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Where’s the ‘Service’
in Internal Revenue Service?

Canadian National Railway (TSX: CNR, NYSE: CNI) reported its financial and operating results for the third quarter ended September 30, 2021, showing strong performance across nearly all key metrics, with adjusted diluted earnings per share ("EPS") of C$1.52, up 10 per cent, an adjusted operating ratio of 59.0 per cent, an improvement of 90 basis points, and revenues of C$3.6 billion, up five per cent over the third quarter of 2020. For the same period, the Company reported a 72 per cent year-over-year increase in diluted EPS to C$2.37 and an operating ratio of 62.7 per cent.

Financial results highlights third-quarter 2021
compared to third-quarter 2020

• Revenues of C$3,591 million, an increase of C$182 million or five per cent.

• Operating income of C$1,341 million, a decrease of two per cent, and adjusted operating income of C$1,471 million, an increase of eight per cent on an adjusted basis.

• Diluted EPS of C$2.37, an increase of 72 per cent, and adjusted diluted EPS of C$1.52, an increase of 10 per cent.

• Operating ratio of 62.7 per cent, an increase of 2.8 points, and adjusted operating ratio of 59.0 per cent, an improvement of 0.9 points.

• Operating income and operating ratio were impacted by transaction-related costs for the terminated CN merger agreement with KCS, a workforce reduction provision, and advisory fees related to shareholder matters.

• For the nine months ended September 30, 2021, after accounting for all direct and incremental expenses as well as income generated from the merger termination fee, CN recorded additional income of C$705 million (C$616 million after-tax), as a result of its strategic decision to bid for KCS.

• Free cash flow for the first nine months of 2021 was C$2,034 million compared to C$2,087 million for the same period in 2020.

CN Rail President and CEO Jean-Jacques Ruest said, “CN’s dedicated railroaders produced strong financial and operating results this quarter, despite headwinds from severe wildfires in Western Canada that caused a prolonged disruption to CN’s main line to Vancouver in July. We are proud of the team’s efforts and dedication, as well as the progress we are making on executing our strategic plan. This includes delivering immediate shareholder value while maintaining our long-term commitment to safety, customer service and sustainable value creation.

Our entire organization is highly confident that the investments we have made in safety, technology and capacity over the past three years will support the Company in delivering enhanced financial results in the last quarter of this year, as well as in 2022 and beyond. Similarly, we believe that we are well positioned to achieve our targets of C$700 million of additional operating income and a 57 per cent operating ratio for 2022. We are already seeing solid progress toward these goals and are working to continue to deliver results to benefit all CN shareholders.”

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