MP173 [snipped; emphasis added - PDN] ] . . . OR is simply operating expenses/operating revenue and doesnt include debt service, taxes, etc. . . . Most financial statements released to the public are fairly broad in nature. The old ICC accounting was fairly detailed, not sure of STB requires anything similar.
. . . Most financial statements released to the public are fairly broad in nature. The old ICC accounting was fairly detailed, not sure of STB requires anything similar.
Aside from the changes in both raw $ numbers year-over-year and/ or quarter vs. quarter, it would be useful to 'normalize' them per carload or Million Gross Ton-Miles ("MGTM"), etc. to get a better sense where the changes are actually occurring.
- Paul North.
Railroads capex has remained fairly steady for years, actually increasing (as I outlined earlier in this thread).
OR is simply operating expenses/operating revenue and doesnt include debt service, taxes, etc.
I doubt if any of us have the volumes of accounting data to completely analyze the carriers. Most financial statements released to the public are fairly broad in nature. The old ICC accounting was fairly detailed, not sure of STB requires anything similar.
ed
And don't forget about improved OR's from cutting maintenance.
C&NW, CA&E, MILW, CGW and IC fan
williamsb [snipped] CN’s OR was still the best by far of the class 1’s at 61.3% as opposed to 61.2% in 2010 KCS – . . . record OR of 71.7 % NS – . . . Record OR – 69.5%. UP – . . . OR was 71.3% 1.9 points worse than the record that was set in 2010. CP’s release didn’t state their OR but the BLET site said it was 81.8%.
Query: To what extent are these good Operating Ratio's the result of cost-cutting/ production efficiencies - and/ or, to what extent are they the result of enhanced revenues/ income, whether from higher volumes, higher rates generally, and/ or the fuel adjustment surcharges ? (Note that the STB recently has taken a harder line on allowing fuel adjustment surcharges to be imposed without challenge - see the BNSF decision last year.)
To answer this question wold take a fair amount of research and number-crunching, which I don't have time for right now - maybe later this month . . .
All the railroad's 2Q figures are quite good, as they are in the sweet spot with increasing volumes, increasing yty rates and the benefits of higher fuel surcharges.
Ok...volumes are up about 4% for most carriers this quarter (over a year ago). Fuel is up, but the fuel surcharges are up considerably. The 4% volume (in simple terms) means you add 4 more cars to a 100 car train. How much more fuel does that consume? How much fuel surcharge revenue do those 4 additional cars generate (plus the added fuel surcharge revenues of the other 100 cars).
As long as volumes increase and fuel increases the rails will do quite nicely. Intermodal business is increasing at a very high volume as the higher fuel costs push more and more trailers to the rails.
Ed
Normal 0 false false false EN-US X-NONE X-NONE
The 2nd quarter results are in and I have been waiting for Agent Kid’s response. He said he was going to go out on a limb and predict CN’s EPS would be less than half of last year and the operating ratio would take a hit. I hope you had a safety harness attached when you were out on that limb!!
From CN’s website it says “ Adjusted net income for second-quarter 2011 was C$578 [$611m US], or C$1.26 per diluted share, an adjusted EPS increase of 12 per cent over 2010” CN’s OR was still the best by far of the class 1’s at 61.3% as opposed to 61.2% in 2010
CN beat the street estimate by 1 cent EPS. If you can figure out stock markets let me know how. CN share value dropped quite dramatically, supposedly because they have surpassed expectations and they don’t see much upside and people are taking profits. Meanwhile CP went down 23% and their shares actually went up!
All the other class 1 railroads had very good results.
CSX – record operating income and EPS up 28%
KCS – record 2nd Qtr revenue and record OR of 71.7 %
NS – record revenue increased 18% to $2.9B. Record net income - $557M plus 42%. Record OR – 69.5%. Record operating income.
UP – best ever quarterly earnings. OR was 71.3% 1.9 points worse than the record that was set in 2010.
CP’s release didn’t state their OR but the BLET site said it was 81.8%. Net income was C$128M [ $135M US]
I was on CN’s Rivers sub from Portage la Prairie to Melville in early June and I found it quite impressive.
Barry Williams Mission BC
Since March - April 2011, E. Hunter Harrison has been pretty much involved with Dynegy, Inc. (utilities/ electric utilities) - which may be in some serious financial 'deep water' - as a director and then as an interim President/ CEO for a few months. See:
http://people.forbes.com/profile/e-hunter-harrison/15069
Some here may remember the furor back in the March - May 2010 time frame about CN's numerous 'incorrect' reports of grade crossing delays of longer than 10 minutes on the former EJ&E lines, which lead to some hearings before the STB and possibly some fines/ penalties being assessed. I believe - but am not certain - that a lot of those events took place in late 2009, during the last months of Harrison's tenure as CN CEO. While he was certainly responsible for that as being at the top of the 'chain-of-command' , and may well have also been responsible for the corporate culture that led to and tolerated such chicanery, I doubt that had anything to do with his retirement date and timing, as that had been announced about a year earlier - in April 2009.
I am having computer trouble, I will try to post later.
If you're interested in him why not contact him directly? He's retired, and he may just appreciate having someone with an interest in the biz to set the record straight. Sometimes those guys appreciate talking about their experiences...but nobody bothers to ask.
I guess in academia, I learned to develop a thicker skin, so as to not be bothered by what others said to my face or behind my back. As a clinical psychologist, I learned how to listen to different people without censoring what they said, even when it was grossly offensive, and to sort out their remembrances, recollections, etc. without dismissing them en mass just because some of it is unreliable hearsay, since it remains useful information in putting together a picture, along with hard data, in the process of helping people.
Some of the stories about HH are self-serving by the individuals relating them, both positive and negative in tone. Some are merely anecdotal without being evaluative. But perhaps this forum is not the place for gathering information.
schlimm selector: I think it morally right or ethically right to impugn a person here where he is unlikely to be afforded an opportunity to refute any claims of fact about him. Crandell Immoral? Unethical? Impugning? Invectives? Pretty strong statements. You seem to miss the distinction between a public figure and an ordinary one. You also imply that anything said here about HH is negative and not accurate. One of the driving forces in the social sciences and education in general is to expand understanding. And the of gathering oral accounts, anecdotes (some of those here have been 1st or 2nd party) etc. is a significant part of biography and history.
selector: I think it morally right or ethically right to impugn a person here where he is unlikely to be afforded an opportunity to refute any claims of fact about him. Crandell
I think it morally right or ethically right to impugn a person here where he is unlikely to be afforded an opportunity to refute any claims of fact about him.
Crandell
Immoral? Unethical? Impugning? Invectives? Pretty strong statements. You seem to miss the distinction between a public figure and an ordinary one. You also imply that anything said here about HH is negative and not accurate. One of the driving forces in the social sciences and education in general is to expand understanding. And the of gathering oral accounts, anecdotes (some of those here have been 1st or 2nd party) etc. is a significant part of biography and history.
I'll let historians assess the veracity of what they learn, anecdotally or not. As for my background as a psychologist, I know that hindsight bias has a way of imparting all sorts of falsehoods and misapprehensions to what one takes for recall. It is much worse when taken for fact from someone else who labours under those misapprehensions. So, thanks, but I will look askance on much of what I see posted here about a person who is apparently disliked. That he is disliked doesn't mean that he is universally disliked, and it certainly doesn't follow that he is incompetent.
And I would not talk about you behind your back if you were subject to villification, and I expect you would appreciate that if you learned of it. Why should the President of the USA or EHH be any different? It amounts to a grande ad hominem when mischaracterizations are offered heresay. Records may share some light on facts about events, and some of them might even lead to conclusions about a person's competence or character. But the rest of it is not something I would like to take part in.
Thanks Paul..I will have a look for SwitchPoints...I read "The Pig that Flew" , a very good read about CN's transition from Crown corporation to private sector corporation.. I highly recommend it.
August 2009 Trains - "Hunter's Way or the Highway", by Fred W. Frailey. See:
http://trn.trains.com/en/sitecore/content/Magazine%20Issues/2009/August%202009.aspx
$5.95 + $2.95 Shipping (estimated) - see: http://www.kalmbachstore.com/trn090801.html
Someplace back around then I read about a privately-published book that was used by CN/ Harrison at internal all-day or all-weekend staff seminars to indoctrinate middle-level managers, and I might even have found a few for sale on eBay. Anybody know the title, any more details, availability - and most interesting of all - any review comments on it ?
EDIT: From my post here of 07-13-2009 at 10:41 AM on page 5 of 11 of the thread "E Hunter Harrison and CN..." at: http://cs.trains.com/TRCCS/forums/p/156519/1730213.aspx
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OK, here they are - from page 36 [left. col.] of the August 2009 [Vol. 69, No. 8] issue of Trains, article on Mr. Harrison;
- ''How We Work and Why'', 2005 - apparently privately published by CN.
- ''Change, Leadership, Mud and Why [How We Work and Why, Vol. 2]'', 2008, published by Canadian National [privately [Q] - doesn't seem to be available in or on the general marketplace yet]
- The Pig That Flew: The Battle to Privatize Canadian National,by Harry Bruce, 1997, Douglas & McIntyre, ISBN 1550546090 (1-55054-609-0)
Finally, in running these down I also found a reference to a more available book -
selector I think it morally right or ethically right to impugn a person here where he is unlikely to be afforded an opportunity to refute any claims of fact about him. Crandell
coborn35 Might as well get rid of news stations, newspapers, magazines, internet forums, and chat rooms eh Crandell? Cant refute claims there either.
Might as well get rid of news stations, newspapers, magazines, internet forums, and chat rooms eh Crandell? Cant refute claims there either.
I take what I see there with about as much skepticism. Some interviews are with respected authorities and experts, while some just solicit opinions. Being prudent has served me well so far.
One story I heard is that he left BN under a cloud after he started removing part of the third track in the Chicago commuter district without authorization. A potential career limiting move. No doubt the Chicago area folks can comment on how well the territory would function today with only two tracks to play with. So to fully understand his strengths and weaknesses we would have to know the complete reasons for his moves from company to company.
Certainly one strength Harrison had was a detailed understanding of the business he was in charge of. All too often we see MBA types running companies, and believing that knowing how to "manage" provides all the necessary skills. There is a difference between a pretty Power Point presentation and actually understanding the customer's desires and how you can actually serve them. The small short lines understand this; the Class 1s are mostly too proud of their bigness to worry about the details that could lead to greater success.
John
Mechanical Department "No no that's fine shove that 20 pound set all around the yard... those shoes aren't hell and a half to change..."
The Missabe Road: Safety First
I have no particular interest in him at all, Schlimm, but neither do I think it morally right or ethically right to impugn a person here where he is unlikely to be afforded an opportunity to refute any claims of fact about him. All there is is invective and opinion, or third party anecdotes a bit short on beef.
Aside from that opinion, I don't know what other reason to know more about him I should have merely because of my educational background....? I enjoy some information about higher-ups in all forms of business, and will sometimes enjoy a well-written biography. I don't think we're going to get anything much of that caliber here.
Crandell: The undisputed fact that HH was made a CEO twice does not mean, however, that there is nothing more to be said about him, positive or negative or simply fleshing out who he is beyond the basic bio. All you have without a deeper exploration is a cardboard figure. I am surprised you, as someone in social sciences, don't seem to have the curiosity to want to know more about him.
[quote user="samfp1943"]
[quote user="Ulrich"]
I'm sure it happens..but promoted on up to CEO just to get rid of him..I don't think so.
[/quote]
"...Maybe it's a railroad thing? I've seen a few people get promoted and shipped away when they should have been fired. Makes it easier for everyone involved, I guess.."
This might be an application of The Peter Principle :
It has been some time for me, but I seem to recall that the Peter Principle had, as a prediction, that one would only ever rise to the level where one is deemed incompetent. I find it very hard to accept that not one person in three different roads, at least one of which had a sound and rational corporate culture with good leadership, didn't conclude that EHH was a dud at his current level and either coach him extensively or stall him inedefinitely. However, regardless of what I have guessed, his extensive tenure and corporate progression seem to fly in the face of all the poor opinions and negative assumptions about his skills, orientation to his work, or his record of success for those who have to assess that record in order to decide whether or not to hire him, or to continue to employ him in his current capacity.
10% equity returns HAVE been average, based on returns from 1926. However, looking at the numbers I posted above, in which SPY has returned 2.84% over the past 10 years, one would tend to be very content with a 10% return.
Look, the railroad stocks have been outstanding investments the past 10 years. CNI has returned enormous returns, over both the railroads and the indices.
That being said, the CNI's return on capital is only about 9% and return on equity is only about 19%. Railroads require enormous amounts of capital investment in order to be attractive. The past decade has allowed the industry to begin to achieve the returns necessary.
Ok, lets look at real numbers (source: Morningstar).
Compare the returns of CNI, all publically traded railroads, and S&P500 over the last few years:
time: CNI Rails SPY
5 years 13.83% 11.42% 3.21%
10 years 19.26% 14.23% 2.84%
15 years 24.97% 10.84% 6.87%
These returns are the compound annual return rate and without going into math geek mode, it essentially means that CNI has had an average rate of return of 13.83% for the past 5 years....each year. 19.26% for each year for 10 years.
Comparing CNI to SPY is a little misleading, as CNI is a North American company, not an American company while the S&P500 is an American index...but the difference is HUGE.
Further, my dividend return yearly off of my initial investment is 34.5%...PER YEAR. Why? I bought in early (IC) at a low price and IC and CNI has constantly increased their dividend (yield on current price is 1.7%).
So, am I with CNI? Yes I am.
Actually much better than 10% if you've held the stock for awhile due to a 3 for 2 stock split in Feb. 04 and a 2 for 1 stock split in Sept. 99..and if you've reinvested all your dividends..well... you can see why I like CN.
You are right. I stand corrected. 10% is better, but only average.
No, but 5% is your number..my own is more like 10%, and for a blue chip stock that's not too shabby at all....don't forget about the 2:1 stock split in Feb. 06..
You are happy with a 5% increase on your investment annually?
I do not, nor have not worked for CN or IC, but have been a shareholder of both for a number of years and also have been a vendor for about 15 years. I have talked to HH once, for perhaps 45 seconds, not long enough to have gained knowledge about him personally, but long enough to thank him for his service to the railroad and my holdings. Now, that full disclosure is taken care of...
I have a customer of a fairly large trucking and logistics company in Chicago that arrives at work every morning at 5am and personally is involved in routing and dispatching drivers and loads. He probably has in excess of 200 drivers and while that is not a HUGE operation, it is pretty darned big. I asked him "why?". He responded that how else would he know that his customers were being serviced? Micro managing? Yes. His other operations people were in the room with him and they have been there for 15-20 years and understand this is who he is.
The former CEO of my employer was an absolute SOB and difficult to deal with at times. He was very brilliant and laser focused on the goal of the company. You do not have to like the boss, most of them really dont want to be friends with you (that is something my CEO told me...that is ok, he allowed me to reach goals in my life that wouldnt have been done elsewhere).
Now, to the numbers...
For the past 7 years CN has had revenues betweeen $6.5B and $8.5B, generally increasing until the bottom fell out in 09 (slid to $7.3B with recovery to $8.3B last year. During those 7 years CN invested between 16.4% and 19.1% of their revenues in capex. The trend has increased over the period of time and last year they invested $1.586B or 19.1% of revenue.
During the same 7 years CSX revenues have ranged between $8.0B and $11.2B with their capex ranging from 12.8% to 17.7%.
CP's revenues ranged from $3.9B to $4.9B with capex between 14.6% (last year) and 20.8% in 2005.
Capex for CN has been very steady in the past 7 years, both in $$$ amounts and %%% amounts, with an increase in every years except 2009:
2004 - $1.070B
2005 - $1.186 B
2006 - $1298B
2007 - $1387B
2008 - $1424B
2009 - $1402 B
2010 - $1586B
I could list the other Class 1's but my guess is that all are in the 15% -20% for capex, with the lineal amounts growing the past decade.
WC's business model was vastly different than CN's. There was business on the WC that simply wouldnt make sense for CN. Ditto Missabe. Ditto EJE (tho I havent heard of anything negetive lately). The EJE and WC along with IC were purchased for the infrastructure that allows CN to handle LONG HAULs, not for the limestone that moves 200 miles. I have former customers that it simply didnt work out...they wanted services or products we couldnt handle, usually at certain price points.
So, as an operations guy...I cannot comment. As a customer...no comment. As a trackside railfan...really dont care what colors the locomotive are. As a shareholder...
One measure of performance of a corporation is stock prices. Compensation for top execs is often closely tied to the stock price of their corporations. In the period of EHH's tenure as CEO, CN stock went from $41 in Jan 2003 to $55 per share when he stepped down in Jan 2010. That is 34% increase over 7 years, or an average of ~5% per year.
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