653<br>16,173<br>18,471<br> 22,679 22,682<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>3.73<br>3.26 3.35<br>4.13<br>4.48<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>KEY FACTS<br> • Canadian coal consists mainly of metallurgical coal destined<br>for steelmaking plants in Asia. Some thermal coal is<br>transported to power plants in the U.S.<br> • U.S. thermal coal is shipped domestically to power plants in<br>the Midwest and Southeast as well as to export terminals<br>in Convent, LA, and Mobile, AL<br> • CN is the only Canadian railway in North America with<br>direct access to coal export terminals on the west coast of<br>Canada and the Gulf of Mexico<br> • In 2023, CN moved approximately 52 million metric tonnes<br>of Canadian and U.S. coal, petroleum coke and<br>metallurgical coke<br>COMMODITIES<br> • Grades of bituminous<br>coal from thermal to<br>metallurgical<br> • Metallurgical coke<br> • Petroleum coke<br>MARKET DRIVERS<br> • Weather<br> • Environmental regulations<br> • Global supply/demand<br>conditions<br> • U.S. and global demand<br>for energy and steel<br> • North American and<br>European natural gas prices<br>$1,017M<br>2023 REVENUES<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 53% Canadian Coal – Export<br>W 21% Petroleum Coke<br>W 13% U.S. Coal – Export<br>W 13% U.S. Coal – Domestic<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>CAGR ( 2023 vs. 2019)<br>392miles AVERAGE LENGTH OF HAUL (2023)<br>+11.5% +11.1% +6.5% +4.7%<br>CN | 2024 INVESTOR FACT BOOK UPDATE 21 | |||
| --- | ||||
| Scotford<br>Flat Rock<br>Hamilton<br>Ferndale, WA<br>Mont Belvieu, TX<br>Blue Hills<br>North Vancouver Kamloops<br>Hay River<br>Fort McMurray<br>Sarnia<br>Baton Rouge<br>Regina<br>Prince George<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>Calgary<br>Moncton<br>FACILITATING GLOBAL DEMAND FOR ENERGY<br>CN serves petroleum and chemical producers in the Alberta Industrial Heartland, the Louisiana<br>Petrochemical Corridor, and the Sarnia Petrochemical and Refining Complex, among others. With extensive<br>reach to key destinations for refined fuels, home heating, and chemical production, CN offers customers<br>access to growing domestic markets vital for economic development. CN’s access to ports in Prince Rupert,<br>Vancouver, Montreal, and Mobile provides customers access to growing international markets for propane,<br>plastics, and renewable products.<br>PETROLEUM AND CHEMICALS<br>For more information, please visit www.cn.ca/your-industry/petroleum-chemicals<br>Petroleum<br>Chemicals<br> and plastics<br>Sulfur<br> Natural gas liquids<br>Ports served by CN<br>P CargoFlo®<br>P Propane export facility<br>P Petrochemical facility<br>P Petrochemical hub<br> Shale play<br>CN’S PETROLEUM AND CHEMICALS<br>SUPPLY CHAIN<br>222 Markets Markets Overview Markets Financials<br>22 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Scotford<br>Flat Rock<br>Hamilton<br>Ferndale, WA<br>Mont Belvieu, TX<br>Blue Hills<br>North Vancouver Kamloops<br>Hay River<br>Fort McMurray<br>Sarnia<br>Baton Rouge<br>Regina<br>Prince George<br>Joliet<br>Mobile<br>Quebec<br>Montreal<br> New Orleans<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Thunder Bay<br>Winnipeg<br>Calgary<br>Moncton<br> 3,052<br>2,631 2,816<br>3,229 3,195<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>688<br>597 596 636 634<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br>53,989<br>43,556 42,436<br>46,273 43,846<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>5.65 6.04<br>6.64 6.98 7.29<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>KEY FACTS<br> • CN is the only rail carrier servicing<br>three key petrochemical hubs in<br>North America: Alberta, Louisiana<br>and Ontario<br> • CN handles over 50% of all Canadian<br>chemical production<br> • Petroleum and chemical shipments<br>move in customer-supplied private cars<br> • Export expansion projects on<br>Canada’s West Coast supporting<br>growth in propane, plastics, and<br>other petrochemical commodities<br>COMMODITIES<br>PETROLEUM PRODUCTS<br> • Propane, butane, crude oil, gasoline, diesel, jet<br>fuel, fuel oil, lubricants, asphalt, condensate<br>CHEMICALS AND PLASTICS<br> • Polyethylene, polyvinyl chloride (PVC), caustic<br>soda, sulfuric acid, pulp mill chemicals<br>SULFUR<br> • Molten and prilled sulfur<br>RENEWABLE PRODUCTS<br> • Biodiesel, renewable propane, condensate and<br>diesel, sustainable aviation fuel (SAF)<br>MARKET DRIVERS<br> • North American and international<br>economic growth<br> • Chemicals and plastics<br>feedstock prices<br> • North American liquified natural<br>gas (LNG) production<br> • Demand for propane for heating<br>and crop drying<br> • North American hydrogen production<br>and investment in clean energy<br> • GHG reduction through renewable<br>diesel, biodiesel and SAF<br>$3,195M<br>2023 REVENUES<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 47% Refined Petroleum Products<br>W 39% Chemicals and Plastics<br>W 9% Crude and Condensate<br>W 5% Sulfur<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>CAGR ( 2023 vs. 2019)<br>790 miles AVERAGE LENGTH OF HAUL (2023)<br>+1.2% -2.0% -5.1% +6.6%<br>CN | 2024 INVESTOR FACT BOOK UPDATE 23 | |||
| --- | ||||
| Windsor<br>Markham<br>Charny<br>St. John’s<br>New Richmond<br>Jackson<br>Mobile<br>Quebec<br>Montreal<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Winnipeg<br>Calgary<br>Moncton<br>Sarnia<br>Thunder Bay<br> New Orleans<br>MOVING VEHICLES AND PARTS TO MAJOR POPULATION CENTRES<br>The Automotive commodity group moves finished vehicles and auto parts across North America,<br>providing service to assembly and production facilities in Ontario, Michigan, and Mississippi. CN extends<br>its services to shippers of finished vehicles and parts for import through key ports of Vancouver and<br>Halifax, which includes Canada’s exclusive East Coast vehicle import facility. CN Autoport provides value<br>added services and loading/unloading at CN locations across the network. Additionally, CN facilitates<br>rail connections to all Class I carriers at major gateways.<br>AUTOMOTIVE<br>For more information, please visit www.cn.ca/your-industry/automotive<br>Finished vehicles<br>Auto parts<br> Ports served by CN<br>P Automotive compounds<br>CN’S AUTOMOTIVE SUPPLY CHAIN<br>2 Markets Overview Markets Financials<br>24 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Windsor<br>Markham<br>Charny<br>St. John’s<br>New Richmond<br>Jackson<br>Mobile<br>Quebec<br>Montreal<br>Prince Rupert<br>Vancouver<br>Halifax<br>Saint John<br>Saskatoon<br>Chicago<br>Memphis<br>Edmonton<br>Toronto<br>Detroit<br>Winnipeg<br>Calgary<br>Moncton<br>Sarnia<br>Thunder Bay<br> New Orleans<br>858<br>591 576<br>797<br>945<br>REVENUES<br>($ millions)<br>2019 2020 2021 2022 2023<br>269<br>187 179<br>208<br>232<br>CARLOADS<br>(thousands)<br>2019 2020 2021 2022 2023<br>3,735<br>2,597 2,395<br>2,822<br>3,136<br>RTMs<br>(millions)<br>2019 2020 2021 2022 2023<br>22.97 22.76 24.05<br>28.24 30.13<br>FREIGHT REVENUE<br>PER RTM<br>(cents)<br>2019 2020 2021 2022 2023<br>COMMODITIES<br> • Finished vehicles<br> • Auto parts<br>MARKET DRIVERS<br> • Global and North American automotive<br>production and sales<br> • Consumer confidence and<br>disposable income<br> • Average age of vehicles in North America<br> • Auto dealer inventory levels<br> • Price of fuel<br> • Zero-emission Vehicles (ZEV) adoption<br>and transition<br>$945M<br>2023 REVENUES<br>BUSINESS UNIT OVERVIEW AND MARKET DRIVERS<br>W 93% Finished Vehicles<br>W 7% Auto Parts<br>2023 COMMODITY BREAKDOWN<br>(% of revenues)<br>CAGR ( 2023 vs. 2019)<br>680 miles AVERAGE LENGTH OF HAUL (2023)<br>+2.4% -3.6% -4.3% +7.0%<br>KEY FACTS<br> • Over 2 million finished vehicles<br>handled annually<br> • 18 automotive compounds accessing 12<br>North American vehicle assembly plants<br> • 5,000 multi-level railcars<br> • Two import ports for finished vehicles<br>in Vancouver and Halifax<br> • Six ports handle containerized auto<br>parts in Vancouver, Prince Rupert, Mobile,<br>Saint John, Montreal and Halifax<br>CN | 2024 INVESTOR FACT BOOK UPDATE 25 | |||
| --- | ||||
| Going to<br>(1) See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>(2) Net of amounts reimbursed by customers.<br>(3) See Forward-Looking Statements on the inside front cover for a summary of key assumptions and important risk factors underlying CN’s 2024-2026<br>financial outlook.<br>(4) Dividends and share repurchases are subject to Board approval.<br>FINANCIAL<br>OVERVIEW<br>CREATING SUSTAINABLE, LONG-TERM VALUE<br>At CN, we are dedicated to driving long-term shareholder value through profitable top-line growth,<br>strong cash flow, and a consistent capital allocation policy. We strategically invest in our network<br>and infrastructure to enhance safety, efficiency, and resilience while fostering growth. We are dedicated<br>to rewarding shareholders through a predictable dividend and executing annual share repurchase<br>programs to achieve a targeted leverage ratio.<br>In 2023, we delivered $8.53 diluted earnings per share (EPS) and $7.28 in adjusted diluted EPS, (1) and<br>strategically invested $3.1 billion (2) to strengthen and expand our network. We also delivered an adjusted<br>return on invested capital (ROIC) of 14.5%. (1)<br>With our scheduled operating model in place and a strong leadership team to execute, we are<br>dedicated to delivering on the longer-term growth plans outlined in our 2024–2026 financial outlook<br>presented at our 2023 Investor Day.<br>10%–15%<br>DILUTED EPS CAGR<br>2.5X<br>ADJUSTED DEBT-TO-ADJUSTED<br>EBITDA OVER TIME<br>15%–17%<br>ANNUAL ROIC<br>BRINGING<br>TOP LINE GROWTH<br>TO THE BOTTOM LINE<br> Growing faster than the economy,<br>supported by our CN-specific<br>initiatives, and pricing ahead of<br>rail inflation<br> Incremental efficiency<br>improvements<br>DISCIPLINED<br>INVESTMENT<br>IN THE BUSINESS<br> Annual CAPEX going from<br>~$3.5B (2024) to ~$4.0B (2026)<br> Efficient capital deployment<br>to support network safety,<br>improve efficiency and resiliency,<br>and enable growth at low<br>incremental cost<br>CONSISTENT<br>APPROACH TO<br>CAPITAL ALLOCATION<br> Reinvesting in the business<br> Maintaining a strong<br>balance sheet<br> Dividend growth in line with<br>earnings growth and share<br>repurchases4)<br>2024-2026 Financial Outlook(3)<br>3 Financials Overview Markets Financials<br>26 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Unaudited<br>($ millions, unless otherwise indicated)<br>2022 2023<br>Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year<br>REVENUES 3,708 4,344 4,513 4,542 17,107 4,313 4,057 3,987 4,471 16,828<br>OPERATING EXPENSES<br>Labor and fringe benefits 753 681 770 731 2,935 812 747 773 818 3,150<br>Purchased services and material 538 557 520 576 2,191 593 571 534 556 2,254<br>Fuel 525 672 649 672 2,518 557 485 486 569 2,097<br>Depreciation and amortization 420 423 435 451 1,729 448 449 457 463 1,817<br>Equipment rents 95 87 72 84 338 90 83 89 97 359<br>Casualty and other 150 155 135 116 556 151 122 131 150 554<br>Total operating expenses 2,481 2,575 2,581 2,630 10,267 2,651 2,457 2,470 2,653 10,231<br>Operating income 1,227 1,769 1,932 1,912 6,840 1,662 1,600 1,517 1,818 6,597<br>Interest expense (126) (128) (141) (153) (548) (165) (173) (185) (199) (722)<br>Other components of net periodic benefit income 125 124 125 124 498 119 120 121 119 479<br>Other income (loss) (14) (10) (1) (2) (27) 1 1 (2) 134 134<br>Income before income taxes 1,212 1,755 1,915 1,881 6,763 1,617 1,548 1,451 1,872 6,488<br>Income tax recovery (expense) (294) (430) (460) (461) (1,645) (397) (381) (343) 258 (863)<br>Net income 918 1,325 1,455 1,420 5,118 1,220 1,167 1,108 2,130 5,625<br>Operating ratio 66.9% 59.3% 57.2% 57.9% 60.0% 61.5% 60.6% 62.0% 59.3% 60.8%<br>EARNINGS PER SHARE ($)<br>Basic 1.31 1.92 2.13 2.10 7.46 1.83 1.76 1.69 3.30 8.55<br>Diluted 1.31 1.92 2.13 2.10 7.44 1.82 1.76 1.69 3.29 8.53<br>WEIGHTED AVERAGE NUMBER<br>OF SHARES (millions)<br>Basic 698.4 690.0 682.3 674.9 686.4 668.3 661.6 654.3 646.4 657.7<br>Diluted 700.2 691.7 684.3 676.9 688.3 669.9 663.1 655.6 647.6 659.1<br>Dividends declared per share ($) 0.7325 0.7325 0.7325 0.7325 2.9300 0.7900 0.7900 0.7900 0.7900 3.1600<br>Quarterly Consolidated<br>Statements of Income<br>For more information on our financial results, please visit www.cn.ca/investors/financial-results<br>(1) See section entitled Non-GAAP Measures for an explanation of these non-GAAP measures.<br>(2) Net of amounts reimbursed by customers.<br>(3) See Forward-Looking Statements on the inside front cover for a summary of key assumptions and important risk factors underlying CN’s 2024-2026<br>financial outlook.<br>(4) Dividends and share repurchases are subject to Board approval.<br>CN | 2024 INVESTOR FACT BOOK UPDATE 27 | |||
| --- | ||||
| Quarterly Consolidated<br>Balance Sheets<br>Unaudited<br>($ millions)<br>2022 2023<br>Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4<br>ASSETS<br>Current assets<br>Cash and cash equivalents 490 465 403 328 484 539 491 475<br>Restricted cash and cash equivalents 555 555 503 506 453 451 451 449<br>Accounts receivable 1,318 1,358 1,526 1,371 1,385 1,223 1,284 1,300<br>Material and supplies 660 731 706 692 764 757 761 699<br>Other current assets 216 245 251 320 330 296 384 166<br>Total current assets 3,239 3,354 3,389 3,217 3,416 3,266 3,371 3,089<br>Properties 40,944 41,761 43,450 43,537 43,499 43,546 44,525 44,617<br>Operating lease right-of-use assets 443 429 483 470 443 416 432 424<br>Pension asset 3,199 3,331 3,460 3,033 3,139 3,245 3,350 3,140<br>Deferred income tax assets – – – – – – – 682<br>Intangible assets, goodwill and other 411 410 424 405 406 403 411 714<br>Total assets 48,236 49,285 51,206 50,662 50,903 50,876 52,089 52,666<br>LIABILITIES AND SHAREHOLDERS’ EQUITY<br>Current liabilities<br>Accounts payable and other 2,344 2,309 2,565 2,785 2,289 2,394 2,360 2,695<br>Current portion of long-term debt 1,504 2,447 792 1,057 2,325 1,107 2,296 2,340<br>Total current liabilities 3,848 4,756 3,357 3,842 4,614 3,501 4,656 5,035<br>Deferred income tax liabilities 9,278 9,503 9,841 9,796 9,858 9,910 10,134 10,066<br>Other liabilities and deferred credits 418 435 439 441 445 461 453 522<br>Pension and other postretirement benefits 639 610 612 486 484 480 480 495<br>Long-term debt 11,879 11,925 14,600 14,372 14,323 15,831 16,086 16,133<br>Operating lease liabilities 322 312 357 341 320 295 309 298<br>Total liabilities 26,384 27,541 29,206 29,278 30,044 30,478 32,118 32,549<br>SHAREHOLDERS’ EQUITY<br>Common shares 3,695 3,660 3,625 3,613 3,589 3,573 3,533 3,512<br>Common shares in Share Trusts (88) (88) (88) (170) (141) (142) (143) (144)<br>Additional paid-in capital 382 374 378 381 360 369 375 373<br>Accumulated other comprehensive loss (2,280) (2,019) (1,546) (1,969) (1,986) (2,079) (1,910) (2,279)<br>Retained earnings 20,143 19,817 19,631 19,529 19,037 18,677 18,116 18,655<br>Total shareholders’ equity 21,852 21,744 22,000 21,384 20,859 20,398 19,971 20,117<br>Total liabilities and shareholders' equity 48,236 49,285 51,206 50,662 50,903 50,876 52,089 52,666<br>3 Financials Overview Markets Financials<br>28 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Quarterly Consolidated<br>Statements of Cash Flows<br>Unaudited<br>($ millions)<br>2022 2023<br>Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year<br>OPERATING ACTIVITIES<br>Net income 918 1,325 1,455 1,420 5,118 1,220 1,167 1,108 2,130 5,625<br>Adjustments to reconcile net income<br>to net cash provided by<br>operating activities:<br> Depreciation and amortization 420 423 435 451 1,729 448 449 457 463 1,817<br> Pension income and funding (112) (92) (91) (92) (387) (105) (105) (104) (104) (418)<br> Gain on disposal of property – – – – – – – – (129) (129)<br> Deferred income taxes (12) 120 108 188 404 70 109 124 (591) (288)<br>Changes in operating assets<br>and liabilities:<br> Accounts receivable (255) (29) (132) 126 (290) (21) 165 (55) (18) 71<br> Material and supplies (67) (65) 39 11 (82) (73) 3 8 44 (18)<br> Accounts payable and other (369) (52) 140 272 (9) (557) 105 (81) 342 (191)<br> Other current assets (43) 25 58 (70) (30) (30) 51 (6) 70 85<br>Other operating activities, net 90 58 100 (34) 214 103 41 61 206 411<br>Net cash provided by<br>operating activities 570 1,713 2,112 2,272 6,667 1,055 1,985 1,512 2,413 6,965<br>INVESTING ACTIVITIES<br>Property additions (379) (707) (744) (920) (2,750) (461) (875) (917) (934) (3,187)<br>Proceeds from disposal of property - - - - – - - - 129 129<br>Business acquisitions and combinations - - - - – - - - (390) (390)<br>Proceeds from assets held for sale 273 - - - 273 - - - - –<br>Other investing activities, net 5 (9) (12) (17) (33) (1) (10) (14) 5 (20)<br>Net cash used in investing activities (101) (716) (756) (937) (2,510) (462) (885) (931) (1,190) (3,468)<br>CN | 2024 INVESTOR FACT BOOK UPDATE 29 | |||
| --- | ||||
| Unaudited<br>($ millions)<br>2022 2023<br>Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year<br>FINANCING ACTIVITIES<br>Issuance of debt - - 1,899 - 1,899 - 1,730 - 824 2,554<br>Repayment of debt (17) (12) (10) (344) (383) (12) (215) (11) (12) (250)<br>Change in commercial paper, net 1,020 686 (1,745) 602 563 1,228 (989) 1,073 (404) 908<br>Settlement of foreign exchange<br>forward contracts on debt (1) 13 49 18 79 10 (12) 23 17 38<br>Issuance of common shares for<br>stock options exercised 29 6 5 21 61 13 18 2 16 49<br>Withholding taxes remitted on the net<br>settlement of equity settled awards (23) (18) (3) - (44) (35) (2) (1) (13) (51)<br>Repurchase of common shares (1,258) (1,172) (1,157) (1,122) (4,709) (1,160) (1,045) (1,194) (1,152) (4,551)<br>Purchase of common shares for<br>settlement of equity settled awards - (16) (7) (1) (24) (1) (2) (1) - (4)<br>Purchase of common shares by Share Trusts (6) (6) (6) (87) (105) (7) (7) (7) (7) (28)<br>Dividends paid (509) (504) (498) (493) (2,004) (526) (521) (515) (509) (2,071)<br>Net cash used in financing activities (765) (1,023) (1,473) (1,406) (4,667) (490) (1,045) (631) (1,240) (3,406)<br>Effect of foreign exchange fluctuations on<br>cash, cash equivalents, restricted cash, and<br>restricted cash equivalents - 1 3 (1) 3 - (2) 2 (1) (1)<br>Net increase (decrease) in cash, cash equivalents,<br>restricted cash, and restricted cash equivalents (296) (25) (114) (72) (507) 103 53 (48) (18) 90<br>Cash, cash equivalents, restricted cash, and<br>restricted cash equivalents, beginning of period 1,341 1,045 1,020 906 1,341 834 937 990 942 834<br>Cash, cash equivalents, restricted cash, and<br>restricted cash equivalents, end of period 1,045 1,020 906 834 834 937 990 942 924 924<br>Cash and cash equivalents, end of period 490 465 403 328 328 484 539 491 475 475<br>Restricted cash and cash equivalents, end of period 555 555 503 506 506 453 451 451 449 449<br>Cash, cash equivalents, restricted cash,<br>and restricted cash equivalents, end of period 1,045 1,020 906 834 834 937 990 942 924 924<br>SUPPLEMENTAL<br>CASH FLOW INFORMATION<br>Interest paid (171) (86) (182) (103) (542) (251) (115) (256) (154) (776)<br>Income taxes paid (320) (370) (264) (334) (1,288) (424) (284) (279) (210) (1,197)<br>Quarterly Consolidated Statements<br>of Cash Flows (cont.)<br>3 Financials Overview Markets Financials<br>30 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Quarterly Financial and<br>Statistical Data<br>Unaudited<br>2022 2023<br>Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year<br>REVENUES ($ millions)<br>Petroleum and chemicals 756 829 850 794 3,229 828 748 758 861 3,195<br>Metals and minerals 406 466 539 500 1,911 529 497 515 507 2,048<br>Forest products 426 513 550 517 2,006 511 480 466 486 1,943<br>Coal 195 249 258 235 937 263 263 242 249 1,017<br>Grain and fertilizers 604 604 621 954 2,783 861 688 722 994 3,265<br>Intermodal 1,056 1,326 1,340 1,184 4,906 1,012 983 880 948 3,823<br>Automotive 165 208 208 216 797 215 235 237 258 945<br>Total freight revenues 3,608 4,195 4,366 4,400 16,569 4,219 3,894 3,820 4,303 16,236<br>Other revenues 100 149 147 142 538 94 163 167 168 592<br>Total revenues 3,708 4,344 4,513 4,542 17,107 4,313 4,057 3,987 4,471 16,828<br>STATISTICAL OPERATING DATA<br>Gross ton miles (GTMs) (millions) 111,066 120,742 115,585 116,317 463,710 115,442 109,693 108,221 118,687 452,043<br>Revenue ton miles (RTMs) (millions) 56,554 60,551 58,540 60,143 235,788 59,961 55,877 55,640 61,136 232,614<br>Carloads (thousands) 1,346 1,474 1,469 1,408 5,697 1,353 1,369 1,326 1,388 5,436<br>Route miles (includes Canada and the U.S.) 18,600 18,600 18,600 18,600 18,600 18,600 18,600 18,600 18,800 18,800<br>Employees (end of period) 22,953 22,783 23,828 23,971 23,971 24,718 25,178 25,101 24,987 24,987<br>Employees (average for the period) 22,720 23,137 23,729 23,998 23,396 24,403 25,005 25,168 25,102 24,920<br>KEY OPERATING MEASURES<br>Freight revenue per RTM (cents) 6.38 6.93 7.46 7.32 7.03 7.04 6.97 6.87 7.04 6.98<br>Freight revenue per carload ($) 2,681 2,846 2,972 3,125 2,908 3,118 2,844 2,881 3,100 2,987<br>GTMs per average number of employees (thousands) 4,888 5,219 4,871 4,847 19,820 4,731 4,387 4,300 4,728 18,140<br>Operating expenses per GTM (cents) 2.23 2.13 2.23 2.26 2.21 2.30 2.24 2.28 2.24 2.26<br>Labor and fringe benefits expense per GTM (cents) 0.68 0.56 0.67 0.63 0.63 0.70 0.68 0.71 0.69 0.70<br>Diesel fuel consumed (US gallons in millions) 101.1 101.2 96.9 103.0 402.2 104.1 97.4 90.0 103.7 395.2<br>Average fuel price ($/US gallon) 4.42 5.82 5.70 5.73 5.42 4.79 4.24 4.66 4.76 4.62<br>Fuel efficiency (US gallons of locomotive fuel<br>consumed per 1,000 GTMs) 0.910 0.838 0.838 0.886 0.867 0.902 0.888 0.832 0.874 0.874<br>SAFETY INDICATORS(1)<br>Injury frequency rate (per 200,000 person-hours) 1.23 1.21 1.01 0.92 1.10 0.98 1.00 1.07 0.79 0.96<br>Accident rate (per million train miles) 2.78 1.82 1.69 2.12 2.10 1.53 1.91 1.86 1.51 1.74<br>Statistical operating data, key operating measures and safety indicators are unaudited and based on estimated data available<br>at such time and are subject to change as more complete information becomes available. Definitions of these indicators are<br>provided on our website, www.cn.ca/glossary.<br>(1) Based on Federal Railroad Administration (FRA) reporting criteria.<br>CN | 2024 INVESTOR FACT BOOK UPDATE 31 | |||
| --- | ||||
| Non-GAAP Measures<br>CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN may use non-GAAP measures that do not have any standardized meaning prescribed by GAAP, including adjusted performance measures, free cash<br>flow, adjusted debt-to-adjusted EBITDA multiple and return on invested capital (ROIC) and adjusted ROIC. These non-GAAP measures<br>may not be comparable to similar measures presented by other companies. From management’s perspective, these non-GAAP measures<br>are useful measures of performance and provide investors with supplementary information to assess the Company’s results of operations<br>and liquidity. These non-GAAP measures should not be considered in isolation or as a substitute for financial measures prepared in<br>accordance with GAAP.<br>Adjusted Performance Measures<br>Adjusted net income, adjusted diluted earnings per share,<br>adjusted operating income, adjusted operating expenses and<br>adjusted operating ratio are non-GAAP measures that are<br>used to set performance goals and to measure CN’s<br>performance. Management believes that these adjusted<br>performance measures provide additional insight to<br>management and investors into the Company’s operations<br>and underlying business trends as well as facilitate period-to-period comparisons, as they exclude certain significant items<br>that are not reflective of CN’s underlying business operations<br>and could distort the analysis of trends in business<br>performance.<br>These items may include:<br>i. operating expense adjustments: workforce reduction<br>program, depreciation expense on the deployment of<br>replacement system, advisory fees related to shareholder<br>matters, losses and recoveries from assets held for sale,<br>business acquisition-related costs;<br>ii. non-operating expense adjustments: business acquisition-related financing fees, merger termination income, gains<br>and losses on disposal of property; and<br>iii. the effect of changes in tax laws including rate enactments,<br>and changes in tax positions affecting prior years.<br>These non-GAAP measures do not have any standardized<br>meaning prescribed by GAAP and, therefore, may not be<br>comparable to similar measures presented by other<br>companies.<br>Adjusted net income is defined as Net income in accordance<br>with GAAP adjusted for certain significant items. Adjusted<br>diluted earnings per share is defined as adjusted net income<br>divided by the weighted-average diluted shares outstanding.<br>3 Financials Overview Markets Financials<br>32 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| Unaudited<br>($ millions, except per share data)<br>Year ended December 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023<br>Net income (1) 3,135 3,529 3,630 5,470 4,312 4,198 3,545 4,899 5,118 5,625<br>Adjustments:<br>Operating expense adjustments:<br> Workforce reduction program – – – – 27 31 – 39 - -<br> Depreciation expense on the<br> deployment of replacement system – – – – – 84 – – - -<br> Advisory fees related to<br> shareholder matters – – – – – – – 20 22 -<br> Loss (recovery) on assets held for sale – – – – – – 486 (137) - -<br> Transaction-related costs – – – – – – – 84 - -<br>Non-operating expense adjustments:<br> Amortization of bridge financing<br> and other fees – - - - – – – 97 - -<br> Merger termination fee - - - - – – – (886) - -<br> Gains on disposal of property (80) – 76 – (338) – – – - (129)<br>Tax adjustments:<br> Tax-deductible goodwill and<br> related impacts (2) – – – – – – – – - (713)<br> Tax effect of adjustments (2) 8 – 10 – 39 (30) (123) 109 (6) 17<br> Tax law changes and rate enactments – 42 7 (1,706) – (112) (141) – - -<br>Total adjustments (72) 42 (59) (1,706) (272) (27) 222 (674) 16 (825)<br>Adjusted net income (1) 3,063 3,571 3,571 3,764 4,040 4,171 3,767 4,225 5,134 4,800<br>Diluted earnings per share (1) 3.81 4.38 4.66 7.22 5.85 5.81 4.97 6.90 7.44 8.53<br>Impact of adjustments, per share (0.09) 0.05 (0.08) (2.25) (0.37) (0.03) 0.31 (0.95) 0.02 (1.25)<br>Adjusted diluted earnings per share (1) 3.72 4.43 4.58 4.97 5.48 5.78 5.28 5.95 7.46 7.28<br>The following table provides a reconciliation of Net income and Earnings per share in accordance with GAAP, as reported for<br>the periods specified, to the non-GAAP adjusted performance measures presented herein:<br>(1) In the first quarter of 2022, the Company changed its method of calculating market-related values of pension assets for its defined benefit plans using a retrospective<br>approach. See the Company’s selected financial information restated for change in accounting policy filed on September 9, 2022, which may be found online on SEDAR+ at<br>www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for additional information.<br>(2) The tax impact of adjustments is based on the nature of the item for tax purposes and related tax rates in the applicable jurisdiction.<br><br>For the year ended December 31, 2023, the Company’s<br>adjusted net income was $4,800 million, or $7.28 per diluted<br>share, which excludes:<br> • a gain on disposal of property within the Bala Subdivision<br>located in Markham and Richmond Hill, Ontario, Canada<br>of $129 million, or $112 million after-tax ($0.17 per diluted<br>share) recorded in the fourth quarter in Other income within<br>the Consolidated Statements of Income; and<br> • a net deferred income tax recovery of $713 million ($1.08<br>per diluted share) recorded in the fourth quarter resulting<br>from tax filings consistent with a ruling that the Company<br>received in a non-U.S. foreign jurisdiction in connection<br>with prior taxation years.<br>For the year ended December 31, 2022, the Company's<br>adjusted net income was $5,134 million, or $7.46 per diluted<br>share, which excludes advisory fees related to shareholder<br>matters of $22 million, or $16 million after-tax ($0.02 per<br>diluted share) of which $12 million, or $9 million after-tax<br>($0.01 per diluted share) was recorded in the second quarter<br>and $10 million, or $7 million after-tax ($0.01 per diluted share)<br>was recorded in the first quarter in Other expense within the<br>Consolidated Statements of Income.<br>CN | 2024 INVESTOR FACT BOOK UPDATE 33 | |||
| --- | ||||
| For the year ended December 31, 2021, the Company reported<br>adjusted net income of $4,225 million,(1) or $5.95 per diluted<br>share,(2) which excludes:<br> • employee termination benefits and severance costs<br>related to a workforce reduction program of $39 million, or<br>$29 million after-tax ($0.04 per diluted share) recorded in<br>the third quarter in Labor and fringe benefits within the<br>Consolidated Statements of Income;<br> • advisory fees related to shareholder matters of $20 million,<br>or $15 million after-tax ($0.02 per diluted share) of which<br>$13 million, or $10 million after-tax ($0.01 per diluted share)<br>was recorded in the fourth quarter and $7 million, or<br>$5 million after-tax ($0.01 per diluted share) was recorded<br>in the third quarter in Other expense within the<br>Consolidated Statements of Income;<br> • the recovery of $137 million, or $102 million after-tax<br>($0.14 per diluted share) recorded in the first quarter related<br>to the loss on assets held for sale in the second quarter<br>of 2020, to reflect an agreement for the sale for ongoing<br>rail operations, certain non-core rail lines in Wisconsin,<br>Michigan and Ontario to a short line operator;<br> • transaction-related costs, consisting of an advance to<br>Kansas City Southern (KCS) and a related refund, net of<br>transaction costs, of $84 million, or $70 million after-tax<br>($0.10 per diluted share), recorded in the third quarter<br>resulting from the terminated CN Merger Agreement<br>with KCS;<br> • amortization of bridge financing and other fees of<br>$97 million, or $84 million after-tax ($0.11 per diluted share),<br>of which $65 million, or $60 million after-tax ($0.08 per<br>diluted share) was recorded in the third quarter and<br>$32 million, or $24 million after-tax ($0.03 per diluted share)<br>was recorded in the second quarter, resulting from the<br>KCS transaction, recorded in Interest expense within the<br>Consolidated Statements of Income; and<br> • merger termination fee paid by KCS to CN of $886 million,<br>or $770 million after-tax ($1.08 per diluted share), recorded<br>in the third quarter resulting from KCS’ notice of termination<br>of the CN Merger Agreement with KCS.<br>For the year ended December 31, 2020, the Company reported<br>adjusted net income of $3,767 million,(1) or $5.28 per diluted<br>share,(1) which excludes a loss of $486 million, or $363 million<br>after-tax ($0.51 per diluted share) in the second quarter,<br>resulting from the Company’s decision to market for sale for<br>ongoing rail operations, certain non-core lines in Wisconsin,<br>Michigan and Ontario, and a current income tax recovery<br>of $141 million ($0.20 per diluted share) in the first quarter<br>resulting from the enactment of the Coronavirus Aid, Relief,<br>and Economic Security (CARES) Act, a U.S. tax-and-spending<br>package aimed at providing additional stimulus to address<br>the economic impact of the COVID-19 pandemic.<br>For the year ended December 31, 2019, the Company reported<br>adjusted net income of $4,171 million,(1) or $5.78 per diluted<br>share,(1) which excludes employee termination benefits and<br>severance costs related to a workforce reduction program of<br>$31 million, or $23 million after-tax ($0.03 per diluted share)<br>in the fourth quarter; a deferred income tax recovery of<br>$112 million ($0.15 per diluted share) in the second quarter,<br>resulting from the enactment of a lower provincial corporate<br>income tax rate; and a depreciation expense of $84 million,<br>or $62 million after-tax ($0.09 per diluted share) in the first<br>quarter, related to costs previously capitalized for a Positive<br>Train Control (PTC) back office system following the<br>deployment of a replacement system.<br>For the year ended December 31, 2018, the Company reported<br>adjusted net income of $4,040 million,(1) or $5.48 per diluted<br>share,(1) which excludes employee termination benefits and<br>severance costs related to a workforce reduction program of<br>$27 million, or $20 million after-tax ($0.03 per diluted share)<br>in the fourth quarter and gains on disposal of property of<br>$338 million, or $292 million after-tax ($0.40 per diluted share),<br>consisting of the following:<br> • in the fourth quarter, a gain previously deferred on the 2014<br>disposal of a segment of the Guelph Subdivision located<br>between Georgetown and Kitchener, Ontario, together with<br>the rail fixtures and certain passenger agreements (the<br> “Guelph”), of $79 million, or $70 million after-tax ($0.10 per<br>diluted share);<br>Non-GAAP Measures (cont.)<br>(1) In the first quarter of 2022, the Company changed its method of calculating market-related values of pension assets for its defined benefit plans using a retrospective<br>approach. See the Company’s selected financial information restated for change in accounting policy filed on September 9, 2022, which may be found online on SEDAR+ at<br>www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for additional information.<br>3 Financials Overview Markets Financials<br>34 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| • in the third quarter, a gain on disposal of property located<br>in Montreal, Quebec, (the “Doney and St-François Spurs”)<br>of $36 million, or $32 million after-tax ($0.04 per diluted<br>share); and<br> • in the second quarter, a gain on transfer of the Company’s<br>finance lease in the passenger rail facilities in Montreal,<br>Quebec, together with its interests in related railway<br>operating agreements (the “Central Station Railway Lease”),<br>of $184 million, or $156 million after-tax ($0.21 per diluted<br>share), and a gain on disposal of land located in Calgary,<br>Alberta, excluding the rail fixtures (the “Calgary Industrial<br>Lead”), of $39 million, or $34 million after-tax ($0.05 per<br>diluted share).<br>For the year ended December 31, 2017, the Company<br>reported adjusted net income of $3,764 million,(1) or $4.97 per<br>diluted share,(1) which excludes a net deferred income tax<br>recovery of $1,706 million ($2.25 per diluted share) consisting<br>of the following:<br> • in the fourth quarter, a deferred income tax recovery of<br>$1,764 million ($2.33 per diluted share) resulting from the<br>enactment of a lower U.S. federal corporate income tax<br>rate due to the Tax Cuts and Jobs Act (“U.S. Tax Reform”)<br>and a deferred income tax expense of $50 million<br>($0.07 per diluted share) resulting from the enactment<br>of higher provincial corporate income tax rates;<br> • in the third quarter, a deferred income tax expense of<br>$31 million ($0.04 per diluted share) resulting from the<br>enactment of a higher state corporate income tax rate;<br> • in the second quarter, a deferred income tax recovery<br>of $18 million ($0.02 per diluted share) resulting from the<br>enactment of a lower provincial corporate income<br>tax rate; and<br> • in the first quarter, a deferred income tax recovery of<br>$5 million ($0.01 per diluted share) resulting from the<br>enactment of a lower provincial corporate income<br>tax rate.<br>For the year ended December 31, 2016, the Company reported<br>adjusted net income of $3,571 million,(1) or $4.58 per diluted<br>share,(1) which excludes a gain on disposal of approximately one<br>mile of elevated track leading into Montreal’s Central Station,<br>together with the rail fixtures, of $76 million, or $66 million<br>after-tax ($0.09 per diluted share) in the fourth quarter, and a<br>deferred income tax expense of $7 million ($0.01 per diluted<br>share) resulting from the enactment of a higher provincial<br>corporate income tax rate in the second quarter.<br>For the year ended December 31, 2015, the Company reported<br>adjusted net income of $3,571 million,(1) or $4.43 per diluted<br>share,(1) which excludes a deferred income tax expense of<br>$42 million ($0.05 per diluted share) resulting from the<br>enactment of a higher provincial corporate income tax rate<br>in the second quarter.<br>For the year ended December 31, 2014, the Company reported<br>adjusted net income of $3,063 million,(1) or $3.72 per diluted<br>share,(1) which excludes a gain on disposal of the Deux-Montagnes Subdivision, including the Mont Royal Tunnel,<br>together with the rail fixtures, of $80 million, or $72 million<br>after-tax ($0.09 per diluted share) in the first quarter.<br>(1) In the first quarter of 2022, the Company changed its method of calculating market-related values of pension assets for its defined benefit plans using a retrospective<br>approach. See the Company’s selected financial information restated for change in accounting policy filed on September 9, 2022, which may be found online on SEDAR+ at<br>www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for additional information.<br>CN | 2024 INVESTOR FACT BOOK UPDATE 35 | |||
| --- | ||||
| Non-GAAP Measures (cont.)<br>Adjusted Performance Measures (cont.)<br>Adjusted operating income is defined as Operating income<br>in accordance with GAAP adjusted for certain significant<br>operating expense items. Adjusted operating expenses is<br>defined as Operating expenses in accordance with GAAP<br>adjusted for certain significant operating expense items.<br>Adjusted operating ratio is defined as adjusted operating<br>expenses as a percentage of revenues.<br>The following table provides a reconciliation of Operating<br>income, Operating expenses and operating ratio, as<br>reported for the periods specified, to the non-GAAP adjusted<br>performance measures presented herein:<br>Unaudited<br>($ millions, except percentages)<br>Year ended December 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023<br>Operating income 4,498 5,155 5,032 5,243 5,493 5,593 4,777 5,616 6,840 6,597<br>Operating expense adjustments:<br>Workforce reduction program - - - - 27 31 – 39 - -<br>Depreciation expense on the<br>deployment of replacement system - - - - – 84 – – - -<br>Advisory fees related to<br>shareholder matters - - - - – – – 20 22 –<br>Loss (recovery) on assets held for sale - - - - – – 486 (137) - -<br>Transaction-related costs - - - - – – – 84 - -<br>Total operating expense adjustments - - - - 27 115 486 6 22 –<br>Adjusted operating income 4,498 5,155 5,032 5,243 5,520 5,708 5,263 5,622 6,862 6,597<br>Operating expenses 7,636 7,456 7,005 7,798 8,828 9,324 9,042 8,861 10,267 10,231<br>Total operating expense adjustments - - - - (27) (115) (486) (6) (22) –<br>Adjusted operating expenses 7,636 7,456 7,005 7,798 8,801 9,209 8,556 8,855 10,245 10,231<br>Operating ratio(1) 62.9% 59.1% 58.2% 59.8% 61.6% 62.5% 65.4% 61.2% 60.0% 60.8%<br>Impact of adjustments 0.0% 0.0% 0.0% 0.0% (0.1)% (0.8)% (3.5)% 0.0% (0.1)% –<br>Adjusted operating ratio 62.9% 59.1% 58.2% 59.8% 61.5% 61.7% 61.9% 61.2% 59.9% 60.8%<br>(1) Operating ratio is defined as operating expenses as a percentage of revenues.<br>3 Financials Overview Markets Financials<br>36 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| (1) Relates to income tax payments of $102 million for KCS merger transaction-related payments and cash receipts. See Note 4 – Acquisitions, Terminated CN Kansas City Southern<br>(KCS) merger agreement, to the Company’s 2022 Annual Consolidated Financial Statements and the section entitled Adjusted performance measures to the Company’s 2022<br>Annual MD&A filed on January 31, 2023, which may be found online on SEDAR+ at www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on the<br>Company’s website at www.cn.ca in the Investors section, for additional information.<br>(2) Relates to the terminated CN KCS merger agreement. See Note 3 – Acquisitions, Terminated CN KCS merger agreement, to the Company’s 2021 Annual Consolidated Financial<br>Statements and the section entitled Adjusted performance measures to the Company’s 2021 Annual MD&A filed on February 1, 2022, which may be found online on SEDAR+ at<br>www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for additional information.<br>(3) Relates to the acquisitions of H&R Transport Limited (“H&R”) and the TransX Group of Companies (“TransX”). See the section entitled Liquidity and capital resources – Investing<br>activities to the Company’s 2021 Annual MD&A filed on February 1, 2022, which may be found online on SEDAR+ at www.sedarplus.com, on the SEC’s website at www.sec.gov<br>through EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for additional information.<br>Unaudited<br>($ millions)<br>Year ended December 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023<br>Net cash provided by<br>operating activities 4,381 5,140 5,202 5,516 5,918 5,923 6,165 6,971 6,667 6,965<br>Net cash used in<br>investing activities (2,161) (2,767) (2,682) (2,738) (3,404) (4,190) (2,946) (2,873) (2,510) (3,468)<br>Net cash provided before<br>financing activities 2,220 2,373 2,520 2,778 2,514 1,733 3,219 4,098 4,157 3,497<br>Adjustments:<br>Cash income taxes for<br>merger transaction-related<br>payments and cash receipts(1)<br> – – – – – – – – 102 -<br>Transaction-related costs paid(2) – – – – – – – 125 - -<br>Advance for acquisition(2) – – – – – – – 845 - -<br>Refund of advance for acquisition(2) – – – – – – – (886) - -<br>Merger termination fee (2) – – – – – – – (886) - -<br>Acquisition, net of cash acquired(3) – – – – – 259 8 – - 390<br>Total adjustments – – – – – 259 8 (802) 102 390<br>Free cash flow 2,220 2,373 2,520 2,778 2,514 1,992 3,227 3,296 4,259 3,887<br>Free Cash Flow<br>Free cash flow is a useful measure of liquidity as it<br>demonstrates the Company’s ability to generate cash for<br>debt obligations and for discretionary uses such as payment<br>of dividends, share repurchases and strategic opportunities.<br>The Company defines its free cash flow measure as the<br>difference between net cash provided by operating activities<br>and net cash used in investing activities, adjusted for the<br>impact of (i) business acquisitions and combinations, and<br>(ii) merger transaction-related payments, cash receipts<br>and cash income taxes, which are items that are not indicative<br>of operating trends. Free cash flow does not have any<br>standardized meaning prescribed by GAAP and, therefore,<br>may not be comparable to similar measures presented by<br>other companies.<br>The following table provides a reconciliation of Net cash<br>provided by operating activities in accordance with GAAP,<br>as reported for the periods specified, to the non-GAAP<br>free cash flow presented herein:<br>CN | 2024 INVESTOR FACT BOOK UPDATE 37 | |||
| --- | ||||
| Non-GAAP Measures (cont.)<br>Adjusted Debt-To-Adjusted EBITDA Multiple<br>Management believes that the adjusted debt-to-adjusted<br>EBITDA multiple is a useful credit measure because it reflects<br>the Company’s ability to service its debt and other long-term<br>obligations. The Company calculates the adjusted debt-to-adjusted EBITDA multiple as adjusted debt divided by the last<br>12 months of adjusted EBITDA. Adjusted debt is defined as<br>the sum of Long-term debt and Current portion of long-term<br>debt as reported on the Company’s Consolidated Balance<br>Sheets as well as Operating lease liabilities, including current<br>portion and pension plans in deficiency recognized<br>on the Company’s Consolidated Balance Sheets due to the<br>debt-like nature of their contractual and financial obligations.<br>Adjusted EBITDA is calculated as Net income excluding<br>Interest expense, Income tax expense, Depreciation and<br>amortization, operating lease cost, Other components of<br>net periodic benefit income, Other income (loss), and other<br>significant items that are not reflective of CN’s underlying<br>business operations and which could distort the analysis of<br>trends in business performance. Adjusted debt and adjusted<br>EBITDA are non-GAAP measures used to compute the<br>Adjusted debt-to-adjusted EBITDA multiple. These measures<br>do not have any standardized meaning prescribed by GAAP<br>and, therefore, may not be comparable to similar measures<br>presented by other companies.<br>The following table provides a reconciliation of debt and<br>Net income in accordance with GAAP, reported as at and for<br>the periods specified, to adjusted debt and adjusted EBITDA,<br>which have been used to calculate the non-GAAP adjusted<br>debt-to-adjusted EBITDA multiple:<br>(1) Represents the present value of operating lease payments.<br>(2) Represents the total funded deficit of all defined benefit pension plans with a<br>projected benefit obligation in excess of plan assets.<br>(3) In the first quarter of 2022, the Company changed its method of calculating<br>market-related values of pension assets for its defined benefit plans using a<br>retrospective approach. See the Company’s selected financial information restated for<br>change in accounting policy filed on September 9, 2022, which may be found online<br>on SEDAR+ at www.sedarplus.com, on the SEC’s website at www.sec.gov through<br>EDGAR, and on the Company’s website at www.cn.ca in the Investors section, for<br>additional information.<br>(4) Represents the operating lease costs recorded in Purchased services and material and<br>Equipment rents within the Consolidated Statements of Income.<br>(5) Relates to employee termination benefits and severance costs for a workforce<br>reduction program, recorded in Labor and fringe benefits within the Consolidated<br>Statements of Income.<br>(6) Relates to advisory fees related to shareholder matters recorded in Other expense<br>within the Consolidated Statements of Income.<br>(7) Relates to the loss (recovery) on assets held for sale resulting from the Company<br>entering into an agreement for the sale of non-core lines.<br>(8) Relates to the terminated CN KCS merger agreement.<br>Unaudited<br>($ millions, unless otherwise indicated)<br>As at and for the year ended December 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023<br>Debt 8,372 10,427 10,937 10,828 12,569 13,796 12,906 12,485 15,429 18,473<br>Adjustments:<br>Operating lease liabilities, including<br> current portion (1) 607 607 533 478 579 501 418 430 466 415<br>Pension plans in deficiency (2) 400 469 442 455 477 521 553 447 353 362<br>Adjusted debt 9,379 11,503 11,912 11,761 13,625 14,818 13,877 13,362 16,248 19,250<br>Net income (3) 3,135 3,529 3,630 5,470 4,312 4,198 3,545 4,899 5,118 5,625<br>Interest expense 371 439 480 481 489 538 554 610 548 722<br>Income tax expense (recovery) (3) 1,182 1,333 1,283 (400) 1,348 1,207 976 1,443 1,645 863<br>Depreciation and amortization 1,050 1,158 1,225 1,281 1,329 1,562 1,589 1,598 1,729 1,817<br>Operating lease cost(4) 201 204 197 191 218 171 143 131 142 149<br>Other components of net periodic benefit income (3) (83) (99) (266) (296) (280) (297) (292) (407) (498) (479)<br>Other income (107) (47) (95) (12) (376) (53) (6) (43) 27 (134)<br>Adjustments:<br>Workforce reduction program (5) – – – – 27 31 – 39 - -<br>Advisory fees related to shareholder matters (6) – – – – – – – 20 22 -<br>Loss (recovery) on assets held for sale (7) – – – – – – 486 (137) - -<br>Transaction-related costs (8) – – – – – – – 84 - -<br>Merger termination fee (8) – – – – – – – (886) - -<br>Adjusted EBITDA 5,749 6,517 6,454 6,715 7,067 7,357 6,995 7,351 8,733 8,563<br>Adjusted debt-to-adjusted EBITDA multiple (times) 1.63 1.77 1.85 1.75 1.93 2.01 1.98 1.82 1.86 2.25<br>3 Financials Overview Markets Financials<br>38 CN | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| (1) In the first quarter of 2022, the Company changed its method of calculating market-related values of pension assets for its defined benefit plans using a retrospective<br>approach. See the Company’s selected financial information restated for change in<br>accounting policy filed on September 9, 2022, which may be found online on SEDAR+<br>at www.sedarplus.com, on the SEC’s website at www.sec.gov through EDGAR, and on<br>the Company’s website at www.cn.ca in the Investors section, for additional information.<br>(2) The effective tax rate, defined as Income tax expense as a percentage of Income<br>before income taxes, used to calculate the tax on Interest expense for 2023 was 24.5%<br>(2022 - 24.3%, 2021 - 22.8%, 2020 - 21.6%, 2019 - 22.3%, 2018 - 23.8%, 2017 - 25.8%,<br>2016 - 26.1%, 2015 - 27.4%, 2014 - 27.4%). Due to the significantly lower effective tax rate<br>reported by the Company in 2023, tax on interest expense for 2023 was calculated using<br>an adjusted effective tax rate. Due to the negative effective tax rate reported by the<br>Company in 2017, tax on interest expense for 2017 was calculated using an adjusted<br>effective tax rate.<br>(3) In the fourth quarter of 2015, the Company adopted ASU 2015-03 Interest – Imputation<br>of Interest on a retrospective basis. As a result, debt issuance costs were reclassified<br>Unaudited<br>($ millions, except percentage)<br>As at and for the year ended December 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023<br>Net income (1) 3,135 3,529 3,630 5,470 4,312 4,198 3,545 4,899 5,118 5,625<br>Interest expense 371 439 480 481 489 538 554 610 548 722<br>Tax on interest expense (2) (102) (120) (125) (124) (116) (120) (120) (139) (133) (177)<br>Return(1) 3,404 3,848 3,985 5,827 4,685 4,616 3,979 5,370 5,533 6,170<br>Average total shareholders' equity 13,212 14,210 14,896 15,749 17,149 17,841 18,846 21,198 22,064 20,751<br>Average long-term debt(3) 7,305 8,407 9,217 9,098 10,067 11,626 11,931 11,987 13,175 15,253<br>Average current portion of long-term debt 783 993 1,466 1,785 1,632 1,557 1,420 709 783 1,699<br>Less: Average cash, cash equivalents,<br>restricted cash and restricted<br>cash equivalents (589) (596) (674) (613) (656) (674) (844) (1,221) (1,088) (879)<br>Average invested capital 20,711 23,014 24,905 26,019 28,192 30,350 31,353 32,673 34,934 36,824<br>ROIC(1) 16.4% 16.7% 16.0% 22.4% 16.6% 15.2% 12.7% 16.4% 15.8% 16.8%<br>Adjusted net income (1)(4) 3,063 3,571 3,571 3,764 4,040 4,171 3,767 4,225 5,134 4,800<br>Interest expense 371 439 480 481 489 538 554 610 548 722<br>Less: Amortization of bridge<br>financing and other fees (5) - - - - – – – (97) - -<br>Adjusted tax on interest expense (6) (103) (117) (126) (124) (120) (131) (137) (123) (133) (177)<br>Adjusted return(1) 3,331 3,893 3,925 4,121 4,409 4,578 4,184 4,615 5,549 5,345<br>Average invested capital 20,711 23,014 24,905 26,019 28,192 30,350 31,353 32,673 34,934 36,824<br>Adjusted ROIC(1) 16.1% 16.9% 15.8% 15.8% 15.6% 15.1% 13.3% 14.1% 15.9% 14.5%<br>ROIC and Adjusted ROIC<br>ROIC and adjusted ROIC are useful measures for management<br>and investors to evaluate the efficiency of the Company’s use<br>of capital funds and allow investors to assess the operating and<br>investment decisions made by management. The Company<br>calculates ROIC as return divided by average invested capital,<br>both of which are non-GAAP measures. Return is defined as<br>Net income plus interest expense after-tax, calculated using<br>the Company’s effective tax rate. Average invested capital is<br>defined as the sum of Total shareholders’ equity, Long-term<br>debt and Current portion of long-term debt less Cash and<br>cash equivalents, and Restricted cash and cash equivalents,<br>averaged between the beginning and ending balance over<br>the last 12-month period. The Company calculates adjusted<br>ROIC as adjusted return divided by average invested capital,<br>both of which are non-GAAP measures. Adjusted return is<br>defined as adjusted net income plus interest expense after-tax,<br>calculated using the Company’s adjusted effective tax rate.<br>Return, average invested capital, ROIC, adjusted return and<br>adjusted ROIC do not have any standardized meaning<br>prescribed by GAAP and, therefore, may not be comparable<br>to similar measures presented by other companies.<br>The following table provides a reconciliation of Net income<br>and adjusted net income to return and adjusted return,<br>respectively, as well as the calculation of average invested<br>capital, which have been used to calculate ROIC and<br>adjusted ROIC:<br>from assets to Long-term debt in the amount of $42 million, $37 million, as at<br>December 31, 2015, 2014 respectively.<br>(4) This non-GAAP measure does not have any standardized meaning prescribed by<br>GAAP and, therefore, may not be comparable to similar measures presented by other<br>companies. See the section entitled Adjusted performance measures for an explanation<br>of this non-GAAP measure.<br>(5) Relates to amortization of bridge financing and other fees resulting from the KCS<br>transaction, recorded in Interest expense within the Consolidated Statements of Income.<br>(6) The adjusted effective tax rate is a non-GAAP measure, defined as Income tax expense,<br>net of tax adjustments as presented in Adjusted performance measures as a percentage<br>of Income before taxes, net of pre-tax adjustments as presented in Adjusted performance<br>measures. This measure does not have any standardized meaning prescribed by GAAP<br>and, therefore, may not be comparable to a similar measure presented by other<br>companies. The adjusted effective tax rate used to calculate the adjusted tax on interest<br>expense for 2023 was 24.5% (2022 - 24.3%, 2021 - 24.0%, 2020 - 24.8%, 2019 - 24.4%,<br>2018 - 24.5%, 2017 - 25.8%, 2016 - 26.2%, 2015 - 26.6%, 2014 - 27.7%).<br>CN | 2024 INVESTOR FACT BOOK UPDATE 39 | |||
| --- | ||||
| DESIGN: CAPSULE CREATIVE WWW.CAPSULECREATIVE.CA<br>Transfer Agent and Registrar<br>Computershare<br>Trust Company of Canada<br>Offices in:<br>Montreal, QC; Toronto, ON;<br>Calgary, AB; Vancouver, BC<br>Telephone: 1-800-564-6253<br>www.investorcentre.com/service<br>Co-Transfer Agent<br>and Co-Registrar<br>Computershare Trust Company, N.A.<br>Attn: Stock Transfer Department<br>Overnight mail delivery:<br>250 Royall Street<br>Canton, MA 02021<br>Regular mail delivery:<br>P.O. Box 43078<br>Providence, RI 02940-3078<br>Telephone: 303-262-0600<br>or 1-800-962-4284<br>Shareholder Services<br>Shareholders with questions<br>concerning their shares<br>should contact:<br>Computershare<br>Trust Company of Canada<br>Shareholder Services<br>100 University Avenue, 8th Floor<br>Toronto, ON M5J 2Y1<br>Telephone: 1-800-564-6253<br>www.computershare.com<br>Investor Relations<br>Stacy Alderson<br>Assistant Vice-President<br>Investor Relations<br>Telephone: 514-399-0052<br>Greg Hamilton<br>Senior Manager, Investor Relations<br>Telephone: 514-399-4654<br>Mariusz Chojnacki<br>Senior Manager, Investor Relations<br>Telephone: 514-399-6464<br>Fax: 514-399-5985<br>Email: investor.relations@cn.ca<br>Mailing Address<br>CN Investor Relations<br>935 de La Gauchetière St. W.<br>16th Floor<br>Montreal, QC H3B 2M9<br>www.cn.ca/investors<br>Shareholder and<br>Investor Information 3 Financials Overview Markets Financials<br>40 CN<br> | 2024 INVESTOR FACT BOOK UPDATE | |||
| --- | ||||
| www.cn.ca/investors<br>CN Investor Relations understands the importance of communicating the CN story<br>and the most current and timely information to our shareholders, the financial<br>community and other stakeholders. The Investors section of our website holds a wealth<br>of information to keep investors and potential investors informed and up to date.<br>Key<br>Weekly Metrics<br>CN reports our performance measures weekly.<br>These measures represent some of the key indicators<br>of railroad performance. We report key weekly volume<br>data for RTMs and carloads, and key weekly operating<br>metrics such as car velocity, average train speed and<br>through dwell.<br>www.cn.ca/investors/key-weekly-metrics<br>Latest Financial<br>Results and Reports<br>We understand the importance of accessing the latest<br>and historical financial and other company reports,<br>including the Investor Fact Book, Annual Report and<br>Sustainability Report. Each quarter, we update our<br>Investor Presentation to showcase our commitment<br>to share our great CN story.<br>www.cn.ca/investors/reports-and-archives<br>Current<br>Stock Information<br>We have a host of tools that provide helpful data<br>about CN’s common shares on the Toronto Stock<br>Exchange (TSX: CNR) and the New York Stock<br>Exchange (NYSE: CNI). These tools include: stock<br>information, interactive charts, stock price history<br>and splits, an investment calculator and dividends.<br>www.cn.ca/investors/stock-information<br>Upcoming<br>Webcasts and Events<br>Our executive team regularly interacts with the<br>investment community through our quarterly<br>investor call and industry conferences. We provide<br>a comprehensive schedule of upcoming investor<br>events on our website, including webcast information.<br>Don’t miss out on the latest news and events from CN.<br>www.cn.ca/investors/events<br>KEEPING INVESTORS UP TO DATE<br>CN | 2024 INVESTOR FACT BOOK UPDATE 41 | |||
| --- | ||||
| facebook.com/CNrail x.com/CNRailway linkedin.com/company/cn www.cn.ca<br>STAY CONNECTED WITH CN: | ||||
| --- |