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Canadian National Railway (NYSE: CNI) lifts 2026 guidance after Q2 profit growth

Filing Impact
(Neutral)
Filing Sentiment
(Neutral)
Form Type
6-K

Rhea-AI Filing Summary

Canadian National Railway Company reported strong second-quarter 2026 results with solid volume growth and profitability. Total revenues were C$4,753 million, up 11% from 2025, while net income reached C$1,249 million, a 7% increase. Diluted EPS rose 10% to C$2.06, and adjusted diluted EPS increased 11% to C$2.08, or C$2.09 at constant currency, up 12%. Gross ton miles grew 3% and revenue ton miles 5%, supported mainly by grain and energy-related traffic.

The operating ratio was 62.5%, up 80 basis points, though fuel efficiency improved 3% to a record 0.836 US gallons per 1,000 GTMs. For the first half, free cash flow was C$1,842 million, up 19%, with net cash from operations of C$2,876 million. CN repurchased 2.9 million shares in the quarter for C$454 million and declared a quarterly dividend of C$0.9150 per share. Full-year 2026 guidance was raised to low single-digit RTM growth and mid-to-high single-digit adjusted diluted EPS growth, with planned capital investments of about C$2.8 billion and an adjusted debt-to-adjusted EBITDA multiple of 2.61 times.

Positive

  • Revenue and EPS growth: Q2 2026 revenues rose 11% to C$4,753 million and diluted EPS increased 10% to C$2.06, with adjusted diluted EPS up 11% to C$2.08.
  • Stronger cash generation: First-half 2026 free cash flow reached C$1,842 million, up 19%, supporting dividends and C$1,323 million of share repurchases year to date.
  • Raised 2026 guidance: Management now assumes low single-digit RTM growth and mid-to-high single-digit adjusted diluted EPS growth for 2026, reflecting sustained business momentum.

Negative

  • Margin pressure: Operating ratio deteriorated to 62.5% in Q2 2026 from 61.7% a year earlier, and operating expenses per GTM increased 9% to 2.45 cents.
  • Higher safety incident rates: Injury frequency rose to 1.01 from 0.83 per 200,000 person hours, and the accident rate increased to 2.30 from 1.56 per million train miles.
Total revenues C$4,753 million Three months ended June 30, 2026; up 11% vs Q2 2025
Net income C$1,249 million Q2 2026 net income; 7% higher than Q2 2025
Diluted EPS C$2.06 Q2 2026 diluted earnings per share; up 10% year over year
Adjusted diluted EPS C$2.08 Q2 2026 adjusted diluted EPS; 11% growth vs Q2 2025
Free cash flow C$1,842 million First half of 2026 free cash flow; 19% increase from prior year
Operating ratio 62.5% Q2 2026 operating expenses as a percentage of revenues; 80 bps higher than 61.7%
Adjusted EBITDA C$8,832 million Adjusted EBITDA for the twelve months ended June 30, 2026; up 4%
Shares repurchased 2.9 million shares; C$454 million Common shares repurchased in Q2 2026 under the normal course issuer bid
revenue ton miles (RTMs) financial
"Achieved revenue ton miles (RTMs) increase of 5% year over year with strong overall volumes"
Revenue ton miles (RTMs) measure how much freight a carrier moves by counting one ton transported one mile when that movement generates revenue. Investors watch RTMs to gauge cargo demand and how efficiently a company uses its transport capacity — like multiplying the number of packages on a truck by the distance driven — because rising RTMs typically indicate stronger sales volumes and better potential for higher revenue and profits.
operating ratio financial
"Operating ratio, defined as operating expenses as a percentage of revenues, of 62.5%"
A company's operating ratio is a simple percentage that shows how much of its revenue is eaten up by the costs of running the business — calculated by dividing operating expenses by operating revenue. For investors it signals efficiency and profit potential: a lower operating ratio means the company keeps more of each dollar it earns (like a household with lower bills keeping more of its paycheck), while a higher ratio suggests tighter margins and less room to absorb shocks.
free cash flow financial
"Free cash flow for the first half of 2026 was C$1,842 million, an increase of 19%"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
adjusted EBITDA financial
"Adjusted EBITDA reported for the twelve months ended June 30, 2026 of C$8,832 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Normal Course Issuer Bid (NCIB) financial
"Under its current NCIB, the Company may repurchase up to 24.0 million common shares"
A normal course issuer bid (NCIB) is a regulated program that allows a publicly traded company to repurchase its own shares on the open market over a set period, following disclosure and trading rules. For investors, an NCIB can raise the value of remaining shares by reducing the number of shares available and can signal management’s confidence, much like a company buying back coupons to make the remaining coupons more valuable; it also uses cash that could have gone to growth or dividends.
constant currency financial
"This non-GAAP measure does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable"
Constant currency is a way of measuring financial results that removes the effects of changes in currency exchange rates. It allows for a clearer comparison of a company's performance over time by showing what the numbers would look like if exchange rates had stayed the same. This helps investors understand whether growth comes from actual business improvements or just currency fluctuations.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

How did Canadian National Railway (CNI) perform financially in Q2 2026?
Canadian National Railway delivered Q2 2026 revenues of C$4,753 million, up 11% year over year, and net income of C$1,249 million, up 7%. Diluted EPS was C$2.06, with adjusted diluted EPS of C$2.08, reflecting double-digit earnings growth.

What guidance did Canadian National Railway (CNI) provide for full-year 2026?
For 2026, CN now assumes low single-digit RTM growth and expects mid-to-high single-digit adjusted diluted EPS growth. The company also plans to invest approximately C$2.8 billion in its capital program, net of customer reimbursements, and aims to keep improving free cash flow conversion.

How strong was Canadian National Railway’s (CNI) cash flow and free cash flow in 2026 so far?
In the first half of 2026, CN generated net cash from operating activities of C$2,876 million and free cash flow of C$1,842 million, up 19% year over year. This supported significant capital spending, dividends, and share repurchases while maintaining a 2.61x adjusted debt-to-adjusted EBITDA ratio.

What dividends and share repurchases did Canadian National Railway (CNI) report?
CN’s board approved a Q3 2026 dividend of C$0.9150 per share, payable September 29, 2026. In Q2 2026, CN repurchased about 2.9 million shares for C$454 million, and 8.9 million shares for C$1,323 million over the first half under its normal course issuer bid.

How did Canadian National Railway’s (CNI) volumes and operating metrics trend in Q2 2026?
Q2 2026 revenue ton miles rose 5% to 62,250 million and gross ton miles increased 3%. CN reported record fuel efficiency at 0.836 gallons per 1,000 GTMs, while train length, train speed, and locomotive utilization all improved modestly versus the prior year.

What is Canadian National Railway’s (CNI) leverage and adjusted EBITDA level?
For the twelve months ended June 30, 2026, CN reported adjusted EBITDA of C$8,832 million, up 4%. Adjusted debt was C$23,056 million, resulting in an adjusted debt-to-adjusted EBITDA multiple of 2.61 times, reflecting moderate leverage for a large infrastructure operator.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2026

Commission File Number: 001-02413

Canadian National Railway Company
(Translation of registrant's name into English)

935 de la Gauchetiere Street West
Montreal, Quebec
Canada H3B 2M9
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  Form 40-FX





































SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
  Canadian National Railway Company
Date:July 24, 2026 By:/s/ Jessica Syms
   Name:Jessica Syms
    Title:Assistant Vice-President, Corporate Secretary and General Counsel















































Canadian National Railway Company


Table of Content

Exhibit Number      Description of Exhibit
Ex 99.1          
Earnings News Release
Ex 99.2          
Unaudited Interim Consolidated Financial Statements and Notes Thereto
Ex 99.3
Management's Discussion and Analysis
Ex 99.4
CEO and CFO Certificates




















PRESS RELEASE

cnlogoa.jpg


CN Delivers on Commitments with Strong Second Quarter Results and Raises 2026 Guidance

•Delivered diluted earnings per share (EPS) increase of 10%, or 11% on an adjusted basis and 12% on an adjusted basis at constant currency (1)
•Raised 2026 financial guidance, now assuming low single-digit RTM growth and expecting mid-to-high single-digit adjusted diluted EPS growth
•Achieved revenue ton miles (RTMs) increase of 5% year over year with strong overall volumes driven primarily by grain and energy products
•Realized record first half and second quarter fuel efficiency performance
•Repurchased approximately 3 million shares for C$454 million
•Generated free cash flow of C$1,842 million, an increase of 19% for the first half of 2026 (consisting of net cash provided by operating activities of C$2,876 million and net cash used in investing activities of C$1,034 million) (1)

MONTREAL, July 24, 2026 — CN (TSX: CNR) (NYSE: CNI) today reported its financial and operating results for the second quarter ended June 30, 2026.

“I want to thank the CN team for the strong results this quarter, which reflect their discipline, focus, and execution. We delivered on our key commitments, with solid operational and commercial performance, improved productivity, strong cash flow generation, and continued financial discipline. We are raising our full-year guidance, supported by sustained business momentum and our continued ability to deliver results for our customers.”

–Tracy Robinson, President and Chief Executive Officer, CN

Second-Quarter 2026 Results Highlights
CN saw improvements across operating metrics, with strong commercial and service performance. Gross ton miles (GTMs) increased by 3% to 121,082 (millions), while RTMs increased by 5% to 62,250 (millions). The Company delivered diluted EPS of C$2.06, an increase of 10%, and adjusted diluted EPS of C$2.08, an increase of 11%, or C$2.09 on an adjusted basis at constant currency, an increase of 12%. (1)

The quarter’s operating performance reflects the Company’s continued priority on operational execution as well as its ability to provide solid service to customers, allowing it to capture demand in grain and in other markets.

Quarterly Financial Results Highlights
Second-quarter 2026 compared to second-quarter 2025
•Revenues of C$4,753 million, an increase of C$481 million, or 11%.
•Operating income of C$1,781 million, an increase of C$143 million, or 9%, and adjusted operating income of C$1,798 million, an increase of C$160 million, or 10%. (1)
•Operating ratio, defined as operating expenses as a percentage of revenues, of 62.5%, an increase of 80 basis points, and adjusted operating ratio of 62.2%, an increase of 50 basis points. (1)
•Net income of C$1,249 million, an increase of C$77 million, or 7%, and adjusted net income of C$1,261 million, an increase of C$89 million, or 8%. (1)
•Diluted EPS of C$2.06, an increase of 10% and adjusted diluted EPS of C$2.08, an increase of 11%, or C$2.09 on an adjusted basis at constant currency, an increase of 12%. (1)
•Net cash provided by operating activities of C$2,876 million and net cash used in investing activities of C$1,034 million for the first half of 2026.
•Free cash flow for the first half of 2026 was C$1,842 million, an increase of C$294 million, or 19%. (1)
•Adjusted EBITDA reported for the twelve months ended June 30, 2026 of C$8,832 million, an increase of 4%. (1)
•Adjusted debt-to-adjusted EBITDA of 2.61 times as at and for the twelve months ended June 30, 2026. (1)
•Repurchased approximately 2.9 million shares in the second quarter of 2026 for C$454 million.


CN | 2026 Quarterly Review – Second Quarter 1

PRESS RELEASE
Quarterly Operating Performance Highlights *
Second-quarter 2026 compared to second-quarter 2025
•GTMs increased 3% to 121,082 (millions).
•RTMs increased 5% to 62,250 (millions).
•Through dwell increased by 4% to 7.1 (entire railroad, hours).
•Car velocity decreased by 1% to 211 (car miles per day).
•Through network train speed increased by 1% to 19.1 (mph).
•Fuel efficiency of 0.836 (US gallons of locomotive fuel consumed per 1,000 GTMs), was 3% more efficient.
•Train length increased by 1% to 8,084 (feet).
•GTMs per average number of employees increased 9% to 5,105 (thousands).
•Operating expenses per GTM increased 9% to 2.45 (cents).

* Statistical operating data and key operating measures are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available.

Dividends
CN's Board of Directors has approved a third-quarter 2026 dividend on the Company’s common shares outstanding. A quarterly dividend of ninety-one and a half cents (C$0.9150) per common share will be paid on September 29, 2026, to shareholders of record at the close of business on September 8, 2026.

Revised 2026 financial guidance (1)(2)
Based on strong volume and solid operational execution in the first half of the year, the Company now assumes to deliver low single-digit RTM growth in 2026 (compared to its January 30, 2026 assumption of flattish growth). The Company now expects adjusted diluted EPS growth in the mid-to-high single-digit range (compared to its January 30, 2026 expectation of slightly exceeding RTM growth).

In 2026, CN continues to plan to invest approximately C$2.8 billion in its capital program, net of amounts reimbursed by customers. The Company also expects to continue improving its free cash flow conversion throughout 2026.

CONFERENCE CALL DETAILS
CN's senior officers will review the results and the railway's outlook in a conference call starting at 8:30 a.m. Eastern Time on July 24, 2026. Tracy Robinson, CN President and Chief Executive Officer, will lead the call. Parties wishing to participate via telephone may dial 1-800-715-9871 (Canada/U.S.), or 1-647-932-3411 (International), using 2015414 as the passcode. Participants are advised to dial in 10 minutes prior to the call.

(1) Non-GAAP Measures
CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN may also use non-GAAP measures in this news release that do not have any standardized meaning prescribed by GAAP. 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 outlook, guidance or targets (2) exclude certain adjustments, which are expected to be comparable to adjustments made in prior years. However, management cannot individually quantify on a forward-looking basis the impact of these adjustments, 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 outlook, guidance or targets.

(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, including statements based on management’s assessment and assumptions and publicly available information with respect to CN. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN 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," "goals," or other similar words.

2026 key assumptions
CN has made a number of economic and market assumptions in preparing its 2026 outlook. The 2025/2026 grain crops in Canada and the U.S. were above their respective five-year averages. The Company continues to assume that the 2026/2027 grain crops in Canada and the U.S. will be in line with their respective five-year averages. CN now assumes low single-digit RTM growth (compared to its January 30, 2026 assumption of flattish growth). CN now assumes that in 2026, the value of the Canadian dollar in U.S. currency will be $0.71 (compared to its April 29, 2026 assumption of $0.73), and continues to assume that in 2026 the average price of crude oil (West Texas Intermediate) will be in the range of US$80 - US$110 per barrel. The Company notes there is a heightened demand risk as a result of volatile macroeconomic conditions, geopolitical conflicts and global trade tensions.




2 CN | 2026 Quarterly Review – Second Quarter

PRESS RELEASE
Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors which may cause actual results, performance or achievements of CN to be materially different from the outlook or any future results, performance or achievements implied by such statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. Important risk factors that could affect the forward-looking statements in this news release include, but are not limited to, general economic and business conditions, including factors impacting global supply chains such as pandemics and geopolitical conflicts or tensions; trade restrictions, trade barriers, or the imposition of tariffs or other changes to international trade arrangements; industry competition; inflation, currency and interest rate fluctuations; changes in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators and other regulatory claims or proceedings; increases in maintenance and operating costs; security threats; reliance on technology, including the use of artificial intelligence, and related cybersecurity risk; transportation of hazardous materials; various events which could disrupt operations, including illegal blockades of rail networks, and natural events such as severe weather, droughts, fires, floods and earthquakes; climate change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings and other types of claims and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; the availability of and cost competitiveness of renewable fuels and the development of new locomotive propulsion technology; reputational risks; supplier concentration; pension funding requirements and volatility; and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should also be made to Management’s Discussion and Analysis (MD&A) in CN’s annual and interim reports, Annual Information Form and Form 40-F, filed with Canadian and U.S. securities regulators and available on CN’s website, for a description of major risk factors relating to CN.

The achievement of CN’s climate goals is subject to several risks and uncertainties, including those disclosed in the MD&A in CN’s annual and interim reports. There can be no certainty that the Company will achieve any or all of these goals within the stated timeframe, or that achieving any of these goals will meet all of the expectations of its stakeholders or applicable legal requirements.

Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement. Information contained on, or accessible through, our website is not incorporated by reference into this news release.

This earnings news release, as well as additional information, including the Financial Statements, Notes thereto and MD&A, is contained in CN’s Quarterly Review available on the Company's website at www.cn.ca/financial-results and on SEDAR+ at www.sedarplus.ca as well as on the U.S. Securities and Exchange Commission's website at www.sec.gov through EDGAR.

About CN
CN powers the economy by safely transporting more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year for its customers. With its nearly 20,000-mile rail network and related transportation services, CN connects Canada’s Eastern and Western coasts with the U.S. Midwest and the U.S. Gulf Coast, contributing to sustainable trade and the prosperity of the communities in which it operates since 1919.

- 30 -
Contacts:
MediaInvestment Community
Ashley MichnowskiJamie Lockwood
Senior ManagerVice-President, Investor Relations
Media Relationsand Special Projects
(438) 596-4329(514) 399-0052
media@cn.ca
investor.relations@cn.ca
CN | 2026 Quarterly Review – Second Quarter 3

SELECTED RAILROAD STATISTICS – UNAUDITED

Three months ended June 30Six months ended June 30
2026202520262025
Financial measures  
Key financial performance indicators (1)
 
Total revenues ($ millions)
4,753 4,272 9,132 8,675 
Freight revenues ($ millions)
4,559 4,090 8,826 8,378 
Operating income ($ millions)
1,781 1,638 3,330 3,248 
Adjusted operating income ($ millions) (2)(3)
1,798 1,638 3,364 3,248 
Net income ($ millions)
1,249 1,172 2,395 2,333 
Adjusted net income ($ millions) (2)(3)
1,261 1,172 2,363 2,333 
Diluted earnings per share ($)
2.06 1.87 3.93 3.71 
Adjusted diluted earnings per share ($) (2)(3)
2.08 1.87 3.88 3.71 
Net cash provided by operating activities ($ millions)
1,611 1,745 2,876 2,909 
Net cash used in investing activities ($ millions)
669 823 1,0341,361
Free cash flow ($ millions) (2)(4)
942 922 1,842 1,548 
Gross property additions ($ millions)
695 805 1,134 1,324 
Share repurchases ($ millions)
454 306 1,323 407 
Dividends per share ($)
0.9150 0.8875 1.8300 1.7750 
Financial ratio
Operating ratio (%) (5)
62.5 61.7 63.5 62.6 
Adjusted operating ratio (%) (2)(3)
62.2 61.7 63.2 62.6 
Operational measures (6)
Statistical operating data
Gross ton miles (GTMs) (millions)
121,082 117,335 239,471 232,178 
Revenue ton miles (RTMs) (millions)
62,250 59,215 124,084 119,264 
Carloads (thousands)
1,409 1,414 2,745 2,727 
Route miles (includes Canada and the U.S., end of period)
18,900 18,900 18,900 18,900 
Employees (end of period)
23,825 24,912 23,825 24,912 
Employees (average for the period)
23,719 25,003 23,636 24,815 
Key operating measures
Freight revenue per RTM (cents)
7.32 6.91 7.11 7.02 
Freight revenue per carload ($)
3,236 2,893 3,215 3,072 
GTMs per average number of employees (thousands)
5,105 4,693 10,132 9,356 
Operating expenses per GTM (cents)
2.45 2.24 2.42 2.34 
Labor and fringe benefits expense per GTM (cents)
0.73 0.73 0.75 0.77 
Diesel fuel consumed (US gallons in millions)
101.2 101.5 206.8 206.8 
Average fuel price ($ per US gallon)
5.67 3.55 4.86 3.98 
Fuel efficiency (US gallons of locomotive fuel consumed per 1,000 GTMs)
0.836 0.865 0.864 0.891 
Train weight (tons)
9,404 9,125 9,350 9,101 
Train length (feet)
8,084 8,016 7,979 7,863 
Car velocity (car miles per day)
211 213 206 200 
Through dwell (entire railroad, hours)
7.1 6.8 7.3 7.3 
Through network train speed (miles per hour)
19.1 18.9 18.9 18.3 
Locomotive utilization (trailing GTMs per total horsepower)
202 190 200 187 
Safety indicators (7)
Injury frequency rate (per 200,000 person hours)
1.01 0.83 1.09 0.97 
Accident rate (per million train miles)
2.30 1.56 2.26 1.82 
(1)Amounts expressed in Canadian dollars and prepared in accordance with United States generally accepted accounting principles (GAAP), unless otherwise noted.
(2)These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.
(3)See the supplementary schedule entitled Non-GAAP Measures – Adjusted performance measures for an explanation of these non-GAAP measures.
(4)See the supplementary schedule entitled Non-GAAP Measures – Free cash flow for an explanation of this non-GAAP measure.
(5)Operating ratio is defined as operating expenses as a percentage of revenues.
(6)Statistical operating data, key operating measures and safety indicators are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available. Definitions of gross ton miles, revenue ton miles, freight revenue per RTM, fuel efficiency, train weight, train length, car velocity, through dwell and through network train speed are included within the Company’s Management’s Discussion and Analysis. Definitions of all other indicators are provided on CN's website, www.cn.ca/glossary.
(7)Based on Federal Railroad Administration (FRA) reporting criteria.
4 CN | 2026 Quarterly Review – Second Quarter

SUPPLEMENTARY INFORMATION – UNAUDITED

 Three months ended June 30Six months ended June 30
 20262025% Change
Fav (Unfav)
% Change at
constant
currency (1)
Fav (Unfav)
20262025% Change
Fav (Unfav)
% Change at
constant
currency (1)
Fav (Unfav)
Revenues ($ millions) (2)
    
Petroleum and chemicals941 808 16%17%1,869 1,723 8%10%
Metals and minerals528 496 6%7%996 1,019 (2%)(1%)
Forest products495 461 7%8%929 955 (3%)(1%)
Coal243 242 —%—%462 488 (5%)(5%)
Grain and fertilizers980 834 18%18%2,029 1,785 14%15%
Intermodal1,087 1,008 8%8%2,049 1,948 5%6%
Automotive285 241 18%18%492 460 7%8%
Total freight revenues4,559 4,090 11%12%8,826 8,378 5%7%
Other revenues194 182 7%7%306 297 3%4%
Total revenues4,753 4,272 11%11%9,132 8,675 5%7%
Revenue ton miles (RTMs) (millions) (3)
Petroleum and chemicals11,874 10,740 11%11%24,558 22,576 9%9%
Metals and minerals7,030 7,074 (1%)(1%)13,086 13,826 (5%)(5%)
Forest products5,216 5,113 2%2%10,128 10,500 (4%)(4%)
Coal5,078 5,058 —%—%9,905 10,504 (6%)(6%)
Grain and fertilizers18,369 16,513 11%11%37,894 33,763 12%12%
Intermodal13,730 13,856 (1%)(1%)26,793 26,442 1%1%
Automotive953 861 11%11%1,720 1,653 4%4%
Total RTMs62,250 59,215 5%5%124,084 119,264 4%4%
Freight revenue / RTM (cents) (2)(3)
Petroleum and chemicals7.92 7.52 5%5%7.61 7.63 —%1%
Metals and minerals7.51 7.01 7%7%7.61 7.37 3%5%
Forest products9.49 9.02 5%5%9.17 9.10 1%3%
Coal4.79 4.78 —%—%4.66 4.65 —%1%
Grain and fertilizers5.34 5.05 6%6%5.35 5.29 1%2%
Intermodal7.92 7.27 9%9%7.65 7.37 4%4%
Automotive29.91 27.99 7%7%28.60 27.83 3%4%
Total freight revenue / RTM7.32 6.91 6%6%7.11 7.02 1%3%
Carloads (thousands) (3)
Petroleum and chemicals170 154 10%10%340 317 7%7%
Metals and minerals234 239 (2%)(2%)448 452 (1%)(1%)
Forest products70 71 (1%)(1%)137 144 (5%)(5%)
Coal110 115 (4%)(4%)218 233 (6%)(6%)
Grain and fertilizers194 177 10%10%389 355 10%10%
Intermodal573 602 (5%)(5%)1,107 1,119 (1%)(1%)
Automotive58 56 4%4%106 107 (1%)(1%)
Total carloads1,409 1,414 —%—%2,745 2,727 1%1%
Freight revenue / carload ($) (2)(3)
Petroleum and chemicals5,535 5,247 5%6%5,497 5,435 1%3%
Metals and minerals2,256 2,075 9%9%2,223 2,254 (1%)—%
Forest products7,071 6,493 9%9%6,781 6,632 2%4%
Coal2,209 2,104 5%5%2,119 2,094 1%2%
Grain and fertilizers5,052 4,712 7%7%5,216 5,028 4%5%
Intermodal1,897 1,674 13%13%1,851 1,741 6%7%
Automotive4,914 4,304 14%14%4,642 4,299 8%10%
Total freight revenue / carload3,236 2,893 12%12%3,215 3,072 5%6%
(1)This non-GAAP measure does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. See the supplementary schedule entitled Non-GAAP Measures – Constant currency for an explanation of this non-GAAP measure.
(2)Amounts expressed in Canadian dollars.
(3)Statistical operating data and related key operating measures are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available.
CN | 2026 Quarterly Review – Second Quarter 5

NON-GAAP MEASURES – UNAUDITED

In this supplementary schedule, the "Company" or "CN" refers to Canadian National Railway Company, together with its wholly-owned subsidiaries. Financial information included in this schedule is expressed in Canadian dollars, unless otherwise noted.

CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). The Company also uses non-GAAP measures that do not have any standardized meaning prescribed by GAAP, including adjusted performance measures, free cash flow, constant currency and adjusted debt-to-adjusted EBITDA multiple. These non-GAAP measures may not be comparable to similar measures presented by other companies. From management's perspective, these non-GAAP measures are useful measures of performance and provide investors with supplementary information to assess the Company's results of operations and liquidity. These non-GAAP measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP.


Adjusted performance measures

Adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted operating expenses and adjusted operating ratio are non-GAAP measures that are used to set performance goals and to measure CN's performance and may include the following adjustments:
i.operating expense adjustments: workforce reduction program, advisory costs related to rail consolidation matters, depreciation expense on the deployment of a replacement system, advisory fees related to shareholder matters, losses and recoveries from assets held for sale, business acquisition-related costs;
ii.non-operating expense adjustments: business acquisition-related financing fees, merger termination income, gains and losses on disposal of property; and
iii.the effect of changes in tax laws including rate enactments and changes in tax positions affecting prior years.

These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

For the three and six months ended June 30, 2026, the Company's adjusted net income was $1,261 million, or $2.08 per diluted share, and $2,363 million, or $3.88 per diluted share, respectively. The adjusted figures for the three and six months ended June 30, 2026 exclude advisory costs related to the analysis and advocacy for the U.S. Surface Transportation Board (STB) review of the impacts to fair competition pertaining to the potential merger between Union Pacific and Norfolk Southern of $17 million, or $12 million after-tax ($0.02 per diluted share) and $34 million, or $25 million after tax ($0.04 per diluted share), respectively, recorded in Purchased services and material within the Consolidated Statements of Income. The adjusted figures for the six months ended June 30, 2026 also exclude the sale of a portion of the Newmarket subdivision located in Washago and Sundridge, Ontario, Canada, together with rail fixtures, for cash proceeds of $84 million, which resulted in a gain of $66 million, or $57 million after-tax ($0.09 per diluted share) recorded in the first quarter of 2026 in Other income within the Consolidated Statements of Income.

For the three and six months ended June 30, 2025, the Company's net income was $1,172 million, or $1.87 per diluted share, and $2,333 million, or $3.71 per diluted share, respectively. There were no adjustments in the second quarter and the first half of 2025.

Adjusted net income is defined as Net income in accordance with GAAP adjusted for certain significant items. Management believes that adjusted net income provides additional insight to management and investors into the Company's operations and underlying business trends as well as facilitates period-to-period comparisons, as it excludes certain significant items that are not reflective of CN's underlying business operations and could distort the analysis of trends in business performance. Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average diluted shares outstanding. This measure helps management and investors evaluate the Company's profitability on a per-share basis, facilitating the assessment of period-over-period performance by removing the impact of significant, non-recurring items.







6 CN | 2026 Quarterly Review – Second Quarter

NON-GAAP MEASURES – UNAUDITED

The following table provides a reconciliation of Net income and Earnings per share in accordance with GAAP, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP adjusted performance measures presented herein:

Three months ended June 30Six months ended June 30
In millions, except per share data2026202520262025
Net income$1,249 $1,172 $2,395 $2,333 
Adjustments:
Operating expense adjustment:
Advisory costs related to rail consolidation matters17 — 34 — 
Non-operating expense adjustment:
Gain on disposal of property— — (66)— 
Tax adjustment:
Tax effect of adjustments (1)
(5)— — — 
Total adjustments$12 $— $(32)$— 
Adjusted net income$1,261 $1,172 $2,363 $2,333 
Diluted earnings per share$2.06 $1.87 $3.93 $3.71 
Impact of adjustments, per share0.02 — (0.05)— 
Adjusted diluted earnings per share$2.08 $1.87 $3.88 $3.71 
(1)The tax impact of adjustments is based on the nature of the item for tax purposes and related tax rates in the applicable jurisdiction.

Adjusted operating income is defined as Operating income in accordance with GAAP adjusted for certain significant operating expense items that are not reflective of CN's underlying business operations. This measure helps management and investors assess the Company's core operating results by excluding items that may distort the analysis of ongoing business performance. Adjusted operating expenses is defined as Operating expenses in accordance with GAAP adjusted for certain significant operating expense items that are not reflective of CN's underlying business operations. This measure provides management and investors with a view of ongoing costs which exclude unusual or non-recurring items, enabling more accurate assessment of cost management and resource allocation across reporting periods. Adjusted operating ratio is defined as adjusted operating expenses as a percentage of revenues. For management and investors, the adjusted operating ratio serves as a key performance indicator of cost management and overall operational effectiveness, as it demonstrates how effectively management controls costs relative to total revenue by excluding unusual or non-recurring items.

The following table provides a reconciliation of Operating income, Operating expenses and operating ratio, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP adjusted performance measures presented herein:

Three months ended June 30Six months ended June 30
In millions, except percentages2026 2025 2026 2025 
Operating income$1,781 $1,638 $3,330 $3,248 
Adjustment:
Advisory costs related to rail consolidation matters17 — 34 — 
Total adjustment$17 $— $34 $— 
Adjusted operating income$1,798 $1,638 $3,364 $3,248 
Operating expenses$2,972 $2,634 $5,802 $5,427 
Total adjustment(17)— (34)— 
Adjusted operating expenses$2,955 $2,634 $5,768 $5,427 
Operating ratio62.5 %61.7 %63.5 %62.6 %
Impact of adjustment(0.3)%— %(0.3)%— %
Adjusted operating ratio62.2 %61.7 %63.2 %62.6 %


CN | 2026 Quarterly Review – Second Quarter 7

NON-GAAP MEASURES – UNAUDITED

Free cash flow

Free cash flow is a useful measure of liquidity as it demonstrates the Company's ability to generate cash for debt obligations and for discretionary uses such as payment of dividends, share repurchases, and strategic opportunities. The Company defines its free cash flow measure as the difference between net cash provided by operating activities and net cash used in investing activities, adjusted for the impact of (i) business acquisitions and combinations; and (ii) merger transaction-related payments, cash receipts and cash income taxes, which are items that are not indicative of operating trends. Free cash flow does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of net cash provided by operating activities in accordance with GAAP, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP free cash flow presented herein:
 Three months ended June 30Six months ended June 30
In millions2026202520262025
Net cash provided by operating activities$1,611 $1,745 $2,876 $2,909 
Net cash used in investing activities(669)(823)(1,034)(1,361)
Free cash flow$942 $922 $1,842 $1,548 


Constant currency

Financial results at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons in the analysis of trends in business performance. Measures at constant currency are considered non-GAAP measures and do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. Financial results at constant currency are obtained by translating the current period results denominated in US dollars at the weighted average foreign exchange rates used to translate transactions denominated in US dollars of the comparable period of the prior year.

The weighted average foreign exchange rates were $1.384 and $1.378 per US$1.00 for the three and six months ended June 30, 2026, respectively and $1.385 and $1.411 per US$1.00 for the three and six months ended June 30, 2025, respectively. On a constant currency basis, the Company's net income for the three and six months ended June 30, 2026 would have been higher by $5 million ($0.01 per diluted share) and $26 million ($0.04 per diluted share), respectively.

8 CN | 2026 Quarterly Review – Second Quarter

NON-GAAP MEASURES – UNAUDITED

The following table provides a reconciliation of the impact of constant currency and related percentage change at constant currency on the financial results, as reported for the three and six months ended June 30, 2026:

Three months ended June 30Six months ended June 30
In millions, except per share data2026Constant currency impact2025% Change at constant currency Fav (Unfav)2026Constant currency impact2025% Change at constant currency Fav (Unfav)
Revenues
Petroleum and chemicals$941 $1 $808 17%$1,869 $25 $1,723 10%
Metals and minerals528 1 496 7%996 17 1,019 (1%)
Forest products495 1 461 8%929 16 955 (1%)
Coal243 — 242 —%462 4 488 (5%)
Grain and fertilizers980 2 834 18%2,029 24 1,785 15%
Intermodal1,087 — 1,008 8%2,049 11 1,948 6%
Automotive285 — 241 18%492 7 460 8%
Total freight revenues4,559 5 4,090 12%8,826 104 8,378 7%
Other revenues194 — 182 7%306 3 297 4%
Total revenues4,753 5 4,272 11%9,132 107 8,675 7%
Operating expenses
Labor and fringe benefits889 (1)862 (3%)1,803 16 1,782 (2%)
Purchased services and material641 (2)576 (11%)1,264 6 1,153 (10%)
Fuel659 3 413 (60%)1,142 26 931 (25%)
Depreciation and amortization 486 — 489 1%970 9 982 —%
Equipment rents106 — 105 (1%)218 4 223 —%
Other191 (1)189 (1%)405 4 356 (15%)
Total operating expenses2,972 (1)2,634 (13%)5,802 65 5,427 (8%)
Operating income1,781 6 1,638 9%3,330 42 3,248 4%
Interest expense(241)— (219)(10%)(475)(8)(452)(7%)
Other components of net periodic benefit income 133 — 126 6%266 — 251 6%
Other income 7 — 16 (56%)80 — 41 95%
Income before income taxes 1,680 6 1,561 8%3,201 34 3,088 5%
Income tax expense (431)(1)(389)(11%)(806)(8)(755)(8%)
Net income
$1,249 $5 $1,172 7%$2,395 $26 $2,333 4%
Diluted earnings per share $2.06 $0.01 $1.87 11%$3.93 $0.04 $3.71 7%
Adjusted net income (1)
$1,261 $5 $1,172 8%$2,363 $26 $2,333 2%
Adjusted diluted earnings per share (1)
$2.08 $0.01 $1.87 12%$3.88 $0.04 $3.71 6%
(1)These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. See the section of this MD&A entitled Adjusted performance measures for an explanation and reconciliation of these non-GAAP measures. Adjusted net income at constant currency and adjusted diluted EPS at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons in the analysis of trends in business performance. For the three months ended June 30, 2026, the Adjusted net income at constant currency was $1,266 million, calculated as adjusted net income of $1,261 million, adjusted for the impact of fluctuations in foreign currency exchange rates of $5 million. For the six months ended June 30, 2026, the Adjusted net income at constant currency was $2,389 million, calculated as adjusted net income of $2,363 million, adjusted for the impact of fluctuations in foreign currency exchange rates of $26 million. For the three months ended June 30, 2026, the Adjusted diluted EPS at constant currency was $2.09, calculated as adjusted diluted EPS of $2.08, adjusted for the impact of fluctuations in foreign currency exchange rates of $0.01 per diluted share. For the six months ended June 30, 2026, the Adjusted diluted EPS at constant currency was $3.92, calculated as adjusted diluted EPS of $3.88, adjusted for the impact of fluctuations in foreign currency exchange rates of $0.04 per diluted share.
CN | 2026 Quarterly Review – Second Quarter 9

NON-GAAP MEASURES – UNAUDITED

Adjusted debt-to-adjusted EBITDA multiple

Management believes that the adjusted debt-to-adjusted EBITDA multiple is a useful credit measure because it reflects the Company's ability to service its debt and other long-term obligations. The Company calculates the adjusted debt-to-adjusted EBITDA multiple as adjusted debt divided by the last twelve months of adjusted EBITDA. Adjusted debt is defined as the sum of Long-term debt and Current portion of long-term debt as reported on the Company’s Consolidated Balance Sheets as well as Operating lease liabilities, including current portion and pension plans in deficiency recognized on the Company's Consolidated Balance Sheets due to the debt-like nature of their contractual and financial obligations. Adjusted EBITDA is calculated as Net income excluding Interest expense, Income tax expense, Depreciation and amortization, operating lease cost, Other components of net periodic benefit income, Other income (loss), and other significant items that are not reflective of CN's underlying business operations and which could distort the analysis of trends in business performance. Adjusted debt and adjusted EBITDA are non-GAAP measures used to compute the adjusted debt-to-adjusted EBITDA multiple. These measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of debt and Net income in accordance with GAAP, reported as at and for the twelve months ended June 30, 2026 and 2025, to the adjusted measures presented herein, which have been used to calculate the non-GAAP adjusted debt-to-adjusted EBITDA multiple:
In millions, unless otherwise indicatedAs at and for the twelve months ended June 30,20262025
Debt (1)
$22,254 $20,425 
Adjustments:
Operating lease liabilities, including current portion (2)
465 443 
Pension plans in deficiency (3)
337 342 
Adjusted debt$23,056 $21,210 
Net income$4,782 $4,564 
Interest expense936 913 
Income tax expense1,595 1,441 
Depreciation and amortization1,926 1,946 
Operating lease cost (4)
154 158 
Other components of net periodic benefit income(517)(478)
Other income(127)(49)
Adjustments:
Workforce reduction program (5)
34 — 
Advisory costs related to rail consolidation matters (6)
49 — 
Adjusted EBITDA$8,832 $8,495 
Adjusted debt-to-adjusted EBITDA multiple (times)
2.61 2.50 
(1)Represents the aggregate of Current portion of long-term debt and Long-term debt as disclosed on the Consolidated Balance Sheets.
(2)Represents the present value of operating lease payments.
(3)Represents the total funded deficit of all defined benefit pension plans with a projected benefit obligation in excess of plan assets.
(4)Represents the operating lease costs recorded in Purchased services and material and Equipment rents within the Consolidated Statements of Income.
(5)Relates to employee termination benefits and severance costs related to a workforce reduction program, recorded in the fourth quarter of 2025 in Labor and fringe benefits within the Consolidated Statements of Income.
(6)Represents advisory costs related to the analysis and advocacy for the STB review of the impacts to fair competition pertaining to the potential merger between Union Pacific and Norfolk Southern recorded in Purchased services and material within the Consolidated Statements of Income.

10 CN | 2026 Quarterly Review – Second Quarter

INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Contents
Consolidated Statements of Income - unaudited
12
Consolidated Statements of Comprehensive Income - unaudited
12
Consolidated Balance Sheets - unaudited
13
Consolidated Statements of Changes in Shareholders' Equity - unaudited
14
Consolidated Statements of Cash Flows - unaudited
16
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note 1 - Basis of presentation
17
Note 2 - Recent accounting pronouncements
17
Note 3 - Acquisition
18
Note 4 - Revenues
19
Note 5 - Pensions and other postretirement benefits
19
Note 6 - Other income
20
Note 7 - Earnings per share
20
Note 8 - Financing activities
20
Note 9 - Leases
22
Note 10 - Stock-based compensation
22
      Note 11 - Accumulated other comprehensive loss
24
      Note 12 - Major commitments and contingencies
26
      Note 13 - Financial instruments
27
      Note 14 - Segmented information
29
      Note 15 - Subsequent event
29

CN | 2026 Quarterly Review – Second Quarter 11

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

 Three months ended
June 30		Six months ended
June 30
In millions, except per share data2026202520262025
Revenues (Note 4)
$4,753 $4,272 $9,132 $8,675 
Operating expenses
Labor and fringe benefits889 862 1,803 1,782 
Purchased services and material641 576 1,264 1,153 
Fuel659 413 1,142 931 
Depreciation and amortization 486 489 970 982 
Equipment rents106 105 218 223 
Other191 189 405 356 
Total operating expenses2,972 2,634 5,802 5,427 
Operating income1,781 1,638 3,330 3,248 
Interest expense(241)(219)(475)(452)
Other components of net periodic benefit income (Note 5)
133 126 266 251 
Other income7 16 80 41 
Income before income taxes 1,680 1,561 3,201 3,088 
Income tax expense
(431)(389)(806)(755)
Net income $1,249 $1,172 $2,395 $2,333 
Earnings per share (Note 7)
  
Basic $2.06 $1.87 $3.93 $3.72 
Diluted $2.06 $1.87 $3.93 $3.71 
Weighted-average number of shares (Note 7)
  
Basic606.5 627.4 608.9 627.6 
Diluted607.5 628.0 609.7 628.2 
Dividends declared per share$0.9150 $0.8875 $1.8300 $1.7750 
See accompanying notes to Interim Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED
 Three months ended
June 30		Six months ended
June 30
In millions2026202520262025
Net income $1,249 $1,172 $2,395 $2,333 
Other comprehensive income (loss) (Note 11)
  
Net gain (loss) on foreign currency translation136 (352)213 (345)
Net change in pension and other postretirement benefit plans (Note 5)
10 12 21 23 
Derivative instruments (Note 13)
(16)6 (16)3 
Other comprehensive income (loss) before income taxes 130 (334)218 (319)
Income tax recovery (expense)32 (88)51 (90)
Other comprehensive income (loss)162 (422)269 (409)
Comprehensive income
$1,411 $750 $2,664 $1,924 
See accompanying notes to Interim Consolidated Financial Statements.
12 CN | 2026 Quarterly Review – Second Quarter

CONSOLIDATED BALANCE SHEETS – UNAUDITED

June 30December 31
In millionsAs at20262025
Assets  
Current assets  
Cash and cash equivalents$280 $350 
Restricted cash and cash equivalents
14 13 
Accounts receivable1,313 1,117 
Material and supplies861 734 
Other current assets379 257 
Total current assets2,847 2,471 
Properties50,013 49,148 
Operating lease right-of-use assets474 440 
Pension asset5,610 5,362 
Deferred income tax assets608 611 
Intangible assets, goodwill and other 542 523 
Total assets$60,094 $58,555 
Liabilities and shareholders' equity  
Current liabilities  
Accounts payable and other$2,757 $2,790 
Current portion of long-term debt512 906 
Total current liabilities3,269 3,696 
Deferred income tax liabilities11,449 11,223 
Other liabilities and deferred credits911 999 
Pension and other postretirement benefits460 453 
Long-term debt21,742 20,300 
Operating lease liabilities362 316 
Total liabilities38,193 36,987 
Shareholders' equity  
Common shares3,474 3,454 
Common shares in Share Trusts(153)(152)
Additional paid-in capital434 415 
Accumulated other comprehensive loss (Note 11)
(798)(1,067)
Retained earnings 18,944 18,918 
Total shareholders' equity21,901 21,568 
Total liabilities and shareholders' equity$60,094 $58,555 
See accompanying notes to Interim Consolidated Financial Statements.













CN | 2026 Quarterly Review – Second Quarter 13

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED

 Number of
common shares		Common
shares		Common
shares
in Share
Trusts
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders'
equity
In millionsOutstandingShare
Trusts
Balance at March 31, 2026607.6 1.1 $3,465 $(150)$407 $(960)$18,689 $21,451 
Net income1,249 1,249 
Stock options exercised0.2 25 (3)22 
Settlement of equity settled awards— — 8 (9)(1)(2)
Stock-based compensation and other39 (1)38 
Repurchase of common shares (Note 8)
(2.9)(16)(438)(454)
Share purchases by Share Trusts — — (11)(11)
Other comprehensive income (Note 11)
162 162 
Dividends(554)(554)
Balance at June 30, 2026604.9 1.1 $3,474 $(153)$434 $(798)$18,944 $21,901 
 Number of
common shares		Common
shares		Common
shares
in Share
Trusts
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders'
equity
In millionsOutstandingShare
Trusts
Balance at December 31, 2025
613.3 1.1 $3,454 $(152)$415 $(1,067)$18,918 $21,568 
Net income2,395 2,395 
Stock options exercised0.5 70 (9)61 
Settlement of equity settled awards0.1 (0.1)19 (50)19 (12)
Stock-based compensation and other78 (3)75 
Repurchase of common shares (Note 8)
(8.9)(50)(1,273)(1,323)
Share purchases by Share Trusts(0.1)0.1 (20)(20)
Other comprehensive income (Note 11)
269 269 
Dividends(1,112)(1,112)
Balance at June 30, 2026604.9 1.1 $3,474 $(153)$434 $(798)$18,944 $21,901 
See accompanying notes to Interim Consolidated Financial Statements.

14 CN | 2026 Quarterly Review – Second Quarter

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED

 Number of
common shares		Common
shares		Common
shares
in Share
Trusts
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Retained
earnings
Total
shareholders'
equity
In millionsOutstandingShare
Trusts
Balance at March 31, 2025
627.5 0.9 $3,515 $(130)$366 $(1,007)$18,880 $21,624 
Net income 1,172 1,172 
Stock options exercised0.1 6 (1)5 
Settlement of equity settled awards0.1 (0.1)6 (9)1 (2)
Stock-based compensation and other33 (2)31 
Repurchase of common shares (Note 8)
(2.2)(11)(295)(306)
Share purchases by Share Trusts(0.1)0.1 (10)(10)
Other comprehensive loss (Note 11)
(422)(422)
Dividends(556)(556)
Balance at June 30, 2025
625.4 0.9 $3,510 $(134)$389 $(1,429)$19,200 $21,536 

 Number of
common shares		Common
shares		Common
shares
in Share
Trusts		Additional
paid-in
capital		Accumulated
other
comprehensive
loss		Retained
earnings		Total
shareholders'
equity
In millionsOutstandingShare
Trusts
Balance at December 31, 2024
627.9 0.9 $3,474 $(129)$372 $(1,020)$18,354 $21,051 
Net income 2,333 2,333 
Stock options exercised0.3 51 (7)44 
Settlement of equity settled awards0.1 (0.1)16 (45)21 (8)
Stock-based compensation and other69 (3)66 
Repurchase of common shares (Note 8)
(2.8)(15)(392)(407)
Share purchases by Share Trusts(0.1)0.1 (21)(21)
Other comprehensive loss (Note 11)
(409)(409)
Dividends(1,113)(1,113)
Balance at June 30, 2025
625.4 0.9 $3,510 $(134)$389 $(1,429)$19,200 $21,536 
See accompanying notes to Interim Consolidated Financial Statements.

CN | 2026 Quarterly Review – Second Quarter 15

CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
 Three months ended
June 30		Six months ended
June 30
In millions2026202520262025
Operating activities  
Net income $1,249 $1,172 $2,395 $2,333 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization486 489 970 982 
Pension income and funding (114)(101)(216)(204)
Deferred income taxes 93 77 138 98 
Gain on disposal of property (Note 6)
— — (66)— 
Changes in operating assets and liabilities:
Accounts receivable(65)131 (190)43 
Material and supplies(28)(22)(120)(110)
Other current assets8 17 (9)(125)
Accounts payable and other(42)(25)(62)(162)
Other operating activities, net24 7 36 54 
Net cash provided by operating activities1,611 1,745 2,876 2,909 
Investing activities
Property additions(695)(805)(1,134)(1,324)
Disposal of property (Note 6)
— — 84 — 
Other investing activities, net26 (18)16 (37)
Net cash used in investing activities(669)(823)(1,034)(1,361)
Financing activities 
Issuance of debt (Note 8)
1,016 995 1,016 995 
Repayment of debt(25)(25)(730)(49)
Change in commercial paper, net (Note 8)
(1,301)(588)185 (693)
Settlement of derivative instruments72 (48)35 (16)
Issuance of common shares for stock options exercised22 5 61 44 
Withholding taxes remitted on the net settlement of equity settled awards (Note 10)
(1)(1)(8)(5)
Repurchase of common shares
(453)(293)(1,337)(444)
Purchase of common shares for settlement of equity settled awards(1)(1)(4)(3)
Purchase of common shares by Share Trusts(11)(10)(20)(21)
Dividends paid(554)(556)(1,112)(1,113)
Net cash used in financing activities(1,236)(522)(1,914)(1,305)
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash and restricted cash equivalents2 (4)3 (4)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents(292)396 (69)239 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period586 244 363 401 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$294 $640 $294 $640 
Cash and cash equivalents, end of period$280 $216 $280 $216 
Restricted cash and cash equivalents, end of period14 424 14 424 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period
$294 $640 $294 $640 
Supplemental cash flow information  
Interest paid$(227)$(192)$(503)$(484)
Income taxes paid$(389)$(265)$(662)$(477)
See accompanying notes to Interim Consolidated Financial Statements.
16 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1 – Basis of presentation

In these notes, the "Company" or "CN" refers to Canadian National Railway Company, together with its wholly-owned subsidiaries. The accompanying unaudited Interim Consolidated Financial Statements ("Interim Consolidated Financial Statements"), expressed in Canadian dollars, have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial statements. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Interim operating results are not necessarily indicative of the results that may be expected for the full year.

These Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing CN's 2025 Annual Consolidated Financial Statements and should be read in conjunction with such statements and Notes thereto.


2 – Recent accounting pronouncements

The following recent Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) have an effective date after December 31, 2025 and have not been adopted by the Company:


ASU 2025-10 — Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities
This ASU introduces comprehensive accounting guidance for government grants received by business entities by expanding Topic 832 beyond disclosure-only requirements to include recognition, measurement, presentation, and disclosure. The main provisions establish that government grants should not be recognized until it is probable that the Company will comply with the conditions attached to the grant and that the grant will be received. The ASU also provides guidance on accounting for grants related to income and grants related to assets, including acceptable presentation approaches, and introduces enhanced disclosure requirements intended to improve transparency and comparability of government grant information.

The amendments in this ASU are effective for annual periods beginning after December 15, 2028, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU may be adopted using a prospective, modified retrospective, or full retrospective transition approach, depending on the nature of the grants and the transition method elected.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.

ASU 2025-06 – Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40)
This ASU modernizes the accounting for internal-use software by removing references to prescriptive and sequential software development stages. The main provisions establish that capitalization begins when management authorizes and commits to funding the software project and it is probable the project will be completed and used as intended. The ASU also introduces enhanced disclosure requirements that align internal-use software disclosures to property, plant and equipment. It also consolidates guidance for website development by integrating it into the framework for internal-use software.

The amendments in this ASU are effective for annual periods beginning after December 15, 2027, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU must be adopted either prospectively, retrospectively or using a modified transition approach based on project status and prior capitalization.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.

ASU 2024-03 – Disaggregation of Income Statement Expenses (Subtopic 220-40)
This ASU aims to provide stakeholders a clearer understanding of an entity's expenses and enhance their ability to assess performance, forecast expenses and evaluate the entity's potential for future cash flows. The ASU amends the rules on income statement expense disclosures and requires public business entities to disaggregate and disclose, in tabular format in the notes to financial statements, specified categories of expenses contained within certain income statement expense line items; to integrate certain amounts that were already required to be disclosed under current GAAP with the new disaggregation requirements and to qualitatively disclose descriptions of the amounts
CN | 2026 Quarterly Review – Second Quarter 17

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
remaining that were not separately disaggregated. The ASU also requires public business entities to disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of those selling expenses. This ASU does not change or remove the current disclosure requirements of expense line items on the face of the Consolidated Statements of Income.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either prospectively to Consolidated Financial Statements issued for reporting periods following the effective date, or retrospectively to any or all prior periods presented in the Consolidated Financial Statements.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements disclosures.

Other recently issued ASUs required to be applied on or after June 30, 2026 have been evaluated by the Company and are not expected to have a significant impact on the Company's Consolidated Financial Statements.


3 – Acquisition

Iowa Northern Railway Company
On January 14, 2025, the STB issued a final decision approving CN’s application to acquire control of the Iowa Northern Railway Company (IANR), subject to certain conditions. The Company assumed control of IANR on March 1, 2025 (Control Date) and began consolidating IANR on that date, accounting for the acquisition as a business combination achieved in stages. The Company derecognized its previously held equity method investment in IANR of $320 million as of March 1, 2025 and remeasured the investment at its Control Date fair value of $344 million resulting in a net remeasurement gain of $24 million recorded in Other income in the Consolidated Statements of Income. The fair value of the previously held equity interest in IANR was determined through use of a discounted cash flow approach, which incorporated the Company’s best estimates of various assumptions including, but not limited to, discount rates and terminal growth rates and multiples.

The Company's Consolidated Balance Sheet includes the assets and liabilities of IANR as of the Control Date, and since that time, IANR’s results of operations have been included in the Company's results of operations. The Company has not provided pro forma information relating to the pre-control date period as the acquisition was not material.

The following table summarizes the final purchase price allocation with the fair value at the Control Date of the previously held equity interest in IANR, as well as the amounts recognized for the identifiable assets acquired and liabilities assumed on the Control Date:

In millionsMarch 1, 2025
Consideration
Fair value of previously held equity method investment (1)
$344 
Recognized amounts of identifiable assets acquired and liabilities assumed (1)
Current assets$10 
Properties426 
Other non-current assets10 
Current liabilities(20)
Deferred income tax liabilities(90)
Other non-current liabilities(23)
Total identifiable net assets (2)
$313 
Goodwill (3)
$31 
(1)The Company’s fair value of the previously held equity interest in IANR and the purchase price allocation was finalized in the fourth quarter of 2025.
(2)Includes operating lease right-of-use assets and liabilities. There were no identifiable intangible assets.
(3)The goodwill acquired through the business combination is mainly attributable to the premium of an established business operation. The goodwill is not deductible for tax purposes.

The final fair values of Properties were determined using valuation techniques including the market approach and the cost approach. The significant assumptions used to determine the final fair value of Properties were mostly related to a selection of comparable assets and inflation.
18 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
4 – Revenues
Three months ended June 30Six months ended June 30
In millions2026202520262025
Freight revenues  
Petroleum and chemicals$941 $808 $1,869 $1,723 
Metals and minerals528 496 996 1,019 
Forest products495 461 929 955 
Coal243 242 462 488 
Grain and fertilizers980 834 2,029 1,785 
Intermodal1,087 1,008 2,049 1,948 
Automotive285 241 492 460 
Total freight revenues4,559 4,090 8,826 8,378 
Other revenues194 182 306 297 
Total revenues (1)
$4,753 $4,272 $9,132 $8,675 
Revenues by geographic area  
Canada$3,320 $2,983 $6,430 $6,059 
United States (U.S.)1,433 1,289 2,702 2,616 
Total revenues (1)
$4,753 $4,272 $9,132 $8,675 
(1)As at June 30, 2026, the Company had remaining performance obligations related to freight in-transit, for which revenues of $111 million ($82 million as at June 30, 2025) are expected to be recognized in the next quarterly period.

Contract liabilities
 Three months ended June 30Six months ended June 30
In millions2026202520262025
Beginning balance$544 $261 $527 $191 
Revenue recognized included in the beginning balance(13)(14)(8)(11)
Increase due to consideration received, net of revenue recognized12 70 24 137 
Ending balance$543 $317 $543 $317 
Current portion - Ending balance$46 $12 $46 $12 


5 – Pensions and other postretirement benefits

The Company has various retirement benefit plans under which substantially all of its employees are entitled to benefits at retirement age, generally based on compensation and length of service and/or contributions. Additional information relating to the retirement benefit plans is provided in Note 17 – Pensions and other postretirement benefits to the Company's 2025 Annual Consolidated Financial Statements.
Three months ended June 30Six months ended June 30
 PensionsOther postretirement benefitsPensionsOther postretirement benefits
In millions20262025202620252026202520262025
Current service cost$16 $21 $— $— $33 $42 $— $— 
Other components of net periodic benefit income:
Interest cost142 151 2 1 285 303 3 3 
Expected return on plan assets (287)(290)— — (575)(580)— — 
Amortization of prior service credit— — (1)(1)— — (2)(2)
Amortization of net actuarial loss (gain) 13 14 (2)(1)26 28 (3)(3)
Total Other components of net periodic benefit income (132)(125)(1)(1)(264)(249)(2)(2)
Net periodic benefit income (1)
$(116)$(104)$(1)$(1)$(231)$(207)$(2)$(2)
(1)In the second quarters of 2026 and 2025, the Company revised its estimate of full year net periodic benefit income for pensions to reflect updated plan demographic information and the resulting impacts were not significant.
CN | 2026 Quarterly Review – Second Quarter 19

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Pension contributions
Pension contributions for all plans for the six months ended June 30, 2026 and 2025 were $27 million and $38 million, respectively. Based on the results of the Company's actuarial valuations for funding purposes as at December 31, 2025, the CN Pension Plan remained fully funded and at a level such that the Company continues to be prohibited from making contributions to the defined benefit component of the CN Pension Plan in 2026. As such, total cash contributions of approximately $60 million are expected to be made in 2026 for all pension plans other than the defined benefit component of the CN Pension Plan.


6 – Other income

Other income includes gains and losses on the disposal of land and property, foreign exchange gains and losses related to foreign exchange forward contracts and the re-measurement of foreign currency denominated monetary assets and liabilities, and other items.

Disposal of property
On February 27, 2026, the Company recorded the sale of a portion of the Newmarket subdivision located in Washago and Sundridge, Ontario, Canada, together with rail fixtures, for cash proceeds of $84 million, which resulted in a gain of $66 million ($57 million after tax).


7 – Earnings per share

Three months ended June 30Six months ended June 30
In millions, except per share data2026202520262025
Net income $1,249 $1,172 $2,395 $2,333 
Weighted-average basic shares outstanding606.5 627.4 608.9 627.6 
Dilutive effect of stock-based compensation1.0 0.6 0.8 0.6 
Weighted-average diluted shares outstanding607.5 628.0 609.7 628.2 
Basic earnings per share $2.06 $1.87 $3.93 $3.72 
Diluted earnings per share $2.06 $1.87 $3.93 $3.71 
Units excluded from the calculation as their inclusion would not have a dilutive effect
Stock options1.1 2.1 1.6 2.0 
Performance share units0.4 0.6 0.6 0.8 


8 – Financing activities

For details on the Company's available financing sources, see Note 15 – Debt to the Company's 2025 Annual Consolidated Financial Statements. For the six months ended June 30, 2026, the following changes occurred:

Notes and debentures
For the six months ended June 30, 2026, the Company issued and repaid the following:
•On May 12, 2026, issuance of US$300 million ($410 million) 4.35% Notes due 2029 and US$450 million ($615 million) 4.95% Notes due 2036 in the U.S. capital markets, which resulted in total net proceeds of $1,016 million; and
•On March 1, 2026, repayment of US$500 million ($682 million) 2.75% Notes due 2026 upon maturity.

For the six months ended June 30, 2025, the Company issued the following:
•On June 10, 2025, issuance of $500 million 3.50% Notes due 2030 and $500 million 4.20% Notes due 2035 in the Canadian capital markets, which resulted in total net proceeds of $995 million.

20 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Revolving credit facilities
On March 31, 2026, the Company increased its existing unsecured revolving credit agreement from $2.5 billion to $3.0 billion. The Company's revolving credit facility agreement was also amended to extend the respective tenors by one additional year each and to remove its sustainability linked loan structure whereby its applicable margins were adjusted up or down based on the Company's performance under certain sustainability goals. The amended unsecured credit facility of $3.0 billion consists of tranches of $1.75 billion and $1.25 billion that are now maturing on March 31, 2029 and March 31, 2031, respectively. The unsecured revolving credit facility of $1.0 billion that was maturing on March 17, 2027 has been terminated as of March 31, 2026. The $3.0 billion revolving credit facility provides borrowings at various benchmark interest rates, such as the Secured Overnight Financing Rate (SOFR) and the Canadian Overnight Repo Rate Average (CORRA), plus applicable margins, based on CN's credit ratings. The revolving credit facility agreement has a financial covenant, which limits debt as a percentage of total capitalization. The Company is in compliance as at June 30, 2026.

As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under its revolving credit facility and there were no draws during the six months ended June 30, 2026.

Equipment loans
During the first six months of 2026, the Company repaid $44 million of its equipment loans. As at June 30, 2026 and December 31, 2025, the Company had outstanding borrowings of $1,306 million and $1,329 million, respectively, at a weighted-average interest rate of 3.85% and 3.85%, respectively, and had no further amounts available to be drawn under these facilities.

Commercial paper
The Company has a commercial paper program in Canada and in the U.S. Both programs are backstopped by the Company's revolving credit facility. As of May 6, 2026, the maximum aggregate principal amount of commercial paper that can be issued was increased from $2.5 billion to $3.0 billion, or the equivalent amount in US dollars, on a combined basis. As at June 30, 2026 and December 31, 2025, the Company had total commercial paper borrowings of US$292 million ($414 million) and US$90 million ($124 million) respectively, at a weighted-average interest rate of 3.79% and 3.79%, respectively, presented in Current portion of long-term debt on the Consolidated Balance Sheets.

 Three months ended June 30Six months ended June 30
In millions2026202520262025
Commercial paper with maturities less than 90 days  
Issuance$5,148 $5,744 $10,137 $11,257 
Repayment(6,368)(6,332)(9,948)(11,726)
Change in commercial paper with maturities less than 90 days, net$(1,220)$(588)$189 $(469)
Commercial paper with maturities of 90 days or greater
Issuance$21 $— $98 $— 
Repayment(102)— (102)(224)
Change in commercial paper with maturities of 90 days or greater, net$(81)$— $(4)$(224)
Change in commercial paper, net$(1,301)$(588)$185 $(693)

Accounts receivable securitization program
As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the accounts receivable securitization program and there were no draws during the six months ended June 30, 2026.

Bilateral letter of credit facilities
On March 31, 2026, the Company extended the maturity date of its committed bilateral letter of credit facility agreements to April 28, 2029.

As at June 30, 2026, the Company had outstanding letters of credit of $321 million ($321 million as at December 31, 2025) under the committed facilities and $153 million ($153 million as at December 31, 2025) under the uncommitted facilities.

Repurchase of common shares
The Company may repurchase its common shares pursuant to a Normal Course Issuer Bid (NCIB) at prevailing market prices plus brokerage fees, or such other prices as may be permitted by the Toronto Stock Exchange. Under its current NCIB, the Company may repurchase up to
CN | 2026 Quarterly Review – Second Quarter 21

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
24.0 million common shares between February 4, 2026 and February 3, 2027. As at June 30, 2026, the Company had repurchased 7.2 million common shares for $1,075 million under its current NCIB.

As at June 30, 2026, the Company had accrued a liability of $25 million for the two percent tax on net share repurchases made in the first six months of 2026 ($39 million as at December 31, 2025), which was accounted for as a direct cost of common share repurchases and recorded in Shareholders’ equity. The accrued tax obligation for the 2025 net share repurchases was paid in the first quarter of 2026.

The Company repurchased 16.0 million common shares under its previous NCIB, including 1.7 million common shares in the first quarter of 2026, which allowed for the repurchase of up to 20.0 million common shares between February 4, 2025 and February 3, 2026.
 Three months ended June 30Six months ended June 30
In millions, except per share data2026202520262025
Number of common shares repurchased2.9 2.2 8.9 2.8 
Weighted-average price per share (1)
$159.01 $145.54 $148.88 $146.65 
Amount of repurchase (1)
$454 $306 $1,323 $407 
(1)Includes brokerage fees and tax on share repurchases.


9 – Leases

The Company entered into an operating lease for its new office headquarters for a term of approximately 20 years, providing for phased access to floors prior to the contractual rent commencement date of January 1, 2028. Lease commencement is determined as control is obtained on a floor‑by‑floor basis, and operating right‑of‑use (ROU) assets and lease liabilities are recognized accordingly. During the second quarter of 2026, the Company recognized ROU assets and lease liabilities for floors under the Company’s control in the amount of $60 million, representing approximately 30 percent of the expected total. Additional floors are expected to be delivered over the next nine months and are not currently included in the Company’s financial statements.


10 – Stock-based compensation

The Company has various stock-based compensation plans for eligible employees. A description of the major plans is provided in Note 19 – Stock-based compensation to the Company's 2025 Annual Consolidated Financial Statements.
Three months ended June 30Six months ended June 30
In millions2026202520262025
Share Units Plan (1)
$27 $18 $47 $37 
Voluntary Incentive Deferral Plan (2)
— — — — 
Stock Option Plan3 4 6 7 
Employee Share Investment Plan7 8 15 15 
Total stock-based compensation expense$37 $30 $68 $59 
Income tax impacts of stock-based compensation
Tax benefit recognized in income$10 $7 $18 $14 
Net excess tax benefit (deficiency) recognized in income$1 $(1)$(4)$(6)
(1)Performance share unit (PSU) awards and restricted share unit (RSU) awards are granted under the Share Units Plan. PSU-ROIC awards and PSU-TSR awards settle depending on the level of attainment of a target return on invested capital (ROIC) performance condition, and on the level of attainment of a target total shareholder return (TSR) market condition, respectively, as defined by the award agreement, over the plan period of three years. RSU awards settle depending on continued employment over the applicable plan period, and are not subject to market or performance conditions.
(2)Deferred share unit (DSU) awards are granted under the Voluntary Incentive Deferral Plan.




22 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Share Units Plan
 
PSUs-ROIC (1)
PSUs-TSR (2)
RSUs (3)
 UnitsWeighted-average grant date fair valueUnitsWeighted-average grant date fair valueUnitsWeighted-average grant date fair value
 In millionsIn millionsIn millions
Outstanding at December 31, 20250.4 $153.18 0.3 $198.61 0.5 $148.51 
Granted (4)
0.2 $131.11 0.1 $145.18 0.2 $131.01 
Settled— $— — $— (0.1)$144.37 
Forfeited— $137.88 — $186.70 — $144.97 
Outstanding at June 30, 20260.6 $146.98 0.4 $182.39 0.6 $142.61 
(1)The grant date fair value of equity-settled PSU-ROIC awards granted in 2026 of $22 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $42 million and is expected to be recognized over a weighted-average period of 1.8 years.
(2)The grant date fair value of equity-settled PSU-TSR awards granted in 2026 of $17 million is calculated using a Monte Carlo simulation model. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $26 million and is expected to be recognized over a weighted-average period of 1.6 years.
(3)The grant date fair value of equity-settled RSU awards granted in 2026 of $32 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $40 million and is expected to be recognized over a weighted-average period of 1.8 years.
(4)Units granted in lieu of dividends have not been quantified as they relate to a nominal number of units.

Voluntary Incentive Deferral Plan
 
DSUs (1)
 UnitsWeighted-average grant date fair value
 In millions
Outstanding at December 31, 20250.3 $121.72 
Granted— $151.19 
Settled (2)
— $107.14 
Outstanding at June 30, 2026 (3)
0.3 $129.90 
(1)The grant date fair value of equity settled DSU awards granted in 2026 of $5 million is valued based on the closing price of the Company's stock on the date of the grant. As at June 30, 2026, the aggregate intrinsic value of all equity settled DSU awards outstanding amounted to $45 million.
(2)For the six months ended June 30, 2026, the Company purchased common shares for the settlement of equity settled DSUs, net of the remittance of the participants withholding tax obligation of $4 million.
(3)The total fair value of equity settled DSU awards vested, the number of units outstanding that were nonvested, unrecognized compensation cost and the remaining recognition period, have not been quantified as they relate to a nominal number of units.

Stock Option Plan
 Options outstanding
 
Number of options
Weighted-average
exercise price
 In millions
Outstanding at December 31, 2025 (1)
3.1 $141.35 
Granted (2)
0.4 $131.17 
Exercised(0.5)$129.53 
Forfeited(0.1)$158.23 
Outstanding at June 30, 2026 (1)(2)(3)
2.9 $144.25 
Exercisable at June 30, 2026 (1)(3)
1.7 $142.10 
(1)Stock options with a US dollar exercise price have been converted to Canadian dollars using the exchange rate in effect at the balance sheet date.
(2)The grant date fair value of options granted in 2026 of $10 million ($21.70 per option) is calculated using the Black-Scholes option-pricing model. As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $20 million and is expected to be recognized over a weighted-average period of 2.0 years.
(3)The weighted-average term to expiration of options outstanding was 6.3 years and the weighted-average term to expiration of exercisable stock options was 4.8 years. As at June 30, 2026, the aggregate intrinsic value of in-the-money stock options outstanding amounted to $76 million and the aggregate intrinsic value of stock options exercisable amounted to $48 million.

CN | 2026 Quarterly Review – Second Quarter 23

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Employee Share Investment Plan
ESIP
Number of shares
Weighted-average
share price
In millions
Unvested contributions at December 31, 2025
0.3 $138.17 
Company contributions0.1 $147.57 
Forfeited— $140.51 
Vested (1)
(0.1)$143.13 
Unvested contributions at June 30, 2026 (2)
0.3 $141.15 
(1)As at June 30, 2026, total fair value of units purchased with Company contributions that vested in 2026 was $15 million.
(2)As at June 30, 2026, total unrecognized compensation cost related to all outstanding awards was $17 million and is expected to be recognized over the next 12 months.


11 – Accumulated other comprehensive loss

The following tables present the changes in Accumulated other comprehensive loss by component for the three and six months ended June 30, 2026 and 2025:
In millions
Foreign
 currency
 translation
Pension
 and other postretirement benefit plans
Derivative instruments
Total
 before tax
Income tax recovery (expense) (1)
Total
 net of tax
Balance at March 31, 2026
$8 $(1,543)$77 $(1,458)$498 $(960)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)
356 356 — 356 
Translation of US dollar debt (3)
(220)(220)31 (189)
Derivative instruments (4)
39 39 (5)34 
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)
11 11 (3)8 
Amortization of prior service credit(1)(1)— (1)
Amortization of derivative instruments (6)
(55)(55)9 (46)
Other comprehensive income (loss)136 10 (16)130 32 162 
Balance at June 30, 2026$144 $(1,533)$61 $(1,328)$530 $(798)

In millions
Foreign
 currency
 translation
Pension
 and other postretirement benefit plans
Derivative instruments
Total
 before tax
Income tax recovery (expense) (1)
Total
 net of tax
Balance at December 31, 2025$(69)$(1,554)$77 $(1,546)$479 $(1,067)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)
602 602 — 602 
Translation of US dollar debt (3)
(389)(389)53 (336)
Derivative instruments (4)
48 48 (7)41 
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)
23 23 (6)17 
Amortization of prior service credit(2)(2)— (2)
Amortization of derivative instruments (6)
(64)(64)11 (53)
Other comprehensive income (loss)213 21 (16)218 51 269 
Balance at June 30, 2026$144 $(1,533)$61 $(1,328)$530 $(798)
Footnotes to the tables follow on the next page.


24 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
In millions
Foreign
 currency
 translation
Pension
 and other postretirement benefit plans
Derivative instruments
Total
 before tax
Income tax recovery (expense) (1)
Total
 net of tax
Balance at March 31, 2025$224 $(1,967)$76 $(1,667)$660 $(1,007)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)
(975)(975)— (975)
Translation of US dollar debt (3)
623 623 (83)540 
Derivative instruments (4)
(65)(65)8 (57)
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)
 13 13 (3)10 
Amortization of prior service credit(1)(1)— (1)
Amortization of derivative instruments (6)
71 71 (10)61 
Other comprehensive income (loss)(352)12 6 (334)(88)(422)
Balance at June 30, 2025$(128)$(1,955)$82 $(2,001)$572 $(1,429)

In millions
Foreign
 currency
 translation
Pension
 and other postretirement benefit plans
Derivative instruments
Total
 before tax
Income tax recovery (expense) (1)
Total
 net of tax
Balance at December 31, 2024$217 $(1,978)$79 $(1,682)$662 $(1,020)
Other comprehensive income (loss) before reclassifications:
Translation of net investment (2)
(971)(971)— (971)
Translation of US dollar debt (3)
626 626 (84)542 
Derivative instruments (4)
(64)(64)8 (56)
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of net actuarial loss (5)
 25 25 (5)20 
Amortization of prior service credit(2)(2)— (2)
Amortization of derivative instruments (6)
67 67 (9)58 
Other comprehensive income (loss)(345)23 3 (319)(90)(409)
Balance at June 30, 2025$(128)$(1,955)$82 $(2,001)$572 $(1,429)
(1)The Company releases stranded tax effects from Accumulated other comprehensive loss to Net income upon the liquidation or termination of the related item.
(2)Foreign exchange gain (loss) on translation of net investment in foreign operations.
(3)Foreign exchange gain (loss) on translation of US dollar-denominated debt designated as a hedge of the net investment in foreign operations. The Company designates US dollar-denominated debt of the parent company as a foreign currency hedge of its net investment in foreign operations. Accordingly, from the dates of designation, foreign exchange gains and losses on translation of the Company's US dollar-denominated debt are recorded in Accumulated other comprehensive loss, which minimizes the volatility of earnings resulting from the conversion of US dollar-denominated debt into Canadian dollars.
(4)The cumulative changes in fair values of cross-currency interest rate swaps are included in Derivative instruments. See Note 13 – Financial instruments.
(5)Total before tax reclassified to Other components of net periodic benefit income in the Consolidated Statements of Income and included in net periodic benefit income. See Note 5 – Pensions and other postretirement benefits for additional information.
(6)Includes the amortization of treasury locks for the three months and six months ended June 30, 2026 of $1 million and $2 million ($1 million and $2 million as at June 30, 2025), respectively, as well as the amortization of cross-currency interest rate swaps related to foreign currency exposure and interest expense. See Note 13 - Financial instruments.


CN | 2026 Quarterly Review – Second Quarter 25

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
12 – Major commitments and contingencies

Purchase commitments
As at June 30, 2026, the Company had fixed and variable commitments to purchase engineering services, rail, information technology services and licenses, locomotives, railroad cars, wheels, rail ties, as well as other equipment and services with a total estimated cost of $2,799 million. Costs of variable commitments were estimated using forecasted prices and volumes.

Contingencies
In the normal course of business, the Company becomes involved in various legal actions seeking compensatory and occasionally punitive damages, including actions brought on behalf of various purported classes of claimants and claims relating to employee and third-party personal injuries, occupational disease and property damage, arising out of harm to individuals or property allegedly caused by, but not limited to, derailments or other accidents.

As at June 30, 2026, the Company had aggregate reserves for personal injury and other claims of $274 million, of which $86 million was recorded as a current liability ($310 million as at December 31, 2025, of which $71 million was recorded as a current liability).

Although the Company considers such provisions to be adequate for all its outstanding and pending claims, the final outcome with respect to actions outstanding or pending as at June 30, 2026, or with respect to future claims, cannot be reasonably determined. When establishing provisions for contingent liabilities the Company considers, where a probable loss estimate cannot be made with reasonable certainty, a range of potential probable losses for each such matter, and records the amount it considers the most reasonable estimate within the range. However, when no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. For matters where a loss is reasonably possible but not probable, a range of potential losses cannot be estimated due to various factors which may include the limited availability of facts, the lack of demand for specific damages and the fact that proceedings were at an early stage. Based on information currently available, the Company believes that the eventual outcome of the actions against the Company will not, individually or in the aggregate, have a material adverse effect on the Company's financial position. However, due to the inherent inability to predict with certainty unforeseeable future developments, there can be no assurance that the ultimate resolution of these actions will not have a material adverse effect on the Company's results of operations, financial position or liquidity.

Environmental matters
The Company's provision for specific environmental sites is undiscounted and includes costs for remediation and restoration of sites, as well as monitoring costs. Costs related to any unknown existing or future contamination will be accrued in the period in which they become probable and reasonably estimable. Additional information relating to the Company's environmental matters is provided in Note 21 – Major commitments and contingencies to the Company's 2025 Annual Consolidated Financial Statements.

Under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Company through one of its subsidiaries was notified by the U.S. Environmental Protection Agency (EPA) on February 28, 2024 that the EPA considers it a potentially responsible party (PRP), along with at least five other previously notified parties, with respect to the Matthiessen & Hegeler Zinc Company Site (Site) in LaSalle, Illinois. The EPA also requested that the Company respond to certain information requests, which the Company did on June 30, 2024. The Company’s designation as a PRP is based on claims that the Company, or its predecessors, had land holdings historically that were leased to others for commercial or industrial uses that may allegedly have resulted in the disposal of hazardous substances onto the Site. Based on remedial investigations and feasibility studies previously conducted, the EPA issued a Record of Decision outlining the clean-up plan for the Site and certain off-Site areas. In the second quarter of 2025, CN received a special notice letter from the EPA which requested CN to respond with a good faith offer by August 4, 2025. The Company responded to the EPA on August 4, 2025 reiterating why it should not be considered a PRP for the Site and as at July 23, 2026, there have been no further developments. The Company has not accrued any obligation related to the remediation of the Site as it has not been able to confirm to what, if any, extent it contributed to the contamination, the extent and cost of remediation and the contribution of other potentially responsible parties and their ability to pay for their obligations.

For matters where a loss is reasonably possible but not probable, a range of potential losses cannot be estimated due to various factors which may include the limited availability of facts, the lack of demand for specific damages and the fact that proceedings were at an early stage.

As at June 30, 2026, the Company had aggregate accruals for environmental costs of $66 million, of which $43 million was recorded as a current liability ($64 million as at December 31, 2025, of which $38 million was recorded as a current liability). The Company anticipates that
26 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
the liability at June 30, 2026 will be paid out over the next five years. Based on the information currently available, the Company considers its accruals to be adequate.

Guarantees and indemnifications
A description of the Company's guarantees and indemnifications is provided in Note 21 – Major commitments and contingencies to the Company's 2025 Annual Consolidated Financial Statements.

As at June 30, 2026, the Company had outstanding letters of credit of $321 million ($321 million as at December 31, 2025) under the committed bilateral letter of credit facilities and $153 million ($153 million as at December 31, 2025) under the uncommitted bilateral letter of credit facilities, and surety and other bonds of $140 million ($147 million as at December 31, 2025), all issued by financial institutions with investment grade credit ratings to third parties to indemnify them in the event the Company does not perform its contractual obligations.

As at June 30, 2026, the maximum potential liability under these guarantee instruments was $614 million ($621 million as at December 31, 2025), of which $571 million ($580 million as at December 31, 2025) related to other employee benefit liabilities and workers' compensation and $43 million ($41 million as at December 31, 2025) related to other liabilities. The guarantee instruments expire at various dates between 2026 and 2027.

As at June 30, 2026, the Company had not recorded a liability with respect to guarantees and indemnifications as the Company did not expect to make any payments under its guarantees and indemnifications.

13 – Financial instruments

Derivative financial instruments
The Company uses derivative financial instruments from time to time in the management of its foreign currency and interest rate exposures. The Company has limited involvement with derivative financial instruments in the management of its risks and does not hold or issue them for trading or speculative purposes.

Foreign currency risk
Foreign exchange forward contracts

As at June 30, 2026, the Company had outstanding foreign exchange forward contracts to purchase a notional value of US$905 million (US$477 million as at December 31, 2025). These outstanding contracts are at a weighted-average exchange rate of $1.38 per US$1.00 ($1.39 per US$1.00 as at December 31, 2025). The weighted-average term of the contracts is 169 days (110 days as at December 31, 2025). Changes in fair values of foreign exchange forward contracts, resulting from changes in foreign exchange rates, are recognized in Other income in the Consolidated Statements of Income as they occur.

For the three and six months ended June 30, 2026, the Company recorded gains of $73 million and $106 million, respectively, related to foreign exchange forward contracts compared to losses of $50 million and $47 million, respectively, for the same periods in 2025. These gains were largely offset by the re-measurement of US dollar-denominated monetary assets and liabilities recorded in Other income.
As at June 30, 2026, the fair value of outstanding foreign exchange forward contracts included in Other current assets and Accounts payable and other was $32 million and $nil, respectively ($nil and $10 million as at December 31, 2025).

Cross-currency interest rate swaps

On March 1, 2026, the US$500 million cross-currency interest rate swap (CCIRS) was settled in conjunction with the underlying bond settlement. As at June 30, 2026, the aggregate notional amount of CCIRS outstanding was US$1,275 million to hedge the US-to-Canadian dollar currency fluctuations on US dollar-denominated notes maturing on July 15, 2028, May 12, 2029, March 12, 2031 and October 15, 2031 for an aggregate principal amount of $1,780 million with a weighted average fixed annual interest rate of 4.67%.

These CCIRS were designated as qualifying hedging instruments and were accounted for as cash flow hedges, with their critical terms corresponding to the related US dollar-denominated notes.
CN | 2026 Quarterly Review – Second Quarter 27

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
The following table provides the fair value gain or (loss) recorded in Accumulated other comprehensive loss and the amounts amortized to Other income related to foreign currency exposure and to Interest expense as reported for the three and six months ended June 30, 2026 and June 30, 2025.
Three months ended June 30Six months ended June 30
In millions2026202520262025
Change in fair value of CCIRS$39 $(66)$48 $(65)
Other income $50 $(77)$55 $(75)
Interest expense$4 $5 $7 $6 

The following table provides the cumulative change in fair value of outstanding CCIRS as at June 30, 2026 and December 31, 2025:

In millionsAs at June 30, 2026As at December 31, 2025
Other current assets $24 $7 
Intangible assets, goodwill and other14 — 
Accounts payable and other
— (29)
Other liabilities and deferred credits(14)(30)
Total fair value of CCIRS$24 $(52)

The cash flows related to these CCIRS that pertain to the periodic interest settlements are classified as operating activities and the cash flows that pertain to the principal balance are classified as financing activities.

Interest rate risk

Interest rate swaps
The Company had outstanding interest rate swaps (IRS) designated as qualifying hedging instruments and accounted for as fair value hedges. The swaps were designed to hedge the interest rate risk associated with market fluctuations attributable to the Canadian Overnight Repo Rate Average (CORRA) or the Secured Overnight Financing Rate (SOFR). The fair value gain or loss on the swaps as well as any offsetting loss or gain on the hedged notes attributable to the hedged risk are recorded in Interest expense.

The following table presents the notional value of U.S. dollar and Canadian dollar denominated debt instruments that are hedged through IRS for the equivalent notional value:
In millions
Maturity
US$ denominated amountAs at June 30, 2026
As at December 31, 2025
3.50%5-year notesJune 10, 2030500500
4.20%10-year notesJune 10, 2035500500
4.95%10-year notesMay 12, 2036US$450639— 
Total notional value$1,639 $1,000 

The following table provides the cumulative change in fair value of outstanding IRS and the corresponding fair value hedging adjustment in Long-term debt as at June 30, 2026 and December 31, 2025:
In millionsAs at June 30, 2026
As at December 31, 2025
Other current assets $3 $5 
Accounts payable and other(1)— 
Other liabilities and deferred credits(19)(16)
Total fair value of IRS$(17)$(11)
Hedging adjustment gain (loss)$18 $11 

Three months ended June 30, 2026Six months ended June 30, 2026
In millions2026202520262025
Periodic net interest accruals for IRS recorded in Interest expense$2 — $3 — 

28 CN | 2026 Quarterly Review – Second Quarter

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Fair value of financial instruments
The financial instruments that the Company measures at fair value on a recurring basis in periods subsequent to initial recognition are categorized into the following levels of the fair value hierarchy based on the degree to which inputs are observable:
•Level 1: Inputs are quoted prices for identical instruments in active markets
•Level 2: Significant inputs (other than quoted prices included in Level 1) are observable
•Level 3: Significant inputs are unobservable

The carrying amounts of Cash and cash equivalents and Restricted cash and cash equivalents approximate fair value. These financial instruments include highly liquid investments purchased three months or less from maturity, for which the fair value is determined by reference to quoted prices in active markets.

The carrying amounts of Accounts receivable, Other current assets and Accounts payable and other approximate fair value due to their short maturity, unless otherwise specified. The fair value of derivative financial instruments, included in Other current assets and Accounts payable and other is classified as Level 2 and is used to manage the Company's exposure to foreign currency risk and interest rate risk. The fair value is measured by discounting future cash flows using a discount rate derived from market data for financial instruments subject to similar risks and maturities.

The carrying amount of the Company's debt does not approximate fair value. The fair value is estimated based on quoted market prices for the same or similar debt instruments, as well as discounted cash flows using current interest rates for debt with similar terms, company rating, and remaining maturity. The Company classifies debt as Level 2. As at June 30, 2026, the Company's debt, excluding finance leases, had a carrying amount of $22,250 million ($21,201 million as at December 31, 2025) and a fair value of $21,009 million ($20,246 million as at December 31, 2025). The carrying amount of debt excluding finance leases exceeded the fair value due to market rates being higher than the stated coupon rates.


14 – Segmented information

For details relating to the Company's segmented information, see Note 23 - Segment information to the Company's 2025 Annual Consolidated Financial Statements.

Net income and diluted earnings per share (EPS), which are reported on the Company's Consolidated Statements of Income, are the profit measures reviewed by the Chief Operating Decision Maker (CODM). These measures are used by the CODM to assess segment profitability, allocate resources across CN's network, benchmark performance against targets and industry standards, analyze trends for strategic planning and forecasting and communicating results to stakeholders.

Significant segment expenses regularly provided to the CODM and included within net income and EPS are the expense captions detailed in the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as Total assets. Segment property additions is reported on the Consolidated Statements of Cash Flows as Property additions.

15 - Subsequent event

Network rights agreement between the Company and Union Pacific Corporation
On July 22, 2026, the Company and Union Pacific Corporation (UP) announced a Memorandum of Understanding concerning a commercial agreement to improve North American Rail Connectivity. Under the agreement, the Company would secure new rights over UP's network for moves between Canada and Mexico; UP would have expanded operating rights over CN's former Elgin, Joliet & Eastern Railway (EJ&E) corridor around Chicago. The rights are subject to Surface Transportation Board (STB) approval.

Competitive access agreement between the Company and Union Pacific Corporation
In connection with the proposed merger between UP and Norfolk Southern Corporation (NS) (the Applicants), on July 22, 2026, the Company and Applicants announced they had executed a Memorandum of Understanding (MOU) in connection with the proposed transaction between UP and NS. The MOU secures CN's competitive access, including access to Kansas City, Missouri. The provisions are contingent on STB approval and closing of the merger.
CN | 2026 Quarterly Review – Second Quarter 29

MANAGEMENT'S DISCUSSION AND ANALYSIS
Contents
Forward-looking statements
31
Introduction
32
Quarterly highlights
32
2026 Business outlook and assumptions
33
Financial highlights
34
Results of operations
34
Non-GAAP measures
36
Revenues
39
Operating expenses
44
Other income and expense
45
Summary of quarterly financial data
46
Liquidity and capital resources
46
Off balance sheet arrangements
51
Outstanding share data
52
Financial instruments
52
Recent accounting pronouncements
54
Critical accounting estimates
55
Business risks
55
Controls and procedures
56
30 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Forward-looking statements

Certain statements included in this Management's Discussion and Analysis (MD&A) are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management’s assessment and assumptions and publicly available information with respect to CN. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN 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," "goals," or other similar words.

Forward-looking statements include, but are not limited to, those set forth in the table below, which also presents key assumptions used in determining the forward-looking statements. See also the section of this MD&A entitled 2026 Business outlook and assumptions.
Forward-looking statementsKey assumptions
Statements relating to revenue growth opportunities, including those referring to general economic and business conditions
•North American and global economic growth in the short and long term
•Long-term growth opportunities being less affected by current economic conditions
•No material disruption of CN’s operations or of the economy’s supply chains as a result of pandemics or geopolitical conflicts and tensions
•No further deterioration in the North American economy as a result of tariffs, trade barriers and trade actions taken by various governments and agencies globally
Statements relating to the Company's ability to meet debt repayments and future obligations in the foreseeable future, including income tax payments, and capital spending
•Adequate credit ratios
•Investment-grade credit ratings
•Access to capital markets
•Adequate cash generated from operations and other sources of financing
Statements relating to pension contributions
•Adequate cash generated from operations and other sources of financing
•Adequate long-term return on investment on pension plan assets
•Level of funding as determined by actuarial valuations, particularly influenced by discount rates for funding purposes

Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors which may cause actual results, performance or achievements of CN to be materially different from the outlook or any future results, performance or achievements implied by such statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements. Important risk factors that could affect the forward-looking statements include, but are not limited to, general economic and business conditions, including factors impacting global supply chains such as pandemics and geopolitical conflicts or tensions; trade restrictions, trade barriers, or the imposition of tariffs or other changes to international trade arrangements; industry competition; inflation, currency and interest rate fluctuations; changes in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators and other regulatory claims or proceedings; increases in maintenance and operating costs; security threats; reliance on technology, including the use of artificial intelligence, and related cybersecurity risk; transportation of hazardous materials; various events which could disrupt operations, including illegal blockades of rail networks, and natural events such as severe weather, droughts, fires, floods and earthquakes; climate change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings and other types of claims and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; the availability of and cost competitiveness of renewable fuels and the development of new locomotive propulsion technology; reputational risks; supplier concentration; pension funding requirements and volatility; and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the U.S., including its Annual Information Form and Form 40-F. See the section entitled Business risks of this MD&A and the Company's 2025 Annual MD&A for a description of major risk factors relating to CN.

CN has sustainability-related commitments and climate goals, and continues to assess the impact on its operations of related initiatives, plans and proposals that CN and other stakeholders (including government, regulatory and other bodies) are pursuing in relation to climate change and carbon emissions. The achievement of CN’s climate goals is subject to several risks and uncertainties, including those disclosed in the section entitled Business risks: Reputation of the Company's 2025 Annual MD&A. The achievement of these goals is also subject to circumstances outside of the Company’s control, including the availability and cost competitiveness of renewable fuels and the development and availability of new technologies, such as alternative propulsion locomotive technologies, and the cooperation of third parties such as suppliers, customers, supply chain partners and regulators. There can be no certainty that the Company will achieve any or all of these goals within the stated timeframe, or that achieving any of these goals will meet all of the expectations of its stakeholders or applicable legal
CN | 2026 Quarterly Review – Second Quarter 31

MANAGEMENT'S DISCUSSION AND ANALYSIS
requirements. If the Company is unable to achieve its climate goals or satisfy the expectations of its stakeholders, its brand and reputation could be materially and adversely affected.

Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement. Information contained on, or accessible through, our website is not incorporated by reference into this MD&A.


Introduction

This MD&A dated July 23, 2026, relates to the consolidated financial position and results of operations of Canadian National Railway Company, together with its wholly-owned subsidiaries, collectively "CN" or the "Company," and should be read in conjunction with the Company's June 30, 2026 Interim Consolidated Financial Statements and Notes thereto. It should also be read in conjunction with the Company's 2025 Annual Consolidated Financial Statements, and the 2025 Annual MD&A. All financial information reflected herein is expressed in Canadian dollars and prepared in accordance with United States generally accepted accounting principles (GAAP), unless otherwise noted.

CN's common shares are listed on the Toronto and New York stock exchanges. Additional information about CN filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC), including the Company's 2025 Annual Information Form and Form 40-F, may be found online on SEDAR+ at www.sedarplus.ca, on the SEC's website at www.sec.gov through EDGAR, and on the Company's website at www.cn.ca in the Investors section. Printed copies of such documents may be obtained by contacting CN's Corporate Secretary's Office.


Quarterly highlights

Second quarter of 2026 compared to second quarter of 2025
Financial results
•Revenues of $4,753 million, an increase of $481 million, or 11%.
•Operating income of $1,781 million, an increase of $143 million, or 9% and adjusted operating income of $1,798 million, an increase of $160 million, or 10%. (1)(2)
•Operating ratio, defined as operating expenses as a percentage of revenues, of 62.5%, an increase of 0.8-points and adjusted operating ratio of 62.2%, an increase of 0.5-points. (1)(2)
•Net income of $1,249 million, an increase of $77 million, or 7% and adjusted net income of $1,261 million, an increase of $89 million, or 8%. (1)(2)
•Diluted earnings per share (EPS) of $2.06, an increase of 10% and adjusted diluted EPS of $2.08, an increase of 11%. (1)(2)
•Net cash provided by operating activities of $1,611 million, a decrease of $134 million, or 8%, and net cash used in investing activities of $669 million, a decrease of $154 million, or 19%.
•Free cash flow of $942 million, an increase of $20 million, or 2%. (1)(3)

(1)This non-GAAP measure does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.
(2)See the section of this MD&A entitled Non-GAAP measures for an explanation and reconciliation of these non-GAAP measures.
(3)See the section of this MD&A entitled Liquidity and capital resources – Free cash flow for an explanation and reconciliation of this non-GAAP measure.








32 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating performance (1)
•Through dwell increased by 4% to 7.1 (entire railroad, hours).
•Car velocity decreased by 1% to 211 (car miles per day).
•Through network train speed increased by 1% to 19.1 (mph).
•Fuel efficiency of 0.836 (US gallons of locomotive fuel consumed per 1,000 gross ton miles (GTMs)), was 3% more efficient.
•Train length increased by 1% to 8,084 (feet).
•Revenue ton miles (RTMs) increased 5% to 62,250 (millions).
•Injury frequency rate increased from 0.83 to 1.01 (per 200,000 person hours). (2)
•Accident rate increased from 1.56 to 2.30 (per million train miles). (2)
(1)Statistical operating data, key operating measures and safety indicators are unaudited and based on estimated data available at such time and are subject to change as more complete information becomes available.
(2)Based on Federal Railroad Administration (FRA) reporting criteria.


Labor and Workforce negotiations
As at June 30, 2026, CN employed a total of 17,300 employees in Canada, of which 12,568, or 73%, were unionized employees, and 6,525 employees in the U.S., of which 5,444, or 83%, were unionized employees.

U.S. workforce
The general approach to labor negotiations by U.S. Class I railroads is to bargain on a collective national basis with the industry, which CN's subsidiaries Grand Trunk Western Railroad Company (GTW), companies owned by Illinois Central Corporation (ICC), Wisconsin Central Ltd. (WC), and Bessemer & Lake Erie Railroad Company (BLE) currently participate in for collective bargaining agreements covering all union-represented employees, with the exception of two employee groups working at Pittsburgh and Conneaut Dock Company (PCD). In the most recent bargaining round, which closed in July 2026, agreements were reached and ratified with all twelve unions.

Recent Developments
On July 22, 2026, the Company and Union Pacific Corporation (UP) announced a Memorandum of Understanding concerning a commercial agreement to improve North American Rail Connectivity. Under the agreement, the Company would secure new rights over UP's network for moves between Canada and Mexico; UP would have expanded operating rights over CN's former Elgin, Joliet & Eastern Railway (EJ&E) corridor around Chicago. The rights are subject to Surface Transportation Board (STB) approval.


2026 Business outlook and assumptions

CN now assumes low single-digit RTM growth (compared to its January 30, 2026 assumption of flattish growth). The 2025/2026 grain crops in Canada and the U.S. were above their respective five-year averages. The Company continues to assume that the 2026/2027 grain crops in Canada and the U.S. will be in line with their respective five-year averages. The Company notes there is a heightened demand risk as a result of volatile macroeconomic conditions, geopolitical conflicts and global trade tensions.

In 2026, the Company continues to expect to invest approximately $2.8 billion in its capital program, net of amounts reimbursed by customers, to improve the safety, efficiency and integrity of its network. These investments are intended to also enable and support the growth of the Company and will be financed with cash generated from operations or with cash from financing activities.

The forward-looking statements discussed in this 2026 Business outlook and assumptions section are subject to risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied in such statements and are based on certain factors and assumptions which the Company considers reasonable, about events, developments, prospects and opportunities that may not materialize or that may be offset entirely or partially by other events and developments. In addition to the assumptions and expectations discussed in this section, reference should be made to the section of this MD&A entitled Forward-looking statements for assumptions and risk factors affecting such statements.

CN | 2026 Quarterly Review – Second Quarter 33

MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial highlights
 Three months ended June 30Six months ended June 30
In millions, except percentages and per share data2026 2025 
% Change
Fav (Unfav)
2026 2025 % Change
Fav (Unfav)
Financial performance and liquidity
Revenues$4,753$4,272 11%$9,132$8,675 5%
Operating income$1,781$1,638 9%$3,330$3,248 3%
Adjusted operating income (1)(2)
$1,798$1,638 10%$3,364$3,248 4%
Net income $1,249$1,172 7%$2,395$2,333 3%
Adjusted net income (1)(2)
$1,261$1,172 8%$2,363$2,333 1%
Basic earnings per share $2.06$1.87 10%$3.93$3.72 6%
Diluted earnings per share $2.06$1.87 10%$3.93$3.71 6%
Adjusted diluted earnings per share (1)(2)
$2.08$1.87 11%$3.88$3.71 5%
Dividends declared per share$0.9150$0.8875 3%$1.8300$1.7750 3%
Operating ratio (3)
62.5%61.7%(0.8) pts63.5%62.6%(0.9) pts
Adjusted operating ratio (1)(2)
62.2%61.7%(0.5) pts63.2%62.6%(0.6)pts
Net cash provided by operating activities$1,611$1,745 (8%)$2,876$2,909 (1%)
Net cash used in investing activities$669$823 19%$1,034$1,361 24%
Free cash flow (1)(4)
$942$922 2%$1,842$1,548 19%
In millions, except percentages
As at
June 30, 2026
As at December 31, 2025
% Change
Fav (Unfav)
Financial position
Total assets$60,094 $58,555 3%
Total long-term liabilities (5)
$34,924 $33,291 (5%)
(1)These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.
(2)See the section of this MD&A entitled Non-GAAP measures – Adjusted performance measures for an explanation of these non-GAAP measures.
(3)Operating ratio is defined as operating expenses as a percentage of revenues.
(4)See the section of this MD&A entitled Liquidity and capital resources – Free cash flow for an explanation of this non-GAAP measure.
(5)Total long-term liabilities is the difference between Total liabilities and Total current liabilities.


Results of operations

Second quarter and first half of 2026 compared to corresponding periods in 2025
Revenues for the second quarter of 2026 were $4,753 million compared to $4,272 million for the same period in 2025, an increase of $481 million, or 11%. The increase was mainly due to higher volumes and higher freight revenue per RTM:
•Volumes: increased mainly due to higher Canadian and U.S. grain exports, higher volumes of refined petroleum products, stronger export and domestic volumes of natural gas liquids; partly offset by lower shipments of international intermodal.
•Freight revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by an increase in the average length of haul.

Revenues for the first half of 2026 were $9,132 million compared to $8,675 million for the same period in 2025, an increase of $457 million, or 5%. The increase was mainly due to higher volumes and higher freight revenue per RTM:
•Volumes: increased mainly due to higher Canadian and U.S. grain exports, higher volumes of refined petroleum products, stronger domestic and export volumes of natural gas liquids and potash; partly offset by lower shipments of frac sand and lower exports of Canadian metallurgical and thermal coal.
•Freight revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

34 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating expenses for the second quarter of 2026 were $2,972 million compared to $2,634 million for the same period in 2025. Operating expenses for the first half of 2026 were $5,802 million compared to $5,427 million for the same period in 2025. The increase of $338 million, or 13%, in the second quarter was mainly due to higher fuel prices, general wage increases and higher purchased services and material expense; partly offset by lower average headcount. The increase of $375 million, or 7%, in the first half of 2026 was mainly due to higher fuel prices in the second quarter, general wage increases, higher purchased services and material expense and higher incident costs, partly offset by lower average headcount, the positive translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

Operating income for the second quarter of 2026 increased by $143 million, or 9%, to $1,781 million when compared to the same period in 2025. Operating income for the first half of 2026 increased by $82 million, or 3%, to $3,330 million when compared to the same period in 2025. The operating ratio, defined as operating expenses as a percentage of revenues, was 62.5% in the second quarter of 2026 compared to 61.7% in the second quarter of 2025, a 0.8-point increase. The operating ratio for the first half of 2026 was 63.5% compared to 62.6% in 2025, a 0.9-point increase.

Net income for the second quarter of 2026 was $1,249 million, an increase of $77 million, or 7%, and diluted earnings per share increased by 10% to $2.06, when compared to the same period in 2025. Net income for the first half of 2026 was $2,395 million, an increase of $62 million, or 3%, and diluted earnings per share increased by 6% to $3.93, when compared to the same period in 2025.

Key operating metrics
 Three months ended June 30Six months ended June 30
20262025% Change
Fav (Unfav)		20262025% Change
Fav (Unfav)
Gross ton miles (GTMs) (millions) (1)
121,082 117,335 3%239,471 232,178 3%
Train weight (tons) (2)
9,404 9,125 3%9,350 9,101 3%
Train length (feet) (3)
8,084 8,016 1%7,979 7,863 1%
Through network train speed (miles per hour) (4)
19.1 18.9 1%18.9 18.3 3%
Fuel efficiency (US gallons of locomotive fuel consumed per 1,000 GTMs) (5)
0.836 0.865 3%0.864 0.891 3%
Through dwell (entire railroad, hours) (6)
7.1 6.8 (4%)7.3 7.3 —%
Car velocity (car miles per day) (7)
211 213 (1%)206 200 3%
(1)GTMs: The workload performed by system trains in hauling freight or equipment. GTMs are calculated by multiplying the trailing weight by the distance the train moved. A larger number is an indicator of more traffic (and thus more revenue) being moved.
(2)Train weight: An efficiency measurement on how much tonnage each mainline train handles on average as it crosses the network. Calculated as the total of GTMs and divided by total train miles, this measure provides insight on how well each train was maximized in terms of its capacity to move traffic.
(3)Train length: An efficiency measurement on average trailing length of each mainline train on the network. Calculated as the total of car foot miles (the sum of car length multiplied by miles travelled for each trailing car) divided by total train miles, this measure provides insight on how well each train was maximized in terms of its capacity to move traffic.
(4)Through network train speed: A measure of the line-haul movement from origin to destination, including time at terminals. The average speed is calculated by dividing train miles by total hours operated, excluding yard and local trains, passenger trains, maintenance of way trains, and foreign trains. This measure represents the fluidity of trains on the network, with a higher value also indicating a more fluid network.
(5)Fuel efficiency: This measure represents how efficient the Company is in the generation and utilization of locomotive horsepower in freight train operations, with a lower number indicating improved performance. Fuel efficiency is defined as US gallons of locomotive fuel consumed per 1,000 GTMs.
(6)Through dwell: The average time a car resides within terminal boundaries expressed in hours. The measurement begins with a customer release, received interchange, or train arrival event and ends with a customer placement (actual or constructive), delivered or offered in interchange, or train departure event. This excludes stored, bad ordered, maintenance of way cars, or cars with dwell greater than 10 days. This measure represents the efficiency of handling cars within the terminal, with a lower value indicating higher performance.
(7)Car velocity: The average miles per day traveled by loaded and empty cars (including all active cars whether private, foreign or CN owned) on company lines. This measure represents the fluidity of cars on the network, calculated by the sum of miles each car traveled divided by the sum of all of the cars’ active time, with a higher value indicating a smoother and more fluid operation.

The Company's continued focus on its scheduled operating plan resulted in strong operating metrics in the second quarter while handling higher than expected volumes.

During the first half of 2026, operating performance improved across all metrics compared to the same period in 2025. Despite winter weather headwinds, the network absorbed disruptions more effectively, as compared to 2025, with faster recovery and limited drag on operating metrics, reflecting a more fluid and resilient operation than the prior year.
CN | 2026 Quarterly Review – Second Quarter 35

MANAGEMENT'S DISCUSSION AND ANALYSIS
Non-GAAP measures

This MD&A makes reference to non-GAAP measures, including adjusted performance measures, constant currency, free cash flow and adjusted debt-to-adjusted EBITDA multiple that do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. From management's perspective, these non-GAAP measures are useful measures of performance and provide investors with supplementary information to assess the Company's results of operations and liquidity. These non-GAAP measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP.

For further details of these non-GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures, refer to the sections of this MD&A entitled Non-GAAP measures: Adjusted performance measures and Constant currency, as well as the section entitled Liquidity and capital resources: Free cash flow and Adjusted debt-to-adjusted EBITDA multiple.

Adjusted performance measures
Adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted operating expenses and adjusted operating ratio are non-GAAP measures that are used to set performance goals and to measure CN's performance and may include the following adjustments:
i.operating expense adjustments: workforce reduction program, advisory costs related to rail consolidation matters, depreciation expense on the deployment of a replacement system, advisory fees related to shareholder matters, losses and recoveries from assets held for sale, business acquisition-related costs;
ii.non-operating expense adjustments: business acquisition-related financing fees, merger termination income, gains and losses on disposal of property; and
iii.the effect of changes in tax laws including rate enactments and changes in tax positions affecting prior years.

These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

For the three and six months ended June 30, 2026, the Company's adjusted net income was $1,261 million, or $2.08 per diluted share, and $2,363 million, or $3.88 per diluted share, respectively. The adjusted figures for the three and six months ended June 30, 2026 exclude advisory costs related to the analysis and advocacy for the U.S. Surface Transportation Board (STB) review of the impacts to fair competition pertaining to the potential merger between Union Pacific and Norfolk Southern of $17 million, or $12 million after-tax ($0.02 per diluted share) and $34 million, or $25 million after tax ($0.04 per diluted share), respectively, recorded in Purchased services and material within the Consolidated Statements of Income. The adjusted figures for the six months ended June 30, 2026 also exclude the sale of a portion of the Newmarket subdivision located in Washago and Sundridge, Ontario, Canada, together with rail fixtures, for cash proceeds of $84 million, which resulted in a gain of $66 million, or $57 million after-tax ($0.09 per diluted share) recorded in the first quarter of 2026 in Other income within the Consolidated Statements of Income.

For the three and six months ended June 30, 2025, the Company's net income was $1,172 million, or $1.87 per diluted share, and $2,333 million, or $3.71 per diluted share, respectively. There were no adjustments in the second quarter and the first half of 2025.

Adjusted net income is defined as Net income in accordance with GAAP adjusted for certain significant items. Management believes that adjusted net income provides additional insight to management and investors into the Company's operations and underlying business trends as well as facilitates period-to-period comparisons, as it excludes certain significant items that are not reflective of CN's underlying business operations and could distort the analysis of trends in business performance. Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted-average diluted shares outstanding. This measure helps management and investors evaluate the Company's profitability on a per-share basis, facilitating the assessment of period-over-period performance by removing the impact of significant, non-recurring items.


36 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
The following table provides a reconciliation of Net income and Earnings per share in accordance with GAAP, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP adjusted performance measures presented herein:
Three months ended June 30Six months ended June 30
In millions, except per share data2026202520262025
Net income$1,249 $1,172 $2,395 $2,333 
Adjustments:
Operating expense adjustment:
Advisory costs related to rail consolidation matters17 — 34 — 
Non-operating expense adjustment:
Gain on disposal of property— — (66)— 
Tax adjustment:
Tax effect of adjustments (1)
(5)— — — 
Total adjustments$12 $— $(32)$— 
Adjusted net income$1,261 $1,172 $2,363 $2,333 
Diluted earnings per share$2.06 $1.87 $3.93 $3.71 
Impact of adjustments, per share0.02 — (0.05)— 
Adjusted diluted earnings per share$2.08 $1.87 $3.88 $3.71 
(1)The tax impact of adjustments is based on the nature of the item for tax purposes and related tax rates in the applicable jurisdiction.

Adjusted operating income is defined as Operating income in accordance with GAAP adjusted for certain significant operating expense items that are not reflective of CN's underlying business operations. This measure helps management and investors assess the Company's core operating results by excluding items that may distort the analysis of ongoing business performance. Adjusted operating expenses is defined as Operating expenses in accordance with GAAP adjusted for certain significant operating expense items that are not reflective of CN's underlying business operations. This measure provides management and investors with a view of ongoing costs which exclude unusual or non-recurring items, enabling more accurate assessment of cost management and resource allocation across reporting periods. Adjusted operating ratio is defined as adjusted operating expenses as a percentage of revenues. For management and investors, the adjusted operating ratio serves as a key performance indicator of cost management and overall operational effectiveness, as it demonstrates how effectively management controls costs relative to total revenue by excluding unusual or non-recurring items.

The following table provides a reconciliation of Operating income, Operating expenses and operating ratio, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP adjusted performance measures presented herein:

Three months ended June 30Six months ended June 30
In millions, except percentages2026 2025 2026 2025 
Operating income$1,781 $1,638 $3,330 $3,248 
Adjustment:
Advisory costs related to rail consolidation matters17 — 34 — 
Total adjustment$17 $— $34 $— 
Adjusted operating income$1,798 $1,638 $3,364 $3,248 
Operating expenses$2,972 $2,634 $5,802 $5,427 
Total adjustment(17)— (34)— 
Adjusted operating expenses$2,955 $2,634 $5,768 $5,427 
Operating ratio62.5 %61.7 %63.5 %62.6 %
Impact of adjustment(0.3)%— %(0.3)%— %
Adjusted operating ratio62.2 %61.7 %63.2 %62.6 %
CN | 2026 Quarterly Review – Second Quarter 37

MANAGEMENT'S DISCUSSION AND ANALYSIS
Constant currency
Financial results at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons in the analysis of trends in business performance. Measures at constant currency are considered non-GAAP measures and do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. Financial results at constant currency are obtained by translating the current period results denominated in US dollars at the weighted average foreign exchange rates used to translate transactions denominated in US dollars of the comparable period of the prior year.

The weighted average foreign exchange rates were $1.384 and $1.378 per US$1.00 for the three and six months ended June 30, 2026, respectively and $1.385 and $1.411 per US$1.00 for the three and six months ended June 30, 2025, respectively. On a constant currency basis, the Company's net income for the three and six months ended June 30, 2026 would have been higher by $5 million ($0.01 per diluted share) and $26 million ($0.04 per diluted share), respectively.

The following table provides a reconciliation of the impact of constant currency and related percentage change at constant currency on the financial results, as reported for the three and six months ended June 30, 2026:

Three months ended June 30Six months ended June 30
In millions, except per share data2026Constant currency impact2025% Change at constant currency
Fav (Unfav)		2026Constant currency impact2025% Change at constant currency
Fav (Unfav)
Revenues
Petroleum and chemicals$941 $1 $808 17%$1,869 $25 $1,723 10%
Metals and minerals528 1 496 7%996 17 1,019 (1%)
Forest products495 1 461 8%929 16 955 (1%)
Coal243 — 242 —%462 4 488 (5%)
Grain and fertilizers980 2 834 18%2,029 24 1,785 15%
Intermodal1,087 — 1,008 8%2,049 11 1,948 6%
Automotive285 — 241 18%492 7 460 8%
Total freight revenues4,559 5 4,090 12%8,826 104 8,378 7%
Other revenues194 — 182 7%306 3 297 4%
Total revenues4,753 5 4,272 11%9,132 107 8,675 7%
Operating expenses
Labor and fringe benefits889 (1)862 (3%)1,803 16 1,782 (2%)
Purchased services and material641 (2)576 (11%)1,264 6 1,153 (10%)
Fuel659 3 413 (60%)1,142 26 931 (25%)
Depreciation and amortization 486 — 489 1%970 9 982 —%
Equipment rents106 — 105 (1%)218 4 223 —%
Other191 (1)189 (1%)405 4 356 (15%)
Total operating expenses2,972 (1)2,634 (13%)5,802 65 5,427 (8%)
Operating income1,781 6 1,638 9%3,330 42 3,248 4%
Interest expense(241)— (219)(10%)(475)(8)(452)(7%)
Other components of net periodic benefit income 133 — 126 6%266 — 251 6%
Other income7 — 16 (56%)80 — 41 95%
Income before income taxes 1,680 6 1,561 8%3,201 34 3,088 5%
Income tax expense (431)(1)(389)(11%)(806)(8)(755)(8%)
Net income $1,249 $5 $1,172 7%$2,395 $26 $2,333 4%
Diluted earnings per share$2.06 $0.01 $1.87 11%$3.93 $0.04 $3.71 7%
Adjusted net income (1)
$1,261 $5 $1,172 8%$2,363 $26 $2,333 2%
Adjusted diluted earnings per share (1)
$2.08 $0.01 $1.87 12%$3.88 $0.04 $3.71 6%

Footnote to the table follows on the following page.

38 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
(1)These non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. See the section of this MD&A entitled Adjusted performance measures for an explanation and reconciliation of these non-GAAP measures. Adjusted net income at constant currency and adjusted diluted EPS at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons in the analysis of trends in business performance. For the three months ended June 30, 2026, the Adjusted net income at constant currency was $1,266 million, calculated as adjusted net income of $1,261 million, adjusted for the impact of fluctuations in foreign currency exchange rates of $5 million. For the six months ended June 30, 2026, the Adjusted net income at constant currency was $2,389 million, calculated as adjusted net income of $2,363 million, adjusted for the impact of fluctuations in foreign currency exchange rates of $26 million. For the three months ended June 30, 2026, the Adjusted diluted EPS at constant currency was $2.09, calculated as adjusted diluted EPS of $2.08, adjusted for the impact of fluctuations in foreign currency exchange rates of $0.01 per diluted share. For the six months ended June 30, 2026, the Adjusted diluted EPS at constant currency was $3.92, calculated as adjusted diluted EPS of $3.88, adjusted for the impact of fluctuations in foreign currency exchange rates of $0.04 per diluted share.


Revenues
 Three months ended June 30Six months ended June 30
In millions, unless otherwise indicated20262025% Change
% Change
at constant
currency (1)
20262025% Change
% Change
at constant
currency (1)
Freight revenues$4,559 $4,090 11%12%$8,826 $8,378 5%7%
Other revenues194 182 7%7%306 297 3%4%
Total revenues$4,753 $4,272 11%11%$9,132 $8,675 5%7%
Freight revenues    
Petroleum and chemicals$941 $808 16%17%$1,869 $1,723 8%10%
Metals and minerals528 496 6%7%996 1,019 (2%)(1%)
Forest products495 461 7%8%929 955 (3%)(1%)
Coal243 242 —%—%462 488 (5%)(5%)
Grain and fertilizers980 834 18%18%2,029 1,785 14%15%
Intermodal1,087 1,008 8%8%2,049 1,948 5%6%
Automotive285 241 18%18%492 460 7%8%
Total freight revenues$4,559 $4,090 11%12%$8,826 $8,378 5%7%
Revenue ton miles (RTMs) (millions) (2)
62,250 59,215 5%5%124,084 119,264 4%4%
Freight revenue/RTM (cents) (3)
7.32 6.91 6%6%7.11 7.02 1%3%
Carloads (thousands)
1,409 1,414 —%—%2,745 2,727 1%1%
Freight revenue/carload ($)
3,236 2,893 12%12%3,215 3,072 5%6%
(1)This non-GAAP measure does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. See the section of this MD&A entitled Non-GAAP measures – Constant currency for an explanation of this non-GAAP measure.
(2)RTMs is a measure of volumes and is calculated by multiplying the weight in tons of the shipment lading being transported by the number of miles that the shipment is transported on company lines. CN uses RTMs as the primary measure of volumes as compared to carloads, since RTMs also takes into account the length of haul and weight in the movement.
(3)Freight revenue per RTM is an indicator of revenue yield and represents revenue earned for transporting one ton of freight over a distance of one mile.

Revenues for the second quarter of 2026 were $4,753 million compared to $4,272 million for the same period in 2025, an increase of $481 million, or 11%. The increase was mainly due to higher volumes and higher freight revenue per RTM:
•Volumes: increased mainly due to higher Canadian and U.S. grain exports, higher volumes of refined petroleum products, stronger export and domestic volumes of natural gas liquids; partly offset by lower shipments of international intermodal.
•Freight revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by an increase in the average length of haul.

Revenues for the first half of 2026 were $9,132 million compared to $8,675 million for the same period in 2025, an increase of $457 million, or 5%. The increase was mainly due to higher volumes and higher freight revenue per RTM:
•Volumes: increased mainly due to higher Canadian and U.S. grain exports, higher volumes of refined petroleum products, stronger domestic and export volumes of natural gas liquids and potash; partly offset by lower shipments of frac sand and lower exports of Canadian metallurgical and thermal coal.
•Freight revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.


CN | 2026 Quarterly Review – Second Quarter 39

MANAGEMENT'S DISCUSSION AND ANALYSIS
Fuel surcharge revenues increased by $242 million in the second quarter of 2026 and increased by $198 million in the first six months of 2026 when compared to the same periods in 2025, mainly due to higher applicable fuel surcharge rates. The fuel surcharge revenues for the first six months of 2025 include the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

Petroleum and chemicals
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$941 $808 16%17%$1,869 $1,723 8%10%
RTMs (millions)
11,874 10,740 11%11%24,558 22,576 9%9%
Revenue/RTM (cents)
7.92 7.52 5%5%7.61 7.63 —%1%
Carloads (thousands)
170 154 10%10%340 317 7%7%
Revenue/carload ($)
5,535 5,247 5%6%5,497 5,435 1%3%

Revenues for this commodity group increased by $133 million, or 16%, in the second quarter of 2026, when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher volumes of refined petroleum products, mainly in gas and diesel, driven by increased demand and the impact of prior year production disruptions and extended turnarounds at customer facilities as well as higher export and domestic volumes of natural gas liquids.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases.

Revenues for this commodity group increased by $146 million, or 8%, in the first half of 2026 when compared to the same period in 2025, mainly due to higher volumes while revenue per RTM remained flat:
•Volumes: increased mainly due to higher volumes of refined petroleum products, mainly in gas and diesel, driven by increased demand and the impact of prior year production disruptions and extended turnarounds at customer facilities, as well as higher export and domestic volumes of natural gas liquids.
•Revenue per RTM: remained flat mainly due to higher applicable fuel surcharge rates and freight rate increases; offset by the negative translation impact of a stronger Canadian dollar and the April 1, 2025 elimination of the Canadian federal carbon tax program.

Metals and minerals
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$528 $496 6%7%$996 $1,019 (2%)(1%)
RTMs (millions)
7,030 7,074 (1%)(1%)13,086 13,826 (5%)(5%)
Revenue/RTM (cents)
7.51 7.01 7%7%7.61 7.37 3%5%
Carloads (thousands)
234 239 (2%)(2%)448 452 (1%)(1%)
Revenue/carload ($)
2,256 2,075 9%9%2,223 2,254 (1%)—%

Revenues for this commodity group increased by $32 million, or 6%, in the second quarter of 2026, when compared to the same period in 2025, mainly due to higher revenue per RTM; partly offset by lower volumes:
•Volumes: decreased mainly due to lower volumes of frac sand driven by increased utilization of locally sourced frac sand in parts of Western Canada; partly offset by higher volumes of metals.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases.


40 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues for this commodity group decreased by $23 million, or 2%, in the first half of 2026 when compared to the same period in 2025, mainly due to lower volumes; partly offset by higher revenue per RTM:
•Volumes: decreased mainly due to lower volumes of frac sand driven by increased utilization of locally sourced frac sand in parts of Western Canada and weaker market fundamentals; partly offset by higher volumes of metals.
•Revenue per RTM: increased mainly due to a significant decrease in the average length of haul, higher applicable fuel surcharge rates and freight rate increases; partly offset by the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

RTMs decreased more than carloads in the first half of 2026 when compared to the same period in 2025, mainly due to lower long-haul shipments of frac sand.

Forest products
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$495 $461 7%8%$929 $955 (3%)(1%)
RTMs (millions)
5,216 5,113 2%2%10,128 10,500 (4%)(4%)
Revenue/RTM (cents)
9.49 9.02 5%5%9.17 9.10 1%3%
Carloads (thousands)
70 71 (1%)(1%)137 144 (5%)(5%)
Revenue/carload ($)
7,071 6,493 9%9%6,781 6,632 2%4%

Revenues for this commodity group increased by $34 million, or 7%, in the second quarter of 2026, when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher shipments of woodpulp.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by an increase in the average length of haul.

RTMs increased while carloads decreased in the second quarter of 2026 when compared to the same period in 2025, mainly due to lower short-haul shipments of pulp & paper.

Revenues for this commodity group decreased by $26 million, or 3%, in the first half of 2026 when compared to the same period in 2025, mainly due to lower volumes; partly offset by higher revenue per RTM:
•Volumes: decreased mainly due to lower shipments of lumber from ongoing unfavourable market conditions, including the impact of higher U.S. anti-dumping and countervailing duties as well as section 232 tariffs affecting Canadian lumber shipments to the U.S.
•Revenue per RTM: increased mainly due to freight rate increases and higher applicable fuel surcharge rates; partly offset by the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

Coal
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$243 $242 —%—%$462 $488 (5%)(5%)
RTMs (millions)
5,078 5,058 —%—%9,905 10,504 (6%)(6%)
Revenue/RTM (cents)
4.79 4.78 —%—%4.66 4.65 —%1%
Carloads (thousands)
110 115 (4%)(4%)218 233 (6%)(6%)
Revenue/carload ($)
2,209 2,104 5%5%2,119 2,094 1%2%

CN | 2026 Quarterly Review – Second Quarter 41

MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues for this commodity group remained flat in the second quarter of 2026 when compared to the same period in 2025:
•Volumes: remained flat mainly due to lower exports of Canadian metallurgical and thermal coal; offset by higher exports of U.S. thermal coal.
•Revenue per RTM: remained flat mainly due to higher applicable fuel surcharge rates and freight rate increases; offset by a significant increase in the average length of haul.

RTMs remained flat while carloads decreased in the second quarter of 2026 when compared to the same period in 2025, mainly due to higher long-haul shipments of U.S. thermal coal exports.

Revenues for this commodity group decreased by $26 million, or 5%, in the first half of 2026 when compared to the same period in 2025, mainly due to lower volumes while revenue per RTM remained flat:
•Volumes: decreased mainly due to lower exports of Canadian metallurgical and thermal coal; partly offset by higher exports of U.S thermal coal.
•Revenue per RTM: remained flat mainly due to higher applicable fuel surcharge rates and freight rate increases; offset by the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program and the negative translation impact of a stronger Canadian dollar.

Grain and fertilizers
 Three months ended June 30Six months ended June 30

20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$980 $834 18%18%$2,029 $1,785 14%15%
RTMs (millions)
18,369 16,513 11%11%37,894 33,763 12%12%
Revenue/RTM (cents)
5.34 5.05 6%6%5.35 5.29 1%2%
Carloads (thousands)
194 177 10%10%389 355 10%10%
Revenue/carload ($)
5,052 4,712 7%7%5,216 5,028 4%5%

Revenues for this commodity group increased by $146 million, or 18%, in the second quarter of 2026 when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher exports of Canadian and U.S. grain.
•Revenue per RTM: increased mainly due to freight rate increases and higher applicable fuel surcharge rates.

Revenues for this commodity group increased by $244 million, or 14%, in the first half of 2026 when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher exports of Canadian and U.S. grain and potash.
•Revenue per RTM: increased mainly due to freight rate increases and higher applicable fuel surcharge rates; partly offset by the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

Intermodal
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$1,087 $1,008 8%8%$2,049 $1,948 5%6%
RTMs (millions)
13,730 13,856 (1%)(1%)26,793 26,442 1%1%
Revenue/RTM (cents)
7.92 7.27 9%9%7.65 7.37 4%4%
Carloads (thousands)
573 602 (5%)(5%)1,107 1,119 (1%)(1%)
Revenue/carload ($)
1,897 1,674 13%13%1,851 1,741 6%7%


42 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues for this commodity group increased by $79 million, or 8%, in the second quarter of 2026 when compared to the same period in 2025, mainly due to higher revenue per RTM; partly offset by lower volumes:
•Volumes: decreased mainly due to lower international shipments through the Port of Prince Rupert; partly offset by higher shipments in the domestic segment and higher international shipments through the Port of Vancouver.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases.

Carloads decreased more than RTMs in the second quarter of 2026 when compared to the same period in 2025, mainly due to a reduction in empty container returns.

Revenues for this commodity group increased by $101 million, or 5%, in the first half of 2026 when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher shipments in the domestic segment and higher international shipments through the Port of Vancouver; partly offset by lower international shipments through the Port of Halifax and the Port of Prince Rupert.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program and the negative translation impact of a stronger Canadian dollar.

Automotive
 Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$285 $241 18%18%$492 $460 7%8%
RTMs (millions)
953 861 11%11%1,720 1,653 4%4%
Revenue/RTM (cents)
29.91 27.99 7%7%28.60 27.83 3%4%
Carloads (thousands)
58 56 4%4%106 107 (1%)(1%)
Revenue/carload ($)
4,914 4,304 14%14%4,642 4,299 8%10%
Revenues for this commodity group increased by $44 million, or 18%, in the second quarter of 2026 when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM.
•Volumes: increased mainly due to higher imports and higher transborder shipments of finished vehicles between the U.S. and Canada; partly offset by lower shipments of finished vehicles within Canada.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by a significant increase in the average length of haul.

RTMs increased more than carloads in the second quarter of 2026 when compared to the same period in 2025, mainly due to higher long-haul imports.

Revenues for this commodity group increased by $32 million, or 7%, in the first half of 2026 when compared to the same period in 2025, mainly due to higher volumes and higher revenue per RTM:
•Volumes: increased mainly due to higher imports and increased Mexico to Canada shipments of finished vehicles; partly offset by lower shipments of finished vehicles within Canada and lower transborder shipments between the U.S. and Canada.
•Revenue per RTM: increased mainly due to higher applicable fuel surcharge rates and freight rate increases; partly offset by a significant increase in the average length of haul, the negative translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

RTMs increased while carloads decreased in the first half of 2026 when compared to the same period in 2025, mainly due to higher long-haul imports.

CN | 2026 Quarterly Review – Second Quarter 43

MANAGEMENT'S DISCUSSION AND ANALYSIS
Other revenues
Three months ended June 30Six months ended June 30
20262025% Change% Change at constant
currency		20262025% Change% Change
at constant
currency
Revenues (millions)
$194 $182 7%7%$306 $297 3%4%

Other revenues increased by $12 million, or 7% and $9 million, or 3%, in the second quarter of 2026 and the first half of 2026, respectively, when compared to the same periods in 2025, mainly due to higher vessel revenues from the iron ore supply chain.


Operating expenses

Operating expenses for the second quarter of 2026 were $2,972 million compared to $2,634 million for the same period in 2025. Operating expenses for the first half of 2026 were $5,802 million compared to $5,427 million for the same period in 2025. The increase of $338 million, or 13%, in the second quarter was mainly due to higher fuel prices, general wage increases and higher purchased services and material expense; partly offset by lower average headcount. The increase of $375 million, or 7%, in the first half of 2026 was mainly due to higher fuel prices in the second quarter, general wage increases, higher purchased services and material expense and higher incident costs, partly offset by lower average headcount, the positive translation impact of a stronger Canadian dollar and the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program.

Three months ended June 30Six months ended June 30
In millions, unless otherwise indicated20262025% Change
% Change at constant currency (1)
20262025% Change
% Change at constant currency (1)
Labor and fringe benefits$889 $862 (3%)(3%)$1,803 $1,782 (1%)(2%)
Purchased services and material641 576 (11%)(11%)1,264 1,153 (10%)(10%)
Fuel659 413 (60%)(60%)1,142 931 (23%)(25%)
Depreciation and amortization486 489 1%1%970 982 1%—%
Equipment rents106 105 (1%)(1%)218 223 2%—%
Other191 189 (1%)(1%)405 356 (14%)(15%)
Total operating expenses$2,972 $2,634 (13%)(13%)$5,802 $5,427 (7%)(8%)
(1)This non-GAAP measure does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies. See the section of this MD&A entitled Non-GAAP measures – Constant currency for an explanation of this non-GAAP measure.

Labor and fringe benefits
Labor and fringe benefits expense increased by $27 million, or 3%, in the second quarter and $21 million, or 1%, in the first half of 2026 when compared to the same periods in 2025. The increase in the second quarter was mainly due to general wage increases and higher incentive compensation expense; partly offset by lower average headcount. The increase in the first half of 2026 was mainly due to general wage increases and higher incentive compensation expense; partly offset by lower average headcount and the positive translation impact of a stronger Canadian dollar.

Purchased services and material
Purchased services and material expense increased by $65 million, or 11%, in the second quarter and $111 million, or 10%, in the first half of 2026 when compared to the same periods in 2025. The increase in the second quarter was mainly due to higher trucking and vessel costs and advisory costs of $17 million related to rail consolidation matters. The increase in the first half of 2026 was mainly due to advisory costs of $34 million related to rail consolidation matters, higher trucking and vessel costs and higher snow clearing costs driven by harsher winter operating conditions in the first quarter; partly offset by the positive translation impact of a stronger Canadian dollar.


44 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Fuel
Fuel expense increased by $246 million, or 60%, in the second quarter and $211 million, or 23%, in the first half of 2026 when compared to the same periods in 2025, mainly due to higher fuel prices in the second quarter. In addition, the increase in the first half of 2026 was partly offset by the impact of the April 1, 2025 elimination of the Canadian federal carbon tax program and the positive translation impact of a stronger Canadian dollar.

Depreciation and amortization
Depreciation and amortization expense for the second quarter of 2026 was in line with the same period in 2025 and decreased by $12 million, or 1%, in the first half of 2026 when compared to the same period in 2025. The decrease in the first half of 2026 was mainly due to the positive translation impact of a stronger Canadian dollar.

Equipment rents
Equipment rents expense for the second quarter of 2026 and the first half of 2026 were in line with the same periods in 2025.

Other
Other expense increased by $2 million, or 1%, in the second quarter and $49 million, or 14%, in the first half of 2026 when compared to the same periods in 2025. The increase in the second quarter was mainly due to higher legal provisions. The increase in the first half of 2026 was mainly due to higher incident costs and higher software and support costs.


Other income and expense

Interest expense
Interest expense was $241 million and $475 million for the three and six months ended June 30, 2026, compared to $219 million and $452 million respectively, for the same periods in 2025. The increases of $22 million and $23 million were mainly due to a higher average level of debt and higher average interest rates; partly offset by the positive translation impact of a stronger Canadian dollar.

Other components of net periodic benefit income
Other components of net periodic benefit income were $133 million and $266 million for the three and six months ended June 30, 2026, respectively, compared to $126 million and $251 million, respectively, for the same periods in 2025. The increases of $7 million and $15 million, respectively, were mainly due to lower interest cost which primarily resulted from changes to discount rates determined at December 31, 2025.

Other income
Other income was $7 million and $80 million for the three and six months ended June 30, 2026 compared to $16 million and $41 million, respectively, for the same periods in 2025. The decrease in the second quarter was not significant. The increase in the first half was mainly due to the sale of a portion of the Newmarket subdivision, in the first quarter, which resulted in a gain of $66 million, partially offset by the prior period fair value remeasurement of CN’s investment in Iowa Northern Railway Company (IANR) as a result of CN acquiring control on March 1, 2025.

Income tax expense
Income tax expense was $431 million and $806 million for the three and six months ended June 30, 2026 compared to $389 million and $755 million for the same periods in 2025. The effective tax rate for the three and six months ended June 30, 2026 was 25.7% and 25.2%, compared to 24.9% and 24.4% for the same periods in 2025. The adjusted effective tax rate for the six months ended June 30, 2026 was 25.4% compared to 24.4% for the same period in 2025 (1).

(1)   Adjusted effective tax rate is a non-GAAP measure, defined as Income tax expense, net of tax adjustments as presented in Adjusted performance measures as a percentage of Income before taxes, net of pre-tax adjustments as presented in Adjusted performance measures. This measure does not have any standard meaning prescribed by GAAP and therefore, may not be comparable to a similar measure presented by other companies.


CN | 2026 Quarterly Review – Second Quarter 45

MANAGEMENT'S DISCUSSION AND ANALYSIS
Summary of quarterly financial data 
202620252024
 QuarterQuartersQuarters
In millions, except per share dataSecondFirstFourthThirdSecondFirstFourthThird
Revenues$4,753 $4,379 $4,464 $4,165 $4,272 $4,403 $4,358 $4,110 
Operating income (1)
$1,781 $1,549 $1,733 $1,606 $1,638 $1,610 $1,628 $1,515 
Net income (1)
$1,249 $1,146 $1,248 $1,139 $1,172 $1,161 $1,146 $1,085 
Basic earnings per share$2.06 $1.87 $2.03 $1.83 $1.87 $1.85 $1.82 $1.72 
Diluted earnings per share (1)
$2.06 $1.87 $2.03 $1.83 $1.87 $1.85 $1.82 $1.72 
Dividends per share$0.9150 $0.9150 $0.8875 $0.8875 $0.8875 $0.8875 $0.8450 $0.8450 
(1)Certain quarters include items that management believes do not necessarily arise as part of CN's normal day-to-day operations and can distort the analysis of trends in business performance. See the section of this MD&A entitled Non-GAAP measures as well as the Company's 2025 Annual MD&A for additional information on these items.

Revenues generated by the Company during the year are influenced by seasonal weather conditions, general economic conditions, cyclical demand for rail transportation and competitive forces in the transportation marketplace (see the section entitled Business risks of the Company's 2025 Annual MD&A). Operating expenses reflect the impact of freight volumes, seasonal weather conditions, labor costs, fuel prices and the Company's productivity initiatives. Fluctuations in the Canadian dollar relative to the US dollar have also affected the conversion of the Company's US dollar-denominated revenues and expenses and resulted in fluctuations in Net income in the rolling eight quarters presented above.


Liquidity and capital resources

An analysis of the Company's liquidity and capital resources is provided in the section entitled Liquidity and capital resources of the Company's 2025 Annual MD&A. There were no significant changes during the second quarter of 2026, except as noted below.

As at June 30, 2026 and December 31, 2025, the Company had Cash and cash equivalents of $280 million and $350 million, respectively; Restricted cash and cash equivalents of $14 million and $13 million, respectively; and a working capital deficit of $422 million and $1,225 million, respectively.(1) There are currently no specific requirements relating to working capital other than in the normal course of business as discussed herein. The Company expects cash from operations and its various sources of financing to be sufficient to meet its ongoing obligations.

(1)The Company defines working capital as current assets of $2,847 million (December 31, 2025 - $2,471 million) less current liabilities of $3,269 million (December 31, 2025 - $3,696 million).

Available financing sources
For details on the Company's available financing sources, see section entitled Liquidity and capital resources to the Company's 2025 Annual MD&A as well as Note 8 – Financing activities to the Company's June 30, 2026 Interim Consolidated Financial Statements.

Shelf prospectus and registration statement
On April 29, 2026, the Company filed a shelf prospectus with Canadian securities regulators and a registration statement with the SEC, pursuant to which CN may issue debt securities in the Canadian and U.S. capital markets over a 37-month period following the filing date. This shelf prospectus and registration statement replaces CN's previous shelf prospectus and registration statement that was set to expire on May 2, 2026. Access to the Canadian and U.S. capital markets under the shelf prospectus and registration statement is dependent on market conditions.


46 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Revolving credit facilities
On March 31, 2026, the Company increased its existing unsecured revolving credit agreement from $2.5 billion to $3.0 billion. The Company's revolving credit facility agreement was also amended to extend the respective tenors by one additional year each and to remove its sustainability linked loan structure whereby its applicable margins were adjusted up or down based on the Company's performance under certain sustainability goals. The amended unsecured credit facility of $3.0 billion consists of tranches of $1.75 billion and $1.25 billion that are now maturing on March 31, 2029 and March 31, 2031, respectively. The unsecured revolving credit facility of $1.0 billion that was maturing on March 17, 2027 has been terminated as of March 31, 2026. The $3.0 billion revolving credit facility provides borrowings at various benchmark interest rates, such as the Secured Overnight Financing Rate (SOFR) and the Canadian Overnight Repo Rate Average (CORRA), plus applicable margins, based on CN's credit ratings.

As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under its revolving credit facility.

Equipment loans
During the first six months of 2026, the Company repaid $44 million of its equipment loans. As at June 30, 2026 and December 31, 2025, the Company had outstanding borrowings of $1,306 million and $1,329 million, respectively and had no further amounts available to be drawn under these facilities.

Commercial paper
The Company's commercial paper program is backstopped by the Company's $3.0 billion revolving credit facility. As of May 6, 2026, the maximum aggregate principal amount of commercial paper that can be issued was increased from $2.5 billion to $3.0 billion, or the equivalent amount in US dollars, on a combined basis.

As at June 30, 2026 and December 31, 2025, the Company had total commercial paper borrowings of US$292 million ($414 million) and US$90 million ($124 million) respectively, presented in Current portion of long-term debt on the Consolidated Balance Sheets.

Accounts receivable securitization program
As at June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the accounts receivable securitization program.

Bilateral letter of credit facilities
On March 31, 2026, the Company extended the maturity date of its committed bilateral letter of credit facility agreements to April 28, 2029.

As at June 30, 2026, the Company had outstanding letters of credit of $321 million ($321 million as at December 31, 2025) under the committed facilities and $153 million ($153 million as at December 31, 2025) under the uncommitted facilities.

Credit ratings
The Company's ability to access funding in the debt capital markets and the cost and amount of funding available depends in part on its credit ratings. Rating downgrades could limit the Company's access to the capital markets, or increase its borrowing costs.

In the second quarter of 2026, the rating agencies took the following actions:
•DBRS Morningstar maintained the outlook at stable and confirmed CN's long-term and short-term ratings at current levels at A and R-1 (low).
•Moody's Investors Service changed their outlook from stable to negative and confirmed the long-term and short-term debt ratings at A2 and P-1 respectively.
•S&P Global Ratings maintained the outlook at stable and confirmed CN's long-term and short-term ratings at current levels at A- and A-2.

The following table provides the Company's long-term debt and commercial paper credit ratings as of the date of this MD&A.
Outlook
Long-term debt rating (1)
Commercial paper rating (1)
DBRS MorningstarStableAR-1 (low)
Moody's Investors ServiceNegativeA2P-1
S&P Global RatingsStableA-A-2
(1)These credit ratings are not recommendations to purchase, hold, or sell the securities referred to above. Ratings may be revised or withdrawn at any time by the credit rating agencies. Each credit rating should be evaluated independently of any other credit rating.

CN | 2026 Quarterly Review – Second Quarter 47

MANAGEMENT'S DISCUSSION AND ANALYSIS
Cash flows

 Three months ended June 30Six months ended June 30
In millions20262025Variance20262025Variance
Net cash provided by operating activities$1,611 $1,745 $(134)$2,876 $2,909 $(33)
Net cash used in investing activities(669)(823)154 (1,034)(1,361)327 
Net cash used in financing activities(1,236)(522)(714)(1,914)(1,305)(609)
Effect of foreign exchange fluctuations on cash, cash equivalents, restricted cash, and restricted
cash equivalents
2 (4)6 3 (4)7 
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents(292)396 (688)(69)239 (308)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period
586 244 342 363 401 (38)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$294 $640 $(346)$294 $640 $(346)

Free cash flow
Free cash flow is a useful measure of liquidity as it demonstrates the Company's ability to generate cash for debt obligations and for discretionary uses such as payment of dividends, share repurchases, and strategic opportunities. The Company defines its free cash flow measure as the difference between net cash provided by operating activities and net cash used in investing activities, adjusted for the impact of (i) business acquisitions and combinations; and (ii) merger transaction-related payments, cash receipts and cash income taxes, which are items that are not indicative of operating trends. Free cash flow does not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of net cash provided by operating activities in accordance with GAAP, as reported for the three and six months ended June 30, 2026 and 2025, to the non-GAAP free cash flow presented herein:

 Three months ended June 30Six months ended June 30
In millions2026202520262025
Net cash provided by operating activities$1,611 $1,745 $2,876 $2,909 
Net cash used in investing activities(669)(823)(1,034)(1,361)
Free cash flow$942 $922 $1,842 $1,548 

Operating activities
Net cash provided by operating activities decreased by $134 million in the second quarter of 2026 and decreased by $33 million in the first half of 2026 when compared to the same periods in 2025, mainly due to unfavorable changes in working capital items.

Pension contributions
The Company's contributions to its various defined benefit pension plans are made in accordance with the applicable legislation in Canada and the U.S. and such contributions follow minimum and maximum thresholds as determined by actuarial valuations.

Additional information relating to the pension plans is provided in Note 17 – Pensions and other postretirement benefits to the Company's 2025 Annual Consolidated Financial Statements and the section entitled Liquidity and capital resources of the Company's 2025 Annual MD&A.

The Company's most recently filed actuarial valuations for funding purposes for its Canadian registered defined benefit pension plans conducted as at December 31, 2025 indicated a funding excess on a going concern basis of approximately $5.4 billion and a funding excess on a solvency basis of approximately $4.2 billion calculated using the three-year average of the plans' hypothetical wind-up ratio.


48 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Pension contributions for all plans for the six months ended June 30, 2026 and 2025 were $27 million and $38 million, respectively. Based on the results of the Company's actuarial valuations for funding purposes as at December 31, 2025, the CN Pension Plan remained fully funded and at a level such that the Company continues to be prohibited from making contributions to the defined benefit component of the CN Pension Plan in 2026. As such, total cash contributions of approximately $60 million are expected to be made in 2026 for all pension plans other than the defined benefit component of the CN Pension Plan.

Adverse changes to the assumptions used to calculate the Company's funding status, particularly the discount rate, as well as changes to existing federal pension legislation or regulator guidance could significantly impact the Company's future pension contributions.

Income tax payments
Net income tax payments for the six months ended June 30, 2026 and 2025 were $662 million and $477 million, respectively. The increase was mainly due to higher required installment payments in Canada. For 2026, the Company's net income tax payments are expected to be approximately $1.4 billion.

Investing activities
Net cash used in investing activities decreased by $154 million in the second quarter of 2026 and $327 million in the first half of 2026 when compared to the same periods in 2025, mainly due to lower property additions and disposal of property in the first quarter of 2026.

Property additions
 Three months ended June 30Six months ended June 30
In millions2026202520262025
Track and roadway$540 $605 $797 $887 
Rolling stock41 79 82 156 
Buildings14 23 27 39 
Information technology56 66 111 142 
Other44 32 117 100 
Property additions $695 $805 $1,134 $1,324 

2026 Capital expenditure program
In 2026, the Company will continue to invest in its capital program to improve the safety, efficiency and integrity of its network. These investments will enable and support the growth of the Company and will be financed with cash generated from operations or with cash from financing activities as required.

Financing activities
Net cash used in financing activities increased by $714 million in the second quarter of 2026 and $609 million in the first half of 2026 when compared to the same periods in 2025. The increase in the second quarter was mainly due to higher net repayment of debt including commercial paper and higher repurchases of common shares. The increase in the first half of 2026 was mainly due to higher repurchases of common shares; partly offset by lower net issuances of debt including commercial paper.

Debt financing activities
Debt financing activities in the first half of 2026 included the following:
•On May 12, 2026, issuance of US$300 million ($410 million) 4.35% Notes due 2029 and US$450 million ($615 million) 4.95% Notes due 2036 in the U.S. capital markets, which resulted in total net proceeds of $1,016 million;
•On March 1, 2026, repayment of US$500 million ($682 million) 2.75% Notes due 2026 upon maturity; and
•Net repayment of commercial paper of $1,301 million in the second quarter and net issuance of $185 million in the first half.

Debt financing activities in the first half of 2025 included the following:
•On June 10, 2025, issuance of $500 million 3.50% Notes due 2030 and $500 million 4.20% Notes due 2035 in the Canadian capital markets, which resulted in total net proceeds of $995 million; and
•Net repayment of commercial paper of $588 million in the second quarter and $693 million in the first half.

CN | 2026 Quarterly Review – Second Quarter 49

MANAGEMENT'S DISCUSSION AND ANALYSIS
Additional information relating to the Company's outstanding debt securities is provided in Note 15 – Debt to the Company's 2025 Annual Consolidated Financial Statements.

Repurchase of common shares
The Company may repurchase its common shares pursuant to a Normal Course Issuer Bid (NCIB) at prevailing market prices plus brokerage fees, or such other prices as may be permitted by the Toronto Stock Exchange. Under its current NCIB, the Company may repurchase up to 24.0 million common shares between February 4, 2026 and February 3, 2027. As at June 30, 2026, the Company had repurchased 7.2 million common shares for $1,075 million under its current NCIB.

As at June 30, 2026, the Company had accrued a liability of $25 million for the two percent tax on net share repurchases made in the first six months of 2026 ($39 million as at December 31, 2025), which was accounted for as a direct cost of common share repurchases and recorded in Shareholders’ equity. The accrued tax obligation for the 2025 net share repurchases was paid in the first quarter of 2026.

The Company repurchased 16.0 million common shares under its previous NCIB, including 1.7 million common shares in the first quarter of 2026, which allowed for the repurchase of up to 20.0 million common shares between February 4, 2025 and February 3, 2026.

 Three months ended June 30Six months ended June 30
In millions, except per share data2026202520262025
Number of common shares repurchased2.9 2.2 8.9 2.8 
Weighted-average price per share (1)
$159.01 $145.54 $148.88 $146.65 
Amount of repurchase (1)
$454 $306 $1,323 $407 
(1)Includes brokerage fees and tax on share repurchases.

Dividends paid
The Company paid quarterly dividends of $0.9150 per share amounting to $554 million and $1,112 million in the second quarter and first half of 2026 compared to $556 million and $1,113 million, at the quarterly rate of $0.8875 per share for the same periods in 2025.

Contractual obligations
In the normal course of business, the Company incurs contractual obligations. The following table sets forth the Company's contractual obligations for the following items as at June 30, 2026:
2031 & thereafter
In millionsTotal20262027202820292030
Debt obligations (1)
$22,250 $461 $79 $1,102 $1,554 $1,132 $17,922 
Interest on debt obligations
13,945 490 978 974 882 828 9,793 
Finance lease obligations 4 3 1 — — — — 
Operating lease obligations (2)
754 67 108 76 44 34 425 
Purchase obligations (3)
2,799 1,764 326 217 156 94 242 
Other long-term liabilities (4)
998 47 58 63 52 47 731 
Total contractual obligations$40,750 $2,832 $1,550 $2,432 $2,688 $2,135 $29,113 
(1)Presented net of unamortized discounts and debt issuance costs and excludes finance lease obligations.
(2)Includes $289 million of imputed interest.
(3)Includes fixed and variable commitments for engineering services, rail, information technology services and licenses, locomotives, railroad cars, wheels, rail ties, as well as other equipment and services. Costs of variable commitments were estimated using forecasted prices and volumes.
(4)Mainly includes expected payments for workers' compensation, pension benefit payments for the Company's non-registered supplemental pension plan, postretirement benefits other than pensions, net unrecognized tax benefits and environmental liabilities.


50 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Adjusted debt-to-adjusted EBITDA multiple
Management believes that the adjusted debt-to-adjusted EBITDA multiple is a useful credit measure because it reflects the Company's ability to service its debt and other long-term obligations. The Company calculates the adjusted debt-to-adjusted EBITDA multiple as adjusted debt divided by the last twelve months of adjusted EBITDA. Adjusted debt is defined as the sum of Long-term debt and Current portion of long-term debt as reported on the Company’s Consolidated Balance Sheets as well as Operating lease liabilities, including current portion and pension plans in deficiency recognized on the Company's Consolidated Balance Sheets due to the debt-like nature of their contractual and financial obligations. Adjusted EBITDA is calculated as Net income excluding Interest expense, Income tax expense, Depreciation and amortization, operating lease cost, Other components of net periodic benefit income, Other income (loss), and other significant items that are not reflective of CN's underlying business operations and which could distort the analysis of trends in business performance. Adjusted debt and adjusted EBITDA are non-GAAP measures used to compute the adjusted debt-to-adjusted EBITDA multiple. These measures do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to similar measures presented by other companies.

The following table provides a reconciliation of debt and Net income in accordance with GAAP, reported as at and for the twelve months ended June 30, 2026 and 2025, to the adjusted measures presented herein, which have been used to calculate the non-GAAP adjusted debt-to-adjusted EBITDA multiple:

In millions, unless otherwise indicatedAs at and for the twelve months ended June 30,20262025
Debt (1)
$22,254 $20,425 
Adjustments:
Operating lease liabilities, including current portion (2)
465 443 
Pension plans in deficiency (3)
337 342 
Adjusted debt$23,056 $21,210 
Net income$4,782 $4,564 
Interest expense936 913 
Income tax expense1,595 1,441 
Depreciation and amortization1,926 1,946 
Operating lease cost (4)
154 158 
Other components of net periodic benefit income(517)(478)
Other income(127)(49)
Adjustments:
Workforce reduction program (5)
34 — 
Advisory costs related to rail consolidation matters (6)
49 — 
Adjusted EBITDA$8,832 $8,495 
Adjusted debt-to-adjusted EBITDA multiple (times)
2.61 2.50 
(1)Represents the aggregate of Current portion of long-term debt and Long-term debt as disclosed on the Consolidated Balance Sheets.
(2)Represents the present value of operating lease payments.
(3)Represents the total funded deficit of all defined benefit pension plans with a projected benefit obligation in excess of plan assets.
(4)Represents the operating lease costs recorded in Purchased services and material and Equipment rents within the Consolidated Statements of Income.
(5)Relates to employee termination benefits and severance costs related to a workforce reduction program, recorded in the fourth quarter of 2025 in Labor and fringe benefits within the Consolidated Statements of Income.
(6)Represents advisory costs related to the analysis and advocacy for the STB review of the impacts to fair competition pertaining to the potential merger between Union Pacific and Norfolk Southern recorded in Purchased services and material within the Consolidated Statements of Income.


Off balance sheet arrangements

Guarantees and indemnifications
In the normal course of business, the Company enters into agreements that may involve providing guarantees or indemnifications to third parties and others, which may extend beyond the term of the agreements. These include, but are not limited to, standby letters of credit, surety and other bonds, and indemnifications that are customary for the type of transaction or for the railway business. As at June 30, 2026, the Company has not recorded a liability with respect to guarantees and indemnifications. Additional information relating to guarantees and indemnifications is provided in Note 12 – Major commitments and contingencies to the Company's June 30, 2026 Interim Consolidated Financial Statements.
CN | 2026 Quarterly Review – Second Quarter 51

MANAGEMENT'S DISCUSSION AND ANALYSIS
Outstanding share data

As at July 23, 2026, the Company had 604.1 million common shares and 2.9 million stock options outstanding.


Financial instruments

Risk management
In the normal course of business, the Company is exposed to various risks from its use of financial instruments, such as credit risk, liquidity risk, and market risks which include foreign currency risk, interest rate risk and commodity price risk. A description of these risks and how the Company manages them, is provided in the section entitled Financial instruments of the Company's 2025 Annual MD&A.

Derivative financial instruments
Foreign currency risk

Foreign exchange forward contracts
As at June 30, 2026, the Company had outstanding foreign exchange forward contracts to purchase a notional value of US$905 million (US$477 million as at December 31, 2025). These outstanding contracts are at a weighted-average exchange rate of $1.38 per US$1.00 ($1.39 per US$1.00 as at December 31, 2025). The weighted-average term of the contracts is 169 days (110 days as at December 31, 2025). Changes in fair values of foreign exchange forward contracts, resulting from changes in foreign exchange rates, are recognized in Other income in the Consolidated Statements of Income as they occur.

For the three and six months ended June 30, 2026, the Company recorded gains of $73 million and $106 million, respectively, related to foreign exchange forward contracts compared to losses of $50 million and $47 million, respectively, for the same periods in 2025. These gains were largely offset by the re-measurement of US dollar-denominated monetary assets and liabilities recorded in Other income.

As at June 30, 2026, the fair value of outstanding foreign exchange forward contracts included in Other current assets and Accounts payable and other was $32 million and $nil, respectively ($nil and $10 million as at December 31, 2025).

Cross-currency interest rate swaps
On March 1, 2026, the US$500 million cross-currency interest rate swap (CCIRS) was settled in conjunction with the underlying bond settlement. As at June 30, 2026, the aggregate notional amount of CCIRS outstanding was US$1,275 million to hedge the US-to-Canadian dollar currency fluctuations on US dollar-denominated notes maturing on July 15, 2028, May 12, 2029, March 12, 2031 and October 15, 2031 for an aggregate principal amount of $1,780 million with a weighted average fixed annual interest rate of 4.67%.

These CCIRS were designated as qualifying hedging instruments and were accounted for as cash flow hedges, with their critical terms corresponding to the related US dollar-denominated notes. The following table provides the fair value gain or (loss) recorded in Accumulated other comprehensive loss and the amounts amortized to Other income related to foreign currency exposure and to Interest expense as reported for the three and six months ended June 30, 2026 and June 30, 2025.

Three months ended June 30Six months ended June 30
In millions2026202520262025
Change in fair value of CCIRS$39 $(66)$48 $(65)
Other income $50 $(77)$55 $(75)
Interest expense$4 $5 $7 $6 


52 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
The following table provides the cumulative change in fair value of outstanding CCIRS as at June 30, 2026 and December 31, 2025:

In millionsAs at June 30, 2026
As at December 31, 2025
Other current assets $24 $7 
Intangible assets, goodwill and other14 — 
Accounts payable and other
— (29)
Other liabilities and deferred credits(14)(30)
Total fair value of CCIRS$24 $(52)

The cash flows related to these CCIRS that pertain to the periodic interest settlements are classified as operating activities and the cash flows that pertain to the principal balance are classified as financing activities.


Interest rate risk

Interest rate swaps
The Company had outstanding interest rate swaps (IRS) designated as qualifying hedging instruments and accounted for as fair value hedges. The swaps were designed to hedge the interest rate risk associated with market fluctuations attributable to the Canadian Overnight Repo Rate Average (CORRA) or the Secured Overnight Financing Rate (SOFR). The fair value gain or loss on the swaps as well as any offsetting loss or gain on the hedged notes attributable to the hedged risk are recorded in Interest expense.

The following table presents the notional value of U.S. dollar and Canadian dollar denominated debt instruments that are hedged through IRS for the equivalent notional value:

In millions
Maturity
US$ denominated amountAs at June 30, 2026
As at December 31, 2025
3.50%5-year notesJune 10, 2030500500
4.20%10-year notesJune 10, 2035500500
4.95%10-year notesMay 12, 2036US$450639— 
Total notional value$1,639 $1,000 

The following table provides the cumulative change in fair value of outstanding IRS and the corresponding fair value hedging adjustment in Long-term debt as at June 30, 2026 and December 31, 2025:

In millionsAs at June 30, 2026
As at December 31, 2025
Other current assets $3 $5 
Accounts payable and other(1)— 
Other liabilities and deferred credits(19)(16)
Total fair value of IRS$(17)$(11)
Hedging adjustment gain (loss)$18 $11 

Three months ended June 30, 2026Six months ended June 30, 2026
In millions2026202520262025
Periodic net interest accruals for IRS recorded in Interest expense$2 — $3 — 

Fair value of financial instruments
As at June 30, 2026, the Company's debt, excluding finance leases, had a carrying amount of $22,250 million ($21,201 million as at December 31, 2025) and a fair value of $21,009 million ($20,246 million as at December 31, 2025). The carrying amount of debt excluding finance leases exceeded the fair value due to market rates being higher than the stated coupon rates.

Additional information relating to financial instruments is provided in Note 13 – Financial instruments to the Company's June 30, 2026 Interim Consolidated Financial Statements.
CN | 2026 Quarterly Review – Second Quarter 53

MANAGEMENT'S DISCUSSION AND ANALYSIS
Recent accounting pronouncements

The following recent Accounting Standards Updates (ASU) issued by the Financial Accounting Standards Board (FASB) have an effective date after December 31, 2025 and have not been adopted by the Company:

ASU 2025-10 — Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities
This ASU introduces comprehensive accounting guidance for government grants received by business entities by expanding Topic 832 beyond disclosure-only requirements to include recognition, measurement, presentation, and disclosure. The main provisions establish that government grants should not be recognized until it is probable that the Company will comply with the conditions attached to the grant and that the grant will be received. The ASU also provides guidance on accounting for grants related to income and grants related to assets, including acceptable presentation approaches, and introduces enhanced disclosure requirements intended to improve transparency and comparability of government grant information.

The amendments in this ASU are effective for annual periods beginning after December 15, 2028, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU may be adopted using a prospective, modified retrospective, or full retrospective transition approach, depending on the nature of the grants and the transition method elected.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.

ASU 2025-06 – Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40)
This ASU modernizes the accounting for internal-use software by removing references to prescriptive and sequential software development stages. The main provisions establish that capitalization begins when management authorizes and commits to funding the software project and it is probable the project will be completed and used as intended. The ASU also introduces enhanced disclosure requirements that align internal-use software disclosures to property, plant and equipment. It also consolidates guidance for website development by integrating it into the framework for internal-use software.

The amendments in this ASU are effective for annual periods beginning after December 15, 2027, including interim periods within these fiscal years. Early adoption is permitted. The amendments in this ASU must be adopted either prospectively, retrospectively or using a modified transition approach based on project status and prior capitalization.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements and disclosures.


ASU 2024-03 – Disaggregation of Income Statement Expenses (Subtopic 220-40)
This ASU aims to provide stakeholders a clearer understanding of an entity's expenses and enhance their ability to assess performance, forecast expenses and evaluate the entity's potential for future cash flows. The ASU amends the rules on income statement expense disclosures and requires public business entities to disaggregate and disclose, in tabular format in the notes to financial statements, specified categories of expenses contained within certain income statement expense line items; to integrate certain amounts that were already required to be disclosed under current GAAP with the new disaggregation requirements and to qualitatively disclose descriptions of the amounts remaining that were not separately disaggregated. The ASU also requires public business entities to disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of those selling expenses. This ASU does not change or remove the current disclosure requirements of expense line items on the face of the Consolidated Statements of Income.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either prospectively to Consolidated Financial Statements issued for reporting periods following the effective date, or retrospectively to any or all prior periods presented in the Consolidated Financial Statements.

The Company is evaluating the effects that the adoption of the ASU will have on its Consolidated Financial Statements disclosures.

Other recently issued ASUs required to be applied on or after June 30, 2026 have been evaluated by the Company and are not expected to have a significant impact on the Company's Consolidated Financial Statements.



54 CN | 2026 Quarterly Review – Second Quarter

MANAGEMENT'S DISCUSSION AND ANALYSIS
Critical accounting estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management reviews its estimates based upon available information. Actual results could differ from these estimates. The Company's policies for income taxes, capital expenditures and depreciation and pensions require management's more significant judgments and estimates in the preparation of the Company's consolidated financial statements and, as such, are considered to be critical. Reference is made to the section entitled Critical accounting estimates of the Company's 2025 Annual MD&A for a detailed description of the Company's critical accounting estimates. There have not been any material changes to these estimates in the second quarter of 2026.

Management discusses the development and selection of the Company's critical accounting policies, including the underlying estimates and assumptions, with the Audit, Finance and Risk Committee of the Company's Board of Directors. The Audit, Finance and Risk Committee has reviewed the Company's related disclosures.


Business risks

In the normal course of business, the Company is exposed to various business risks and uncertainties that can have an effect on the Company's results of operations, financial position, or liquidity. While some exposures may be reduced by the Company's risk management strategies, many risks are driven by external factors beyond the Company's control or are of a nature which cannot be eliminated.

Reference is made to the section entitled Business risks of the Company's 2025 Annual MD&A for a detailed description of such key areas of business risks and uncertainties with respect to: Trade restrictions, Competition, Environmental matters, Personal injury and other claims, Labor negotiations, Economic conditions, Regulation, Pandemic risk, Pension funding volatility, Reliance on technology and related cybersecurity risk, Terrorism and international conflicts, Customer credit risk, Liquidity, Supplier concentration, Availability of qualified personnel, Fuel costs and supply disruptions, Foreign exchange, Interest rates, Transportation network disruptions, Severe weather, Climate change and Reputation, which is incorporated herein by reference. Additional risks and uncertainties not currently known to management, or that may currently not be considered material by management, could nevertheless also have an adverse effect on the Company's business.

The following is a material update to the risks described in the Company's 2025 Annual MD&A.

Competition
On July 19, 2025, Union Pacific Corporation (UP) and Norfolk Southern Corporation (NS) (the Applicants) entered into a merger agreement and announced their intention to create a U.S. transcontinental railroad and on December 19, 2025, filed an application with the STB requesting approval to combine the two railroads. On January 16, 2026, the STB rejected the application as incomplete and allowed the Applicants to submit a revised application. On April 30, 2026, the Applicants filed an amended application. On May 28, 2026, the STB accepted the Applicants' amended application, placed the proceeding in abeyance, and ordered the Applicants to submit supplemental information by July 27, 2026. If the merger is ultimately approved by the STB, this could adversely and materially impact the Company's competitive position. On July 22, 2026, the Company and Applicants announced they had executed a Memorandum of Understanding (MOU) in connection with the proposed transaction between UP and NS. The MOU secures CN's competitive access, including access to Kansas City, Missouri. The provisions are contingent on STB approval and closing of the merger.

Trade restrictions
On July 1, 2026, the U.S. notified its partners under the United States–Mexico–Canada (USMCA) free-trade agreement that it would not support renewal of the agreement in its current form. While this notification initiates a review and negotiation process, the USMCA remains in effect as discussions among the parties continue. Unless a party withdraws from the agreement, the USMCA will remain in force through 2036. The outcome of these discussions and any resulting amendments to the agreement remain uncertain and could affect the future trade framework among the USMCA partners which could materially and negatively impact the Company’s financial results.


CN | 2026 Quarterly Review – Second Quarter 55

MANAGEMENT'S DISCUSSION AND ANALYSIS
Controls and procedures

The Company's Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2026, have concluded that the Company's disclosure controls and procedures were effective.

During the second quarter ended June 30, 2026, there were no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

56 CN | 2026 Quarterly Review – Second Quarter

Statement of CEO Regarding Facts and
Circumstances Relating to Exchange Act Filings

I, Tracy Robinson, certify that:

(1)I have reviewed this report on Form 6-K of Canadian National Railway Company;
(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5)The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 24, 2026
/s/ Tracy Robinson
Tracy Robinson
President and Chief Executive Officer



Statement of CFO Regarding Facts and
Circumstances Relating to Exchange Act Filings

I, Ghislain Houle, certify that:

(1)I have reviewed this report on Form 6-K of Canadian National Railway Company;
(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
(5)The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  July 24, 2026
/s/ Ghislain Houle
Ghislain Houle
Executive Vice-President and Chief Financial Officer


Source: View Original Filing on SEC EDGAR

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