Summary of Canadian National Railway Company Conference Call Company Overview - **Company**: Canadian National Railway Company (NYSE:CNI) - **Event**: Conference Call on November 18, 2025 - **Key Speaker**: Tracy Robinson, President and CEO Key Points Industry Context - The railway industry is currently experiencing a freight recession that began in early 2022, impacting overall volume growth and economic conditions [16][20][21] - The company is navigating an uncertain economic environment with challenges such as tariffs and trade flow disruptions [9][11] Financial Performance - CN Rail reported a 6% growth in earnings per share (EPS) and improved its operating ratio by 170 basis points to 61.4%, despite flat volumes [10] - The capital program for 2026 is set at CAD 2.8 billion, which is CAD 600 million less than the previous year [11] - The company is focused on increasing free cash flow and shareholder returns, having retired 8 million shares in Q3 [12] Operational Efficiency - The operational network is performing at its best levels in a decade, with a focus on customer service and productivity [9][10] - Significant improvements in operating ratio were noted across the quarters: Q1 (20 bps), Q2 (50 bps), and Q3 (770 bps) [24] - The company is leveraging its latent capacity and resources to prepare for future volume increases [25] Market Outlook - The company anticipates a year of softer volumes in 2026, with strengths in certain sectors like energy and agriculture, but weaknesses in forest products and steel due to macroeconomic factors [12][18] - CN Rail is uniquely positioned to benefit from diversification in trade, particularly through its port access across Canada [17][22] Strategic Initiatives - The company is intensifying its marketing strategy under Chief Commercial Officer Janet, focusing on customer engagement and innovative pricing strategies [35][36] - CN Rail is actively involved in nation-building projects, particularly in the energy sector, which are expected to drive future growth [48][49] Capacity and Infrastructure - The company has debottlenecked key lines, increasing capacity and operational speed, particularly on the Edson Sub, which is crucial for east-west traffic [40][41] - Future capacity planning includes shovel-ready projects to address potential bottlenecks as demand increases [42] Trade Relations and Risks - The U.S.-Canada trade relationship is seen as critical for future growth, with concerns about structural differences in forest products and tariffs [53][54] - The company is prepared to engage in potential U.S. rail consolidation discussions, emphasizing its strong position with 85% of its volumes originating from its own network [56][57] Technology and Innovation - CN Rail is exploring AI and data analytics to enhance operational efficiency and predictive capabilities [64][65] - The company is investing in automation within rail yards and is focused on creating a digital culture among its workforce [66] Conclusion - Despite the challenging environment, CN Rail is committed to driving shareholder value and operational excellence, positioning itself for future growth as economic conditions improve [72]

Core Points - CN celebrated the 30th anniversary of its Initial Public Offering (IPO) on November 17, 2025, which raised C$2.25 billion, marking it as the largest IPO in Canadian history at that time [1][2] - The privatization of CN in 1995 transformed it into a leading transportation and trade-enabling company, significantly contributing to the economy and North American supply chains [2][4] - Senior executives, including the Chair of the Board and the CEO, commemorated the anniversary by ringing the Opening Bell at the Toronto Stock Exchange and the Closing Bell at the New York Stock Exchange [3] Company Overview - Founded in 1919, CN is the largest and oldest Crown Corporation in Canada, with a nearly 20,000-mile rail network that facilitates the transportation of over 300 million tons of goods annually [2][5] - CN connects Canada's Eastern and Western coasts with the U.S. Midwest and Gulf Coast, playing a vital role in sustainable trade and community prosperity [5] - The company has developed a robust three-coast network over the past three decades, enabling long-term sustainable economic growth in North America and globally [4]

Core Points - The Brotherhood of Railway Carmen (BRC) and Union Pacific Railroad have reached an agreement ensuring job security for hundreds of union employees following the merger of Union Pacific and Norfolk Southern to create America's first coast-to-coast railroad [1] Group 1 - The agreement provides a commitment of job security for BRC members employed at both Union Pacific and Norfolk Southern at the time of the merger [1]

Core Points - Canadian National Railway Company (CN) celebrates its 30th anniversary of being listed on the Toronto Stock Exchange (TSX) [1][2] - The company has a significant history, having gone public during one of the largest rail privatizations, marking a new era of growth and innovation in the rail industry [2] - CN plays a crucial role in the economy by transporting over 300 million tons of various goods across North America annually [3] Company Overview - CN operates a nearly 20,000-mile rail network that connects Canada's Eastern and Western coasts with the U.S. Midwest and Gulf Coast [3] - The company has been contributing to trade and the prosperity of communities since its establishment in 1919 [3]

Group 1 - CN's Executive Vice-President and CFO, Ghislain Houle, will speak at the Desjardins Toronto Conference on November 24, 2025, at 8:00 a.m. Eastern Time [1] - CN will provide a live webcast of the conference on its investor relations website, with a replay available after the event [1] Group 2 - CN is a major transportation company that moves over 300 million tons of natural resources, manufactured products, and finished goods across North America annually [2] - The company operates a nearly 20,000-mile rail network that connects Canada's coasts with the U.S. Midwest and Gulf Coast, supporting sustainable trade and community prosperity since 1919 [2]

Core Viewpoint - Canadian National Railway Company (CNI) is recognized as a strong investment opportunity despite facing some volume forecast challenges, with a focus on operational efficiency and cost management [2][3][5]. Group 1: Financial Performance - Bernstein raised CNI's price target to $109.44 from $106.47 while maintaining a Market Perform rating, indicating confidence in the company's operational performance despite top-line pressure in Q3 [2]. - In Q3 2024, CNI's CEO acknowledged that the company had not met volume forecasts over the past two years but highlighted strong operational results and top-tier margins [3]. Group 2: Capital Expenditure and Cost Management - Management plans to reduce capital spending from $3.35 billion in 2025 to $2.8 billion in 2026, aligning capex with US peers and reflecting the completion of major projects rather than a reduction in growth initiatives [4]. - CNI intends to cut management labor costs by $75 million and accelerate share repurchases, citing attractive valuation levels [5]. Group 3: Market Position - CNI operates the largest rail network in Canada and provides freight transportation services across the United States and Mexico, positioning itself as a key player in the North American transportation sector [5].

Core Viewpoint - A coalition of nine Republican state attorneys general has expressed competition concerns regarding Union Pacific's proposed $85 billion acquisition of Norfolk Southern, which aims to create a larger freight transportation entity [1] Group 1: Competition Concerns - The attorneys general are worried that the merger could reduce competition in the freight transportation market, potentially leading to higher prices and reduced service quality for consumers [1] - The acquisition is seen as a significant consolidation in the industry, which may have implications for market dynamics and competition levels [1] Group 2: Financial Implications - The proposed deal is valued at $85 billion, indicating a substantial financial commitment from Union Pacific to expand its market presence [1] - The merger could reshape the competitive landscape of the freight transportation sector, affecting both operational efficiencies and pricing strategies [1]

Core Points - Union Pacific (UP) and Norfolk Southern (NS) have received overwhelming shareholder approval for their merger, with nearly 99% of NS shareholders and 99.5% of UP shareholders voting in favor of the $85 billion deal [1][2] - The merger aims to create America's first coast-to-coast transcontinental railroad, enhancing network capabilities and providing benefits to stakeholders [2] - NS shareholders will receive one share of Union Pacific common stock and $88.82 in cash for each share of Norfolk Southern [2] - UP shareholders approved the issuance of new shares of UP common stock as part of the merger process [3] - The railroads plan to file their merger application with the Surface Transportation Board in early December [3]

Core Viewpoint - The proposed $85 billion merger between Union Pacific and Norfolk Southern aims to create the first coast-to-coast rail network in the U.S., receiving overwhelming shareholder support but still requiring approval from the U.S. Surface Transportation Board [1][2]. Company Overview - Union Pacific CEO Jim Vena expressed confidence that the merger will unlock new opportunities for service, growth, and innovation, with plans to file a formal application by late November or early December [2]. - The merger is designed to connect Union Pacific's extensive Western network with Norfolk Southern's Eastern rail lines, resulting in over 50,000 miles of track across 43 states and access to major ports on both coasts [4]. Industry Impact - The merger has garnered support from the largest rail union and numerous shippers, although concerns have been raised by chemical manufacturers and competitor BNSF regarding potential negative impacts on competition and increased rates [3]. - The merger is expected to streamline the delivery of goods and raw materials nationwide by reducing delays during inter-railroad shipments [5]. Regulatory Environment - The U.S. Surface Transportation Board will conduct a thorough review of the merger, which must meet high standards established after previous industry consolidations caused significant operational issues [5]. - The merger's approval is anticipated to be influenced by the current pro-business administration, with historical context suggesting potential political dynamics affecting the board's decisions [7]. Financial Details - The merger proposal includes a cash offer of $20 billion and stock exchange terms, valuing Norfolk Southern at approximately $320 per share, with a breakup fee of $2.5 billion [8].

Core Viewpoint - Union Pacific shareholders have approved a merger with Norfolk Southern, indicating a significant consolidation in the railroad industry [1] Company Summary - Union Pacific and Norfolk Southern are both major railroad operators in the United States, and this merger represents a strategic move to enhance operational efficiencies and market presence [1]