MONTREAL, Dec. 3, 2019 (Globe Newswire) -CN today announced that its recovery plan is on track and that it is revising its guidance following the impact of the 8-day strike.
“Our discipline on our recovery plan is delivering results,” said JJ Ruest, president and chief executive officer of CN. “While we expect to take some time and we remain dependent on favourable weather, we are pleased by how things are progressing. Safety is at the heart of everything we are doing as we bring our Canadian Operations back online and we have not experienced any significant setbacks at this point.”
CN would like to thank its customers for the collaboration they have provided during the recovery process and will continue to work closely with them.
Due to the impact of the strike, estimated at around $0.15 of EPS, CN is revising its 2019 full year financial outlook, and remains focused on continuing to realign its resources in light of the weaker demand, including its workforce, to address cost takeout efforts that started prior to the strike.
Revised 2019 financial outlook
CN is now targeting to deliver 2019 adjusted diluted EPS growth in the low to mid single-digit range versus last year's adjusted diluted EPS of C$5.50(1), compared with its October 22, 2019 financial outlook which called for adjusted diluted EPS growth in the high single-digit range.
(1) Non-GAAP Measures
CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN also uses non-GAAP measures in this news release that do not have any standardized meaning prescribed by GAAP, such as adjusted performance measures. These non-GAAP measures may not be comparable to similar measures presented by other companies. For further details of these non-GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures, refer to the attached supplementary schedule, Non-GAAP Measures.
CN's full-year adjusted diluted EPS outlook(2)excludes the expected impact of certain income and expense items, as well as those items noted in the reconciliation tables provided in the attached supplementary schedule, Non-GAAP Measures. However, management cannot individually quantify on a forward-looking basis the impact of these items on its EPS because these items, which could be significant, are difficult to predict and may be highly variable. As a result, CN does not provide a corresponding GAAP measure for, or reconciliation to, its adjusted diluted EPS outlook.
(2) Forward-Looking Statements
Certain statements included in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. By their nature, forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as "believes," "expects," "anticipates," "assumes," "outlook," "plans," "targets," or other similar words.
2019 key assumptions
CN has made a number of economic and market assumptions in preparing its 2019 outlook. The Company assumes that North American industrial production for the year will increase in the range of 0.5 to one per cent, and assumes U.S. housing starts of approximately 1.25 million units and U.S. motor vehicle sales of approximately 17 million units. For the 2018/2019 crop year, the grain crops in both Canada and the United States were in line with their respective three-year averages. The Company assumes that the 2019/2020 grain crop in Canada will be in line with the three-year average and that the 2019/2020 grain crop in the United States will be below the three-year average. CN now assumes RTMs in 2019 will be negative compared to 2018 (compared to its October 22, 2019 assumption that total RTMs would be slightly negative). CN assumes continued pricing above rail inflation. CN assumes that in 2019, the value of the Canadian dollar in U.S. currency will be approximately $0.75, and assumes that in 2019 the average price of crude oil (West Texas Intermediate) will be in the range of US$55 to US$60 per barrel. In 2019, CN plans to invest approximately C$3.9 billion in its capital program, of which C$1.6 billion is targeted toward track and railway infrastructure maintenance.