Canadian National Railway Company (NYSE:CNI) 2026 Conference February 18, 2026 07:10 AM ET Company ParticipantsGhislain Houle - CFOJamie Lockwood - VP of Investor Relations and Special ProjectsConference Call ParticipantsNone - AnalystNone - AnalystModeratorTopical. With us, we have Ghislain Houle and Jamie Lockwood. Ghislain is the CFO, Jamie is newly appointed IR, so congrats onGhislain HouleThank you.Moderatoryour new feat, and I'll turn it over to Ghislain, who has some opening comments.Ghislain HouleWe ...

Core Viewpoint - The Barclays 43rd Annual Industrial Select Conference is taking place in Miami, focusing on the transport and freight sector, with Canadian National's participation highlighted [1]. Group 1: Conference Details - The conference features a series of presentations over three days, including audience response questions to engage participants [2]. - The first presentation includes a discussion on railroading, indicating a focus on the transport sector [1]. Group 2: Audience Engagement - Audience members will be asked to respond to six questions during each presentation, with results shared post-conference [2]. - The first question pertains to the ownership status of Canadian National among attendees, offering options from ownership to no ownership [2].

Summary of Canadian National Railway Company (CNI) FY Conference Call Company Overview - **Company**: Canadian National Railway Company (NYSE:CNI) - **Date of Conference**: February 17, 2026 Key Points Industry and Market Context - The freight transportation industry is currently experiencing a four-year freight recession, which is unprecedented [21] - Macroeconomic growth is expected to be weak in 2026, with uncertainty surrounding trade flows due to the renewal of the USMCA [10] Financial Performance - **2025 Performance**: - 14% EPS growth in Q4, the best in the industry, and 7% growth for the year on 1% volume growth [9] - 8% growth in free cash flow and a 250 basis point improvement in operating ratio in Q4 [10] - **2026 Expectations**: - Anticipated solid Q1 performance despite difficult operating conditions [13] - Focus on generating free cash flow growth and returning it to shareholders [11] Operational Strategies - Emphasis on productivity improvements and a reset of the capital program [9] - The company is focused on controlling costs and improving operational efficiency, with a leaner and more productive network [12][46] - The "Boots on the Ground" program aims to enhance commercial presence and customer service [11] Growth Opportunities - Significant growth potential exists in sectors such as energy, agriculture, and mining, leveraging the company's strategic network [23][25] - The company is well-positioned to capitalize on North America's natural resource base, regardless of trade flow uncertainties [12] Challenges and Risks - Non-recurring headwinds include unfavorable traffic mix, capital credit impacts, and currency fluctuations [11] - The impact of tariffs, particularly on steel, aluminum, and forest products, has been significant, costing approximately $350 million last year [56] - Uncertainty regarding the impact of the UP-Norfolk Southern merger on competition and market dynamics [31] Leadership and Management - The current leadership team is viewed positively, with strong alignment around operational plans and strategies [29] - Recent turnover in executive positions is seen as a natural evolution, with a focus on maintaining strong operational execution [27] Technological Advancements - The company is exploring AI applications to enhance operational efficiency, particularly in train operations and infrastructure inspections [48][49] - AI is expected to transform business processes and improve predictive capabilities [49] Capital Allocation - Priorities for capital spending include maintaining operational capacity and ensuring consistent dividend growth [42] - The company plans to redirect capital back to shareholders as capital expenditures grow [42] Pricing Environment - The company aims to achieve pricing growth above inflation, despite challenges from tariffs and market conditions [58] - Domestic intermodal services are growing, supported by strong service performance [57] Long-term Outlook - The company is poised for significant operating leverage and earnings growth as market conditions improve [60] - Anticipated mid-single-digit volume growth with a lean cost structure could lead to outsized EPS growth [26] Conclusion Canadian National Railway Company is navigating a challenging freight environment while focusing on operational efficiency, strategic growth opportunities, and shareholder returns. The leadership is optimistic about future growth potential, particularly in energy and resource sectors, despite current market uncertainties and tariff impacts.

Berkshire Hathaway - Berkshire Hathaway's insurance business has shown strong performance, with underwriting earnings increasing by 3% in the first nine months of 2025 despite challenges from California wildfires [1] - The transition of leadership from Warren Buffett to Greg Abel is expected to maintain the operational excellence of the company, as Buffett has left Abel with a robust portfolio of businesses and equity stakes [2][3] Gates Foundation and Berkshire Shares - The Gates Foundation continues to hold a significant amount of Berkshire Hathaway shares, with 21.8 million shares valued at approximately $11 billion as of the end of the third quarter [3] - Buffett's annual donations to the Gates Foundation include substantial amounts of Berkshire shares, with last year's donation being 9.4 million Class B shares [4] Investment Strategy - The Gates Foundation's investment strategy is heavily focused on value stocks, with 59% of its marketable equity portfolio concentrated in just three stocks [5] - The foundation's holdings include WM (Waste Management) and Canadian National Railway, both of which are long-term investments that provide steady returns [9][13] WM (Waste Management) - WM holds a dominant position in the waste disposal industry with over 260 landfill locations, benefiting from regulatory barriers that limit competition [10] - The company reported an adjusted operating margin of 31.5% in 2025, an increase from 30% in 2024, and expects further margin expansion in 2026 [11] - Despite a disappointing revenue growth outlook of 5.2% for 2026, WM is focusing on operational improvements to enhance profitability [12] Canadian National Railway - Canadian National Railway is another key holding for the Gates Foundation, with 51.8 million shares valued at about $5.1 billion [13] - The company experienced a 2% revenue increase in 2025, driven by record grain transport volumes, despite challenges from tariffs affecting import volumes [14] - Management has authorized a share repurchase program and is reducing capital expenditures, which should support earnings growth and free cash flow [15][16] Investment Insights - The Gates Foundation's investment approach emphasizes owning a small number of high-quality companies, which can lead to significant long-term wealth accumulation [18] - Berkshire Hathaway shares are currently trading at around 1.55 times book value, which is considered a fair price, but not necessarily a bargain [8]

Core Insights - CN achieved its second-best January for grain movement, shipping over 2.72 million metric tonnes from Western Canada, following a record of 2.85 million metric tonnes in January 2020 [1] - The company adapted its operations to ensure safe and efficient grain transportation despite extreme cold weather conditions [1] Group 1: Company Performance - CN's grain movement in January 2026 was significant, marking a strong performance in the agricultural sector [1] - The company has a history of supporting farmers and supply chain partners through effective operational adjustments [1] Group 2: Operational Strategy - CN is actively executing its winter operations plan to maintain service levels during challenging weather conditions [2] - Proactive solutions have been implemented as part of the 2025-2026 Winter Plan to enhance operational efficiency [2] Group 3: Company Overview - CN plays a crucial role in the economy by transporting over 300 million tons of various goods across North America annually [3] - The company operates a nearly 20,000-mile rail network, connecting key regions in Canada and the U.S., contributing to sustainable trade [3]

Core Insights - Canadian National Railway Company (CNI) reported strong fourth-quarter 2025 results, with earnings and revenues exceeding expectations, leading to a 2.8% stock price increase since the earnings release on January 30 [2][8]. Financial Performance - Earnings per share were $1.49 (C$2.03), surpassing the Zacks Consensus Estimate by 4.2% and reflecting a 14.6% year-over-year increase [3]. - Revenues reached $3.20 billion (C$4.46 billion), exceeding the Zacks Consensus Estimate by 0.5% and rising 2.8% year over year [3]. - Revenue ton-miles (RTMs) increased by 4% year over year, while carloads rose by 2.9% [3][8]. - Operating expenses remained flat at $2.73 billion year over year, attributed to effective cost-cutting measures [4]. - Operating income grew by 6% compared to the fourth quarter of 2024, with the operating ratio improving by 140 basis points to 61.2% [4][8]. Segment Performance - Freight revenues, which accounted for 97% of total revenues, increased by 3% year over year [5]. - Specific freight revenue growth included petroleum and chemicals (4%), grain and fertilizers (6%), intermodal (10%), and automotive (4%), while metals and minerals, forest products, and coal saw declines of 4%, 8%, and 1%, respectively [5][6]. Liquidity and Capital Management - CNI ended Q4 2025 with cash and cash equivalents of C$350 million, down from C$389 million at the end of Q4 2024 [7]. - Long-term debt increased to C$20.3 billion from C$19.7 billion year over year [7]. - CNI generated C$2.23 billion from operating activities, with free cash flow reported at C$995 million [7]. Dividend and Share Buyback - The board approved a 3% increase in the 2026 dividend, raising it to C$0.9150 per share, marking the 30th consecutive year of dividend increases [8]. - A new normal course issuer bid was approved, allowing the purchase of up to 24 million common shares for cancellation between February 4, 2026, and February 3, 2027 [9]. Outlook - For full-year 2026, CNI expects adjusted earnings per share growth to slightly exceed volume growth, with planned capital investments of approximately C$2.8 billion [10]. - Volume growth in terms of RTMs is anticipated to remain flat [10].

Core Viewpoint - iREIT+HOYA Capital is positioned as a leading income-focused investment service, emphasizing sustainable portfolio income, diversification, and inflation hedging [1][2]. Group 1: Investment Focus - The service targets income-producing asset classes, including REITs, ETFs, closed-end funds, preferred stocks, and dividend champions [2]. - It aims to provide high-yield, dividend growth investment ideas, with portfolios targeting dividend yields up to 10% [2]. Group 2: Experience and Expertise - The team behind iREIT+HOYA Capital has over 14 years of investment experience and an MBA in Finance, focusing on defensive stocks with a medium- to long-term investment horizon [2]. - The group offers research and insights to help investors achieve dependable monthly income and portfolio diversification [2].

Core Viewpoint - Canadian National (CN) is undergoing a leadership transition in its investor relations department, with Stacy Alderson retiring and Jamie Lockwood appointed as her successor [1][2]. Group 1: Leadership Transition - Stacy Alderson, assistant vice president of investor relations at CN, will retire in May after a 30-year career marked by leadership and significant contributions across various business areas [1][2]. - Jamie Lockwood, currently vice president of engineering, will take over as vice president of investor relations and special projects, bringing 18 years of extensive railroad experience [2]. Group 2: Transition Process - Chief Executive Tracy Robinson announced that Alderson and Lockwood will collaborate over the next month to ensure a smooth transition in leadership [2].

Core Viewpoint - CN has filed its 2025 Annual Financial Statements and related documents with Canadian and U.S. securities regulators, making them available on its website [1] Group 1: Financial Reporting - The 2025 Annual Financial Statements, Notes, and Management's Discussion and Analysis are now accessible in the "Investors" section of CN's website [1] - Printed copies of these financial documents will be provided to shareholders free of charge upon request [2] Group 2: Company Overview - CN plays a crucial role in the economy by transporting over 300 million tons of natural resources, manufactured products, and finished goods across North America annually [3] - The company operates a nearly 20,000-mile rail network that connects Canada's Eastern and Western coasts with the U.S. Midwest and Gulf Coast, contributing to sustainable trade and community prosperity since 1919 [3]

Core Insights - CN has filed its 2025 Annual Financial Statements and related documents with Canadian and U.S. securities regulators, now accessible on its website [1] - Printed copies of the financial statements will be available to shareholders free of charge upon request [2] Company Overview - CN plays a crucial role in the economy by transporting over 300 million tons of natural resources, manufactured products, and finished goods across North America annually [3] - The company operates a nearly 20,000-mile rail network, connecting Canada's Eastern and Western coasts with the U.S. Midwest and Gulf Coast, contributing to sustainable trade and community prosperity since 1919 [3]