Canadian National Railway Company (CNR) Q3 2024 earnings summary

Executive summary

• Q3 2024 EPS was $1.72, up 2% year-over-year, with an operating ratio of 63.1% and revenues of $4,110 million, up 3%.

• Network fully recovered from Alberta wildfires and August labor stoppage, with operational resilience and ongoing labor arbitration.

• Volume growth was 2% in RTM terms, led by international intermodal and refined petroleum products, but tempered by labor uncertainty and a softer macro environment.

• Adjusted resource levels and cost structure to align with lower demand, especially in construction-related and automotive sectors.

• Free cash flow for Q3 was $584 million, up 1% year-over-year, with YTD free cash flow at CAD 2.1 billion.

Financial highlights

• Q3 diluted EPS up 2% year-over-year to $1.72; operating ratio increased by 110 bps to 63.1%.

• Q3 revenues were $4.11B, up 3% year-over-year; operating income was $1.5B, flat compared to last year.

• Labor expense up 2% on higher headcount and wage increases; fuel expense up 5% due to higher GTMs and lower fuel efficiency.

• Dividends per share increased 7% to $0.8450 in Q3.

• Share repurchases paused after buying back up to 14.4 million shares for up to $2,498 million YTD.

Outlook and guidance

• Affirmed low single-digit adjusted diluted EPS growth for 2024, with high single-digit EPS CAGR targeted through 2026.

• Volume growth expected at the lower end of the 3%-5% RTM range, with Q4 margin improvement anticipated.

• Capital investment of approximately $3.5 billion planned for 2024, net of customer reimbursements.

• Adjusted ROIC expected in the 13%-15% range for 2024.

• Macro environment expected to remain soft into 2025; more detailed 2025 guidance to be provided in January.