Canadian National Q4 Earnings Lag Estimates, Decrease Year Over Year

Core Viewpoint - Canadian National Railway Company (CNI) reported a decline in earnings and revenues for the fourth quarter of 2024, missing consensus estimates while facing challenges in volume and operating expenses [1][2][3]. Financial Performance - CNI's fourth-quarter 2024 earnings were $1.30 per share (C$1.82), missing the Zacks Consensus Estimate of $1.37 and declining 12.1$3.11 billion (C$4.35 billion), surpassing the Zacks Consensus Estimate of$3.07 billion but still declining year-over-year [1]. - Operating income decreased by 11% compared to the fourth quarter of 2023, with an operating ratio worsening to 62.6% from 59.3% [3]. Volume and Revenue Metrics - Revenue ton-miles (RTMs) decreased by 3% year-over-year, with carloads down by 5% [2]. - Freight revenue per RTM saw a slight increase of 0.1% year-over-year [2]. - Freight revenues, which accounted for 95.9% of total revenues, decreased by 3% year-over-year, with notable declines in several segments including coal (down 8%) and automotive (down 20%) [4]. Segment Performance - Carloads in various segments showed mixed results, with petroleum and chemicals up by 4% while automotive fell by 18% [5]. - Specific segment revenues included a 1% increase in petroleum and chemicals and a 4% increase in grain and fertilizers, contrasting with declines in metals and minerals, forest products, and coal [4][5]. Liquidity and Capital Management - CNI ended the fourth quarter with cash and cash equivalents of C$389 million, up from C$273 million in the previous quarter [6]. - Long-term debt increased to C$19.7 billion from C$18.6 billion [6]. - The company generated C$1.99 billion from operating activities, with free cash flow at C$1.03 billion [6]. Dividend and Share Buyback - The board approved a 5% increase in the quarterly cash dividend, marking the 29th consecutive year of dividend increases [7]. - A new Normal Course Issuer Bid was approved, allowing the purchase of up to 20 million common shares for cancellation over a 12-month period starting February 4, 2025 [7]. Future Outlook - For 2025, CNI anticipates adjusted earnings per share (EPS) growth of 10%-15% and plans to invest approximately C$3.4 billion in its capital program [8]. - The company expects low to mid-single-digit growth in RTMs and a 1% growth in North American industrial production [9]. - CNI aims for compounded annual adjusted diluted EPS growth in the high single-digit range from 2024 to 2026 [9].