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Canadian National Railway's (CNI) CEO Claude Mongeau on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Results Earnings Conference Call

April 25, 2016, 04:30 PM ET

Executives

Sam Forgione - VP, IR

Claude Mongeau - President and CEO

Jim Vena - EVP and COO

Jean-Jacques Ruest - EVP and Chief Marketing Officer

Luc Jobin - EVP and CFO

Analysts

Cherilyn Radbourne - TD Securities

Ravi Shanker - Morgan Stanley

Jason Seidl - Cowen

Fadi Chamoun - BMO

Ken Hoexter - Merrill Lynch

Walter Spracklin - RBC

Brandon Oglenski - Barclays

Chris Wetherbee - Citigroup

Justin Long - Stephens

Allison Landry - Credit Suisse

Brian Ossenbeck - JPMorgan

Tom Wadewitz - UBS

Turan Quettawala - Scotia Bank

Scott Group - Wolfe Research

Bascome Majors - Susquehanna

Benoit Poirier - Desjardins Capital Markets

Operator

CN's first quarter 2016 financial results conference call will begin momentarily. I would like to remind you that today's remarks contain forward-looking statements within the meaning of applicable securities laws. Such statements are based on assumptions that may not materialize and are subject to risks described in CN's first quarter 2016 financial results press release and analyst presentation documents that can be found on CN's website. As such, actual results could differ materially. Reconciliations for any non-GAAP measures are also posted on CN's website at www.cn.ca. Please stand by. Your call will begin shortly.

Welcome to the CN First Quarter 2016 Financial Results Conference Call. I would now like to turn the meeting over to Sam Forgione, Vice-President, Investor Relations. Ladies and gentlemen, Mr. Forgione.

Sam Forgione

Thank you, Patrick. Good afternoon, everyone, and thank you for joining us today. I'd like to remind you all of the comments already made regarding forward-looking statements.

With me today is Claude Mongeau, our President and Chief Executive Officer; Jim Vena, our Executive Vice President and Chief Operating Officer; J.J. Ruest, our Executive Vice President and Chief Marketing Officer; and Luc Jobin, our Executive Vice President and Chief Financial Officer.

In order to be fair to all participants, I would ask that you to please limit yourselves to one question.

It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Mr. Claude Mongeau.

Claude Mongeau

Thank you very much Sam, and thank you all for joining us on this call. I think it's fair to say that there is a lot to be proud. We are coming again with very strong results in what is more difficult volume environment. J.J. will take you through the contour but we're leveraging hard diversity, the diversity of our franchise we're chasing every carload.

We're holding our own but the overall volume is down 7% or 9% depending how you measure it but in that context we are responding very swiftly on the resource side and then in terms of efficiency. Jim will give you the detail, but across the Board, we're setting new levels of performance in terms of efficiency and network throughput.

We put it all together. We're doing this with a view to maintain that balance because we service and cost efficiency. Our service has never been better. We need that to help our customers succeed in the marketplace.

We're also maintaining our focus on safety. We've had very strong safety results during the first quarter and we want this to continue going forward. In terms of the - very important operating ratio, we've established a record for the first quarter with 58.9%.

This is a clearly industry-leading performance. If you take the same geography as the industry in terms of out of book real estate gain. So very good performance. We're very pleased in that regard and so you put it all together.

Luc will take you though this, but our EPS is up around 16% to $1 and our free cash flow is very solid at around $584 million, while around very good results, solid performance by the team.