Canadian National Railway Co revenue started to decline in 2016: decreased 4.6% vs. 3.9% growth a year earliner
24.01.2017 • About Canadian National Railway Co (
$CNR) • By InTwits
Canadian National Railway Co reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 54.3% in 2016 vs. 50.9% in 2015 vs. 46.5% in 2012
- Canadian National Railway Co has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.8%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 3,797 in 2016, 4,468 in 2015, 11,398 in 2014, 7,211 in 2013, 6,104 in 2012
- The company has highly profitable business model: ROIC is at 15.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Canadian National Railway Co ($CNR) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9,920 | 10,575 | 12,134 | 12,611 | 12,037 | -4.6% |
| EBITDA | 4,609 | 4,853 | 5,674 | 6,424 | 6,537 | 1.8% |
| Net Income | 2,680 | 2,612 | 3,167 | 3,538 | 3,640 | 2.9% |
Balance Sheet
|
|---|
| Cash | 155 | 214 | 52 | 153 | 176 | 15.0% |
| Short Term Debt | 577 | 1,021 | 544 | 1,442 | 1,489 | 3.3% |
| Long Term Debt | 6,323 | 6,819 | 7,828 | 8,985 | 9,448 | 5.2% |
Cash flow
|
|---|
| Capex | 1,731 | 1,973 | 2,297 | 2,706 | 2,695 | -0.4% |
Ratios
|
|---|
| Revenue growth | 9.9% | 6.6% | 14.7% | 3.9% | -4.6% | |
| EBITDA growth | 10.3% | 5.3% | 16.9% | 13.2% | 1.8% | |
| EBITDA Margin | 46.5% | 45.9% | 46.8% | 50.9% | 54.3% | 3.4% |
| Net Income Margin | 27.0% | 24.7% | 26.1% | 28.1% | 30.2% | 2.2% |
| CAPEX, % of revenue | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% | 0.9% |
| ROIC | 16.0% | 15.2% | 16.4% | 16.8% | 15.6% | -1.2% |
| ROE | 24.7% | 21.8% | 24.0% | 24.9% | 24.4% | -0.5% |
| Net Debt/EBITDA | 1.5x | 1.6x | 1.5x | 1.6x | 1.6x | 0.0x |
Canadian National Railway Co ($CNR) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,964 | 2,842 | 3,014 | 3,217 | -4.3% | -9.1% | -6.5% | 1.6% |
| EBITDA | 1,524 | 1,589 | 1,719 | 1,705 | 12.1% | -3.5% | -3.1% | 3.7% |
| Net Income | 792 | 858 | 972 | 1,018 | 12.5% | -3.2% | -3.5% | 8.2% |
Balance Sheet
|
|---|
| Cash | 188 | 160 | 215 | 176 | 5.6% | 86.0% | -60.0% | 15.0% |
| Short Term Debt | 987 | 1,238 | 671 | 1,489 | -8.9% | -17.6% | -48.6% | 3.3% |
| Long Term Debt | 9,141 | 9,084 | 10,022 | 9,448 | 9.9% | 15.8% | 9.2% | 5.2% |
Ratios
|
|---|
| EBITDA Margin | 51.4% | 55.9% | 57.0% | 53.0% | 7.5% | 3.2% | 2.0% | 1.1% |
| Net Income Margin | 26.7% | 30.2% | 32.2% | 31.6% | 4.0% | 1.8% | 1.0% | 1.9% |
Revenue and profitability
The company's Revenue decreased on 4.6%. Annual revenue decline showed slowdown in 16Q4 - revenue increased slightly on 1.6%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.4 pp from 50.9% to 54.3% in 2016.
Net Income marign increased on 2.2 pp from 28.1% to 30.2% in 2016.
Capital expenditures (CAPEX) and working capital investments
Canadian National Railway Co's CAPEX/Revenue was 22.4% in 2016. The company showed CAPEX/Revenue growth of 3.7 pp from 18.7% in 2013 to 22.4% in 2016. Average CAPEX/Revenue for the last three years was 20.9%.
Return on investment
The company operates at high and attractive ROE (24.44%) while ROIC is a bit lower (15.59%). ROIC decreased slightly on 1.2 pp from 16.8% to 15.6% in 2016. ROE showed almost no change in 2016.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA increased on 0.047x from 1.6x to 1.6x in 2016. Debt increased on 4.9% while cash jumped on 15.0%.
Management team
Canadian National Railway Co's CEO Luc Jobin is a founder and has spent 2 years at the company. Ghislain Houle is a Canadian National Railway Co's CFO. Ghislain Houle has spent 2 years at the company.
Appendix 1: Peers in Industrial
Below we provide Canadian National Railway Co benchmarking against other companies in Industrial industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Progressive Waste Solutions Ltd ($BIN) | | 16.1% | 7.8% | 1.8% | 59.4% |
| Baylin Technologies Inc ($BYL) | | 16.5% | -44.0% | -4.1% | 47.5% |
| CCL Industries Inc ($CCL.B) | | 44.4% | 36.8% | 17.5% | 30.8% |
| Stantec Inc ($STN) | | 17.9% | 13.3% | 14.4% | 30.5% |
| Avigilon Corp ($AVO) | | 72.6% | 41.9% | 17.7% | 22.2% |
| |
|---|
| Median (51 companies) | | 4.9% | 9.9% | 8.5% | 3.2% |
|---|
| Canadian National Railway Co ($CNR) | | 6.6% | 14.7% | 3.9% | -4.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($PUR) | 77.9% | 78.0% | 77.5% | 75.6% | |
| WSP Global Inc ($WSP) | 81.1% | 83.2% | 81.0% | 74.0% | 76.7% |
| Avigilon Corp ($AVO) | 49.3% | 54.2% | 56.6% | 57.4% | 52.0% |
| Stantec Inc ($STN) | 55.0% | 54.7% | 54.9% | 54.5% | 54.1% |
| IWG Technologies Inc ($IWG) | 53.3% | 54.0% | 49.0% | 47.8% | 54.9% |
| |
|---|
| Median (50 companies) | 23.6% | 23.4% | 21.7% | 21.7% | 22.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian Pacific Railway Ltd ($CP) | 26.1% | 32.4% | 43.7% | 48.9% | 51.6% |
| Badger Daylighting Ltd ($BAD) | 25.7% | 25.9% | 27.9% | 24.6% | 24.2% |
| IWG Technologies Inc ($IWG) | 12.7% | 25.5% | 20.0% | 24.0% | 26.9% |
| Winpak Ltd ($WPK) | 19.5% | 18.6% | 18.7% | 22.7% | 23.5% |
| CCL Industries Inc ($CCL.B) | 19.6% | 15.6% | 18.4% | 19.9% | 18.3% |
| |
|---|
| Median (53 companies) | 10.2% | 8.3% | 8.0% | 7.8% | 11.0% |
|---|
| Canadian National Railway Co ($CNR) | 46.5% | 45.9% | 46.8% | 50.9% | 54.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($NAL) | 21.7% | 34.5% | 35.1% | 42.0% | 9.6% |
| Cargojet Inc ($CJT.A) | 7.0% | 6.3% | 54.1% | 41.3% | |
| Algoma Central Corp ($ALC) | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% |
| Canadian Pacific Railway Ltd ($CP) | 20.2% | 20.2% | 21.9% | 22.7% | 19.0% |
| ENTREC Corp ($ENT) | 35.0% | 26.7% | 29.5% | 18.0% | |
| |
|---|
| Median (54 companies) | 3.2% | 3.6% | 4.3% | 3.7% | 3.9% |
|---|
| Canadian National Railway Co ($CNR) | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($IBG) | 4.8% | -9.0% | 11.6% | 21.9% | 26.2% |
| IWG Technologies Inc ($IWG) | 17.0% | 36.3% | 23.4% | 27.2% | 25.7% |
| Winpak Ltd ($WPK) | 20.4% | 18.0% | 18.3% | 22.6% | 21.8% |
| Toromont Industries Ltd ($TIH) | 28.8% | 25.8% | 24.3% | 23.5% | 21.7% |
| Intertape Polymer Group Inc ($ITP) | 12.3% | 13.7% | 22.5% | 23.0% | 21.0% |
| |
|---|
| Median (55 companies) | 12.2% | 9.6% | 11.0% | 8.3% | 8.5% |
|---|
| Canadian National Railway Co ($CNR) | 16.0% | 15.2% | 16.4% | 16.8% | 15.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($CFF) | | 2.7x | 6.1x | 35.9x | 3.6x |
| Ag Growth International Inc ($AFN) | 2.9x | -0.1x | 2.1x | 14.1x | |
| Cargojet Inc ($CJT.A) | 1.5x | 1.5x | 31.5x | 12.9x | |
| Progressive Waste Solutions Ltd ($BIN) | 4.5x | 3.3x | 2.9x | 10.6x | 3.8x |
| Finning International Inc ($FTT) | 2.3x | 1.8x | 1.4x | 9.4x | 2.5x |
| |
|---|
| Median (49 companies) | 1.5x | 1.5x | 1.2x | 1.0x | 2.1x |
|---|
| Canadian National Railway Co ($CNR) | 1.5x | 1.6x | 1.5x | 1.6x | 1.6x |
