Canadian National Railway Company (NYSE:CNI) Conference Transcript

Summary of Canadian National Railway Company (CNI) Conference Call - November 24, 2025 Company Overview - Company: Canadian National Railway Company (NYSE:CNI) - Event: Digital Day Conference - Date: November 24, 2025 Key Points Financial Performance - Q3 Results: The third quarter results were well received, with volumes up 1% year-to-date and 6% in Q4 to date, with November volumes up 15% [3][5] - Cost Management: Operating ratio improved by 170 basis points, indicating effective cost management [7] - Cost Reduction Initiative: A $75 million cost reduction initiative focused on management positions, protecting frontline supervisors [11][12] Volume and Sector Performance - Volume Trends: The company has experienced a freight recession for a few years, but anticipates capturing a rebound at low incremental costs when the economy improves [9] - Sector Performance: - Strong Sectors: Petroleum, chemicals, and grain sectors performing well [5] - Challenging Sectors: Lumber sector facing difficulties due to 45% tariffs and low prices [6] Capital Expenditure and Growth - CapEx Reduction: A $550 million cut in capital expenditures for 2026, aiming for capital efficiency [16] - Sustainable Growth: The company is positioned for sustainable growth with a focus on capital efficiency and capacity management [17][19] Leadership Changes - New COO Appointment: Pat Whiteside appointed as COO, transitioning from a co-COO model to a single COO for better focus on long-term engineering and mechanical functions [23][25] - New CMO Appointment: Janet Drysdale appointed as EVP and Chief Marketing Officer, emphasizing urgency and intensity in the marketing strategy [28][30] Sustainability Initiatives - Biofuels Usage: Increased biofuels to nearly 10% of overall locomotive fuel, achieved without additional costs [33][35] - Pilot Programs: Three pilots for battery electric and hybrid locomotives announced, with testing in various conditions [21][22] M&A Outlook - Transcon Merger: The company is not in favor of the Transcon Merger, believing it does not solve existing problems and that customer service is adequate in North America [37][38] - Regulatory Challenges: Anticipates a tough regulatory environment for any merger approval, emphasizing the need for enhanced competition [39] Capital Deployment Strategy - Leverage Target: The company targets a leverage ratio of 2.5 times, maintaining a strong balance sheet while being opportunistic in share buybacks [40][41][42] Additional Insights - Employee Management: Over 700 employees currently on furlough, with a successful recall rate of over 90% for those called back [13][15] - Operational Efficiency: Significant improvements in capital efficiency and cost reductions in engineering contracting services [26][27] This summary encapsulates the key discussions and insights from the conference call, highlighting the company's performance, strategic initiatives, and outlook for the future.