(Source: CN press release, July 23, 2019)
MONTREAL — CN today reported its financial and operating results for the second quarter ended June 30, 2019.
“The CN team delivered record second-quarter results, and we remain optimistic on CN’s volume prospects in the second half of the year while maintaining our vigilance on costs,” said JJ Ruest, president and chief executive officer of CN. “Our focus on delivering profitable growth and advanced technologies to modernize our scheduled railroading model is expected to continue driving long-term value creation for our shareholders.”
Financial results highlights
Second-quarter 2019 compared to second-quarter 2018
• CN attained record second-quarter diluted EPS, as well as record quarterly revenues, operating income and adjusted diluted EPS.(1)
• Revenues increased by nine per cent to C$3,959 million.
• Diluted EPS increased by six per cent to C$1.88 and adjusted diluted EPS increased by 15 per cent to C$1.73. (1)
• Operating ratio of 57.5 per cent, an improvement of 0.7 points.
• Operating income increased by 11 per cent to C$1,682 million.
Reaffirmed 2019 financial outlook (2)
CN still aims to deliver 2019 adjusted diluted EPS growth in the low double-digit range this year versus last year’s adjusted diluted EPS of C$5.50 (1) and continues to assume mid single-digit volume growth in 2019 in terms of revenue ton miles (RTMs).
Second-quarter 2019 revenues, traffic volumes and expenses
Revenues for the second quarter of 2019 were C$3,959 million, an increase of C$328 million or nine per cent, when compared to the same period in 2018. The increase in revenues was mainly due to the inclusion of TransX in the intermodal commodity group, the positive translation impact of a weaker Canadian dollar, freight rate increases, and higher volumes primarily from petroleum crude and Canadian and U.S. grain, which were partly offset by lower volumes of frac sand, lumber and potash.
RTMs, measuring the relative weight and distance of freight transported by CN, increased by two per cent from the year-earlier period. Freight revenue per RTM increased by eight per cent over the year-earlier period, mainly driven by the inclusion of TransX, the positive translation impact of a weaker Canadian dollar and freight rate increases.
Operating expenses for the second quarter increased by eight per cent to C$2,277 million, mainly driven by the inclusion of TransX, the negative translation impact of a weaker Canadian dollar, and higher costs resulting from increased volumes of traffic.
(1) Non-GAAP Measures
CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN also uses non-GAAP measures in this news release that do not have any standardized meaning prescribed by GAAP, such as adjusted performance measures. These non-GAAP measures may not be comparable to similar measures presented by other companies. For further details of these non-GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures, refer to the attached supplementary schedule, Non-GAAP Measures.
CN’s full-year adjusted diluted EPS outlook (2) excludes the expected impact of certain income and expense items, as well as those items noted in the reconciliation tables provided in the attached supplementary schedule, Non-GAAP Measures. However, management cannot individually quantify on a forward-looking basis the impact of these items on its EPS because these items, which could be significant, are difficult to predict and may be highly variable. As a result, CN does not provide a corresponding GAAP measure for, or reconciliation to, its adjusted diluted EPS outlook.