Canadian Pacific Railway Limited (CP) 29 Jan 202019 Q4 Earnings call transcript

Company Profile

Participants

Maeghan Albiston	Assistant Vice President, Investor Relations and Pensions
Keith Creel	President and Chief Executive Officer
John Brooks	Executive Vice President and Chief Marketing Officer
Nadeem Velani	Executive Vice President and Chief Financial Officer
Seldon Clarke	Deutsche Bank
Walter Spracklin	RBC Capital Markets
Brandon Oglenski	Barclays Capital
Fadi Chamoun	BMO Capital Markets
Chris Wetherbee	Citi Investment Research
Scott Group	Wolfe Research, LLC
Konark Gupta	Scotiabank
Thomas Wadewitz	UBS Securities LLC
Sawyer Rice	Morgan Stanley
Brian Ossenbeck	JPMorgan Chase & Co.
Benoit Poirier	Desjardins Capital Management
Justin Long	Stephens, Inc.
David Vernon	Sanford C. Bernstein & Co., LLC
Ken Hoexter	Bank of America Merrill Lynch
Allison Landry	Credit Suisse

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Canadian Pacific’s Fourth Quarter 2019 Conference Call. The slides accompanying today’s call are available at www.cpr.ca. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

introduce the AVP, conference. to Pensions, Relations like begin to now Maeghan Investor Albiston, and I’d

Maeghan Albiston

Thanks, for joining Good us Jack. morning, today. everyone, and thanks

U.S. this with our and our in begin, contains uncertainties materially. X, regulators. and we I in that to press Canadian are and you Before the could described factors influence Slide want The risks and forward-looking results MD&A results actual that information and other may actual filed differ release remind presentation on

contains also are on presentation which Our non-GAAP outlined Slide measures, X.

And With two. President EVP me we’d time, Officer; Nadeem and Creel, followed Officer. to here you in as if today your is ask questions Q&A. remarks Chief Financial and and Velani, limit the Keith our formal interest Chief Brooks, Officer; Chief be The Executive of John could Marketing well as will EVP by

introduce my pleasure now Creel. It’s to CEO, our Keith

Keith Creel

morning our leader, this for shareholders, quarter you behalf well see right. to and Thank on team, what ahead strong for Thank is fourth my our all. review we I’m another and our us the good I cover represent value-creating joining it’s results, our to we’re extremely results going honor of. of you as our CP can on to family. view year tell Maeghan, customers you, as All CP proud as morning a which our

revenues with operating and growth with billion, an operating billion XX% to all-time to X% for For an of all-time of fourth XX%. for a the another adjusted $X.X proud record year across I’m $XX.XX, revenues EPS $X.X and X%, and billion year. extremely double-digit up records report the increase ratio quarter, ratio income adjusted the delivered growth the team XX% operating of financial $X.X EPS of Board producing of XX.X%, of quarter combined high

by were an team. operating results strong driven These industry-leading

started of leaders I results role last in full his in true does, As the Redd, a Mark improve do we to his is promoted a what they first EVP I advised sustain to as performance, not serve, year on and believe, our Operations new quarter September role them. testament leader true last call, this of

power talented number leads plan up impressive operating men women metrics he and well through of record trip and proven the per XX% terminal XX%, again productivity the with model. CP a our all and X%, dwell compliance quarter, car set the the locomotive daily an X% of up operating of for group a testament quarter, Mark as car executing day miles to down

thank these with success, dedicated serve to in are XXXX, I and special special distinction which that a in you terminal. recognition to our on Their those awards to our few obviously CEO of to So look covered all railroaders, Year a contributions in Terminal of our all that the across Winnipeg honoring and results and which in you departments, words work our weeks. is of upcoming at of a forward the thank men the the men unique the women CP women

fundamental the it each objective. us absolutely physical culture a and CP. foundational bone It’s personal other, of to to safe the XX%. Safety ensure down in is is at about reinvesting injuries down train enable or to into which all to to day, go plant safety, paramount financial with do results. I’m success also XX%, proud for about to network to returns concern railroading to sacrificing accidents strong Speaking report we accountability, home our being allows CP. with cutting that isn’t a at quarter, the performance Precision safety combined when a achieve which all care safe that earning every our

CP. few Ontario, our locomotive In pockets I employees as days said, want where well running also have as and have worked shops many our a XXX Vancouver of days in X,XXX excess at recognize injury-free. Thunder injury-free, in safety Bay, of among in to That Winnipeg, excess of worked trades both excellence for

thank follow. you excellence of sending example for of us for all So to

to highlight a of happy past fellow that acquisition. shareholders, this to our franchise benefiting announcements quarter this be also in customers the I’m number CMQ positive and for years colleagues and namely will come,

the port announced successfully to & end Maine the acquisition in extend that the Eastern CP In its Central in John November, East we closed at REITs. New enables Maine. We our St. presence Brunswick Coast, Searsport, December. U.S. railroad. transaction access the can to the on This a of East Quebec side, To increase acquisition with of

compelling. excited after and spending about to we even compelled But weeks, value the railroad the addition it. convicted network I was the when time about franchise the of feel purchased more strategic is addition few enable family proposition simply our I the The and it last value the represents. CP on would value

our hard expertise, decades. simply customers to culture they service been to railroad and safety over we not the excited our our as alternatives, in Commercially, disciplined quickly have can. work at we’ll extremely which possibly bringing record Operationally, have as two are the afforded

standpoint. reliable to and routes competitive on standpoint We’ll and service Toronto, and more truck-like compelling be the Montreal, offer from much shortest the call Chicago, Western a Canada, able will be a compatible on that to Maritimes obviously truck-like –

acquisition, We’re our for compelling making customers, a to both enable value for has that same how at service where our create we going solutions real our shareholders, time. to expertise, our proven know stick the to team that

on is announcement. then about And of what truly gets oil DRU me excited most to the topic our crude

speak As December, CP rail operating unit our announced John Hardisty, Development, to a diluent recovery you our U.S. – Alberta. at served partners near business to they’ll rail be great Gibson and partners, going and constructing terminal terminal shortly in to is

to and franchise and changer and Canada. rail for to are is unique enable efficient that crude development which by This for is more franchise is move what game will that long-term, sustainable in our to the a a crude enjoy CP’s unique revenues innovative safer

as single earnings double-digit release, on RTM been in deliver. confident produce margins, growth. continued our journey our convicted tell press I ability mid single-digit this to growth. can guidance, growth, never low And and in I potential to opportunity contained on But to more targeting stated you, or in our – sustainable improve I’ve to we’re long-term finally, team’s high continued profitable

as the expect we’ve in led the certainly XXXX, XXXX consecutive continue growth. marked another we into volume second that in deliver year industry And we record-setting I industry year. enter as to trend –

up markets questions. So elaborates we to John hand Nadeem discussion closes, over to on some going with on the he that, for to color I’m numbers and the open before as it bring the

John Brooks

you, and everyone. morning, Keith, Thank right. good All

X% and were RTMs quarter range, revenues pricing targeted were total X% in mix our X%, flat, fuel slightly record landed headwind So FX a up to was positive. this $X.X while down while was a billion. was

the family but The quarter also the you book spoke and across of as saw Keith its resiliency was quarter of gained CP saw, you about. the business. our not just We steadily that without challenges momentum across

that January and carrying into momentum are into XXXX. We

the basis $X.X up and total were billion. record year, revenues FX-adjusted On X% on to an a

at speak next a So performance basis. the on quarter the we’ll I’ll to look revenue fourth currency-adjusted take results slide. on the a now

but metric historic customers product harvest, quarter our tons the Canadian and largest This tonnage industry the delivered quarter, a history. true market. our XXXX So revenues company’s single and grain grain grain testament in the efficient single to in off This model. we the of our quarter a challenging achievement as the X.X to delivered of the were largest flat with our the collaboration capped history, shift Canadian X%. were million volumes most our any a Despite operating in in employees, grain up is year dedication with investment driving

and the remain wet Vancouver, look strong I expect in grain I shipments of weather As through more with Canadian delayed ahead the to first-half the extreme XXXX. recently harvest

to a the In dropped have movements trade largely the talks as X%, increased side, of P&W, rally positive settlement lane. volume helped grain result U.S.-China in this shipments as U.S. export spot soybean

Canadian the to a moving I volumes down weather in were down where at in down U.S. low XXXX. down be volumes Further, coal coal in all, about challenges maintenance resulted the revenues I in XX%. of volumes slightly were All spoke mines gas XX%, volumes Now to on prices coal again, and natural coal, expect X%. down were result Vancouver. as being

potash XX%. the all accounted XX% nearly were down decreased and for volumes our revenues On front, of decline and RTM total

negotiations contract international with in the on delay export quarter. weighed Continued volumes

we see the However, resolved. as of the as expected, smaller did were export volumes to other back-half begin pickup and India contracts quarter,

the of will that growth, Canpotex is K+s the on information, China of of end both resolved demand weighted contract the our remains to we will and solid and belief QX. Based for towards be potash be outlook XXXX, for Overall, the the are back-half macro latest volume Canpotex optimistic our year.

third and company’s chemicals history record to revenue portfolio in was This domestic to growth our consecutive and saw be with both XX%. continue compete as energy plants portfolio, revenues quarter over our in QX markets. carloads. by in the also largest the crude biofuels The quarter well-positioned with our rail of was XX,XXX export plastics ethanol the

similar run we as look We’re beyond. to and QX rate expecting a out

development crude more unit I’m be the Hardisty. allowing innovative Gulf. the model by DRU the rail for diluent loaded each creates This about railcar remove a U.S. and to process will car, also Hardisty, When extremely the competitive making construct diluent recovery in to pipe. rail sustainable shipping by operational cost excited as with in XXXX, prior crude tank the near to safer announcement mentioned to loading XX% the approximately crude Keith

capacity facility no trains a equates diluent, a the and a longer is to day state for removing and stream to accrued returns revenue by rail. The creates this set hazardous key more for it two by classified crude long-term as Further, per commodity. concentrated

while products. in frac steel by in up revenues Revenues to declines Permian prices XX%, were on Basin. driven sand and Moving lower continued shipments largely to X%, the our declined forest MMC,

outstanding the sector. revenues were outcome an up XX%, pressures this on Automotive given

we for we’ll has through unique revenues the open driven further continue Vancouver auto be surgical pace. to opportunities with that to replicated. our a of to continue full-year partnering right a developing sector. approach our enhance those at our see compound, enjoy market franchise and to this XXXX, path I that significant proposition XXXX grow growth Our new we’ll compounds value and solutions will to this auto auto in to in a easily look In cannot Glovis automakers will welcome market

And intermodal were X%. volumes growth Finally, in quarterly up with we basis, the with on extremely the I’m X%. a full-year up pleased intermodal, side, strong had on volumes

leverage deliver and continue intermodal over I the demand On the we and market quarter we premium record third the had year. record front, continued as growth consecutive in management our service to conversion. domestic expect a XXXX, in our our road tools, fully

to we and Yang X, long-term HMM a On side, extended aboard. contract, welcome January Ming the international we

Deltaport at on continue grow customers will brought of to We leverage the this Vancouver. business and port the with to our capacity through

you’re So our this marketplace. of close playbooks. last saying, by even our Investor the let is that in team just back talked strategic me out And Day, executing what over seeing to the couple years about I’ve exactly playing and

We are going are doing what said to we we do.

sustainable, distinct a team creating CP this these is extremely growth our deliver at to advantages the I’m of profitable revenues leveraging manner. and are delivering. results And for We grow stories are proud unique –

XXXX look some Keith CMQ there of I this discussions, I’m strong very service. opportunities pipeline as price utilizing a opportunities as includes for that railroad at this ahead, excited front look, network. to to about of in about, incremental very initial reflects us beyond. the the bring remains opportunities our for a positive and volumes spoke So And

to So that, it pass with I’ll Nadeem.

Nadeem Velani

good John, Thanks, morning. and

in I and quarter the best was a inaugural and who named my Canada to moment year, Institutional Investor congratulate Canadian of about as I survey. Investor just take the remarks recently all Before the want Albiston, industrial professional by sector Maeghan prepared the Relations start and magazine’s

very congratulations, So Maeghan, honor. a well-deserved

to the of adjusted is environment exhibit has demonstrate PSR power the and adapt delivering team ability ratio headwind an and increased million, the quarter of Through railroad. land comp early to with I’m of today. XXXX. results through the built basis to extremely from a continued Overall, the of proud points driven the effectively rationalized We to the the this back-half volume $XX team dynamic well-positioned well true year, by stock-based XXXX. sale a XX%, XX as momentum are operating into fourth resources as and lapping we a and

higher increased versus closer benefits stock-based million The Comp and items earlier, of efficiencies. in was the increase a key up mentioned the expense or at the increase of This the was by volumes a partially side. $XX operating the primary Taking few on a share offset X%, as year. price. driver I decreased and result primarily last look comp was

as primarily X.XXX a efficiency X%, GTMs. $XX of quarter gallons result lower million, decreased fourth X,XXX per expense Fuel and prices, a volumes of or lower fuel fuel record

asset of increase Depreciation $XX result expense XX%. driver of lapping services The or land XXXX X% million. a retirements. of $XX the as $XXX main was an Purchased was a increase million, sales was million, million, of $XXX decrease of approximately

were valuations. below interest as primarily year-end Moving million result of line. benefit Interest periodic expense net $XX XXXX rate lower XXXX and due applied to negatively the a lower XX%, Other refinancing. impacted workers’ from compensation recovery million, a components to effective or discount $X decreased rate, debt our resulting of

quarter. income of of or earnings. expense has backed diluted been a tax tax a adjusted million, XX%, X% result Income the provision of uncertain increased This item statement, as an out the grew $XX of out EPS prior primarily a Rounding in period. adjusted

record caps the for CP. next the results fourth performance another quarter full-year year to Turning slide, on

operating X% income grew grew For the revenues year, – X% grew and

XX.X%, we of in share volume growth continue Full-year demonstrate ability year-over-year, operating XX% margins improvement spite softer grew adjusted approach ratio point us helped our diluted as income EPS Adjusted basis disciplined program improve of and environment was a overall. a achieve to repurchase our the to continued to XX%. XXX

year mentioned, EPS of Keith growth. third our As consecutive double-digit

specifics growth, XXXX in billion A the single-digit CapEx low volume mid few growth. this high our EPS highlighted to double-digit to release guidance morning, out. we call Turning to of single-digit and $X.X

at facing reduction the as headwind, end and expected $XX line a our discount our return above plan. and largely in for year pension be a respectively, will We the result of and million, $XX assets of pension lower million rates of a below on both the

to our the incurred and full-year quarter as larger we which of is a approximately services casualty increase depreciation result a is base. was purchase Last of expected million line. to The in $XXX a part of expense, other asset QX, typically year,

took Shareholders a X.X the nearly cash up repurchase XX billion We completion to XXXX to X.X% we to NCIB free cash. brief our ops and free $X of pause December, share increased to In October. billion. following to program continue by next over on new in of by announced be a the shares increased X% rewarded. buyback months. to a million cash XX% Moving from record $X.X

over and $X.X returned we shareholders XXXX, buybacks to In billion share dividends. through

Our strong remains balance EBITDA. leverage net adjusted sheet debt times X.X with to of

came CapEx around the in guided $X.X billion.

to prudent evidenced by the adjusted investment XX.X%, business. – of strong returns clearly generating we’re a Our XX% XX capital that’s ROIC disciplined and in approach of investment XXXX, an are the compares back in demonstrating

two As that’s the we And back is as that into $X.X to forward, CP go at terms to back years are remain that asset competency increasingly about investment. expect we invest expect capital that in capital railroads. core to into That inclusive of billion for excited also we CMQ the next be our to standards. up one the of invested we acquisition bring we of

double-digit was expect XXXX Overall, to without XXXX not grow to both disciplined spite consecutive beyond. you As guidance. free of improve a exceeding year This challenges. a earnings can But consecutive marked conversion in and on cash or of we we’ll we year say in delivering it continue culture earnings is our growth and and the what of see that, earnings the on of capital, accountability and third on do. remain built company third CP’s delivering its on

an industry going We’re be to leader in continue XXXX. to

things wrap up. turn the Keith call With back to to I’ll over that,

Keith Creel

to and well being Thanks, an CFO industrial family Okay. our going being But in in congratulate – I space for And Maeghan best echo the comments as for overall as John. for Canada. I’m to congratulate the recognized company such it Thanks, recognized as for and as strong before honored XX,XXX honor questions, open color. XXXX best Canada. from up I Nadeem, achievement, congratulate your you Nadeem CP the finally, too,

that for confidence like exceeds performance we of that are a future by your and or do to and them the Votes granted. this high by we valued with of expectations. us degree They’re our place producing you deeply investors responsibility in don’t it receive take meets honor trust

And you to we’ll for trust. with thank that So move that questions. said, the

Operator

follow-up. with Certainly. limit Bank. question Clarke one yourself Instructions] Deutsche one Please and Seldon to [Operator

is open. Your line

Seldon Clarke

Hey, But phase guys, the relates still more know U.S.-China goods thanks trade it start one as deal the situation. a to purchasing question. exports this any a from you developing that? could CP there’s the things indeed the the handles does U.S. and China’s agreement I of somewhat U.S., met of do or to think of present at coal, to products or like like if risk more China relying on start for ag

John Brooks

Seldon, think actually, emerge. courts cost bit we’ve U.S. this continue little deal relative outcomes to of be The no, the some as side. of the I competitive for upside started of to trade – to frankly, more positive a Canadian see

volumes, we’ve of begin US. And some then, a end in to seen to I So products the can sort upside volumes our grain into of move, these of nice frankly, Vancouver the as surge move the if franchise trade we U.S. we potentially offsetting from the of start of see year. towards some disruptions, ag see

Keith Creel

take And Canadian positive ports, for we be which or U.S., that all a is Coast view uniquely from. West benefit a net again, the this actually this franchise

Seldon Clarke

as talk think whether look CP the question. by and this things it counterpart, a relates an maybe just can discount increasing And fuel you ever opportunity And the your kind pricing? Okay, has obviously, if years. just driving last But And you ground impacted it make for kind divergence? currency. guys the both CP, at about presents you up then maybe been been is you and than it’s this for like several helpful. and and you’re some to to what is in per that’s that revenue is of a earning steadily Canadian of higher-level was RTM, versus longer-term But XXXX wider

Nadeem Velani

of and business. think of of length a mix reflection I haul it’s

grown we’ve grown as per an as recently, potash RTM our RTM. forth, impacts per overall that reported the company so does overall on have So sense sense we’ve crude impact business, and

think that’s the major I So item.

Seldon Clarke

Okay.

So a up we it – the shouldn’t be reading into we side? pricing as too made on there’s some much ground

Keith Creel

No.

Nadeem Velani

not I that between quarter. of company close – And But No. I gap this getting OR everything. a in reflection the ORs point to think, there’s a is XX a think the we’re

So really reflection is a I pricing don’t of anything. think

it’s just execution. think solid I

Keith Creel

the most is earnings. I double-digit attention to number think to And pay important

Seldon Clarke

Yes, I absolutely. All the appreciate Thanks for guys. question, right. it.

Keith Creel

Seldon. Thanks,

Operator

RBC with Spracklin Markets. Capital Walter

open. is line Your

Walter Spracklin

much. very thanks Yes,

tech up or impact business, So there the Ridley know quantification to but Kamloops, you you you obviously only one-third on was to Can that? portion the on it’s of some of over Neptune. quantify either I the impact a on some the news that? share gained about – side your said that having the of curious on hall for the expect

Keith Creel

don’t Walter, this of of sell headwind. and that assuming assuming Vancouver don’t worst-case into expectations of X% a the we a which the realistic that that we Kamloops scenario not precious that remains business worst-case profitability us, are and is I’d scenario capacity West say, improve the any existing with book to on goes assuming is both

our will they with value I’m in business. convicted a both That experience. and way tech of convinced of said, Canada, with their not given tech value experience value bit our concerned. that we their overall have service that we railroading quite a I’m never and in railroads Obviously, XX relationship being running my and years

and to minimize asset not introducing not those one it. turns that complexity. The assets turn eliminate faster. me velocity that complexity as and to railroad, sells creates by faster to game To I’m PSR one is a I’m

So increase seized making will anymore interchange that handle which sure right to or volume Canadian National state we with that to able not location, work is today’s in ensure it as efficiently. tech, well we’re as with closely clearly movement now, handle is what

of business. only texts doesn’t have not impact, So of balance the an on business, it our but book adverse

we’re So that’s seized with. what

doing seized the not in it to enable to to we’re as best At the the with, tech and do make concerned revenue. we’re coal continue end the succeed much X% headwind day, seized control We’ll going fair with our they make to marketplace. tech given as of sure to succeeds, dead bucket or we what level on can. That’s could what move a

Walter Spracklin

Okay, makes sense. color, that Keith. I that appreciate

to cadence. question leverage Nadeem, on here over volume and Moving operating

something So single-digit as sooner can into your rather than whether you the us you’re or we can mid is something back-end, out, sense building of than plays itself see later? is volume this that this give a

volume other, Thank harder year? in points roughly little volume. basis on, point that XXX well OR it this achieve, you. for as your each typically hold a certainly, improvement just that basis And but still holds gets XXX comes here if always Does wondering with pile efficiencies that you’ve as to of scenario, this indicated as on

Nadeem Velani

there, right. All to Walter. Thanks the softball

if the had recall had the difficult very So of terms last tragic derailment impact you quarter impact challenging in our winters time was that, year, how network throughout that of very challenging QX a February period. of that a and on and

So both – we QX. revenue point very view. I in a easy comps very a point from point and and of an report, strong expect view, expense very, have QX volume view, a of of

year. So with think flooding to start the were outages and in forth. spring the from the very We to year strong last Midwest have going we’re network a so impacted in I

of improvements is very space. of we achievable of expect some volume is of grain to volumes. just gets So, second-half the see sight more Canadian year-over-year to the where line trends challenging the in have terms in we that in bit in do positives a continued have Recall first-half it volumes. Where we kind

August, we had crop. grain to a So, very September, late start the

potash should see sudden you well, as of kind had impacts in some volumes. you XX% And drop there. the of a benefits potash So XX%,

So be RTM. to favorable environment as very that well a should report

the take operating of do so the leverage, – our to bring and and incremental it volumes bottom we’re in don’t I it’s we So and any our to – going loaded of good have terms From to forth by strong. very it’s think consistently line. just going sight guided margins think to which I we do, is a I to stretch, our year. front-end what RTM strong growth. line mid think, We’ve operating that single-digit always necessarily overall, And be

than from And I less continued improvements a that nothing expect operating and team. would our ratio so

Walter Spracklin

I Okay. the appreciate time.

Nadeem Velani

Okay. Thanks, Walter.

Operator

Barclays. with Oglenski Brandon

Your line is open.

Brandon Oglenski

and good I services, morning, because you thinking? if answer on purchase questions. there, just that come did my And could did I of everyone, to more for maybe us were couple in taking you on specifically – those a a speak than Nadeem, in think, and Hey, rehighlight that cost XXXX. bit for headwinds, little specifically we thanks more guess, following higher

Nadeem Velani

Pension our Yes. headwind probably rates line as bit both we compensation above more of below the of in conservative as was that item of terms and return a then the plan. a benefits know and being discount in on in also, the our terms we’ve the line, expected given pension assets

The depreciation. other be item would

record had year. we’ve So of last in spending CapEx kind the

that have we as depreciation a little higher. trend base, asset so we’ll up see And higher

And there. That’s been going then a any is that don’t we’re from view of well-received headwind by something performing, I again been have with any the of faced We comp. the it’s on year. team consistently expect that, think, We’ve stock-based to management that’s this front. investors, that bonus face the efforts, – for we item so other a, nothing headwinds face but accruals of we consistently sort a point sort that paying to

your back-half of what question, And Brandon, was again? the

Brandon Oglenski

services? about right It was purchased of just the level

Nadeem Velani

but nothing on that in see expecting million, services. sales, of create call Yes, – $XX out overall, the we’d quarter-to-quarter between of quarter-to-quarter, think I purchased maybe land sense be that million much would $XX could volatility we’re a to bit of not terms in noise

Brandon Oglenski

not higher clear other be of or off-highway, because which – revenue, competitor a included obviously, growth pretty I CapEx the I I track too. to CapEx, better equation? Nadeem think, and border strong. railroads is the mean right didn’t have clearly the question can asked deminimize obviously growth, at that yourself gotten I some at U.S. guess, of the is, day, this a competitor your Okay. but of record to your and there’s can either. but And a lot but Is XX% that of trend talk Keith mean, divergence, that also guys there’s below you better

Keith Creel

railroading. place given at excess Yes. I it’s holiday, outcome natural obviously, the would understanding precision a PSR, in didn’t implementing the capital railroads the and two implementation scheduled say, that just different PSR are exist. stories, model, with of progress where the assets enjoy their a operating surplus of ever We

If I look still of some we’re investing those at tailwinds but we’re enjoying our also for locomotives, spend now, in growth.

we’re where invest numbers to our hopper stay, is our So, to to expect we’re cars. at going continue again, where we in absolute

We’re about halfway the through by of end it this year.

XX cars, rough material be to once end And improve do see at end X,XXX, of We’re that – X,XXX see there, you’ll And, we’ll get around X,XXX with we finish free number view a XXXX. XXXX program percentages, dollars flow again, into get as if But cash a well. going in improve the we you’ll way and our total both. come that’s you down. obviously, to of

and effective on the physical can same protect call at so capital, an the when money our to invest plan, but cash should run making that’s time, a formula. on efficient we and lower money, railroad, have we’re We we call and grow

Nadeem Velani

right. All

to return on invested scorecards, our closer Our XX%. getting capital, which

deployment. terms of So our to capital that’s always a operating we’re see how in basis of good kind

Brandon Oglenski

I All tension the appreciate there. right. constructive

Nadeem Velani

Brandon. you, Thank

Operator

Fadi Markets. Capital with BMO Chamoun

Your is line open.

Fadi Chamoun

morning. Good

a timing the if times and see timeframe? side beyond you there the of just opportunity that the as XXXX CMQ offer mentioned that see, kind can the little on You wanted the I on XXXX, this see to of few of also opportunity well you bit intermodal that up call. details or as more that a you kind about

Keith Creel

I the I in the in in be developing. it possible, I see can domestic see the opportunity we’re automotive see I in Fadi, still be product. all opportunities domestic, an inbound product, fairness, lumber. see inbound growth, water art of opportunity intermodal you, tell opportunities I fuels. one, in number it Well, it be international. growth, it be off

industry challenging port very of the think Yes, years. been the value has yes, But the been reduction time, at the environment. a in that Just unlocked. has St. shipments there through available some paper across John Board, Canada. that’s, has about And strategic you walked Eastern same an in in not

is the a your you that very And Montreal a if efficient, its running distance. its competitor best shareholders up now our versus the obviously, best as best franchise. railroad a got John, day truck say, value very open our our, day, shortest your at our well option I’d distance longer And is St. for at the running and run We’ve as a safe. a distance, it’s compelling customers, shortest day or opportunity that’s to

we’re far plant a through. be investing working we that ourselves the in as working quantum to in magnitude, we’re get to to that owe timing, at important owe or it though, is up to physical that communities The XXXX. CP which going now in and as most we So or hard operate thing the to that standard, and we on Fadi,

So We’ll we’ll do efficient. a stronger more the year physical with a finish with in that plant, XXXX.

with gives the se, implement already the schedules us STB CMQ philosophically, approval reduced, physical differently it’s running out per at operating We’ve existing approval the more approval, of we’re in in handling not and worked differently schedules is It’s trains trust. totality, the taking that and Until May faster, with a transit under because us are of plant. it’s, to trains and that we gives we’re the this like the time anticipate differently. leaders time the the year hope plan, CP

come. to more So

you’ll business XXXX opportunities. timing for as prepare those have of XXXX, two and see better some we key color needle and forward celebrating think through into Those been I XXXX. and the more successes as start XXXX forward go I years for And couldn’t are us. them those sharing look The certain. to XXXX in to on we move for

Fadi Chamoun

of the would Keith. included required guidance, I the assume, footprint, Thank are you. needs, your helpful, that’s Okay, physical the in right? upgrade the CapEx Is

Keith Creel

Yes. it. We big a It’s baked into got chunk absolutely it. of

In by do ties and come short us we’ll in track focusing We’re for end In a the Class a allows safe that rails and XXXX, it very out the ballast. and distance will fashion XXXX certain. on reliable of convert same thing. that with XXXX, to III

Fadi Chamoun

line. question on quick And to a Nadeem labor cost the

up and I’m then the where on we got How pension So you You the went XXXX? pretty headcount, line. assume expense big you ended swing you’ve going above should the that much. started you went and obviously, some down year in about inflation, a increase like understanding

single-digit? XXXX about up think we should with volume how So mid

Keith Creel

I Well, be And that’s more what for and less, with railroaders physical we in to want always do to – to able shareholders. better the we become and us got to – what we we our we we is, that that’s should formula as plant. do invest owe our

flat So or actually, on actually positive finished RTM. down X% RTMs in about XXXX, we just

know what super because do efforts proud, positive, took our be operating very the sales railroad team proud just to we’re from it our to environment. of a only And able team and We’re in great in that. it macro challenging the I industry that to produce

on So single-digit mid that’s the increase. headcount low with where pride RTM single-digit that a guidance, we But said, XXXX from. look a can at if comes you assume

Fadi Chamoun

you. Thank Awesome.

Keith Creel

you. Thank

Operator

with Wetherbee Citi. Chris

lines Your open.

Chris Wetherbee

I Hey, crude thanks. Good guys. wanted morning, by on to rail. touch

there a you is So I a get think growth of to there? be XXXX think maybe some capacity quarterly assuming mentioned sense you what carloads basis, Wanted XX,XXX on demand in potential the could XQ. in

how in what rail then around And to do and moved might second do capacity, carloads opportunity about you question, to think in to numbers then DRU trying of of means XXXX what need quarter? to we terms crude or a relative put XXXX? part opportunity? sort XX,XXX that maybe about it add And of sort the Just think to and some you some that might as in the the last this we structure by how

Keith Creel

answer. color the a I’ll and the on Capacity, piece, upside the speak run and I’ll Chris, provide what might So, to potential rates be. simple It’s capacity it’s zero. John let the

We we assets. XXXX been lockstep prepared we the with partners worked business our demand XXXX. and We we This in for it and has it, delayed. the in prepared people, this have in have growth for the

So it’s there.

We in handle that continue to current to with enjoy to we’re be run the invest drop surge needed potential a capacity shot, there’ll be and peaking or at and it, upside. some and rates no able

Nadeem Velani

to I of timeframe see come capacity Yes. of, the pipe in mean, some be sits able a it could where available. kind Chris, you

So as there. an standpoint, from quite be capacity replacement. or Keith acts there a insulator shouldn’t it But actually, not one-for-one might any a as said, a issues

we Fred in of In the rate, as kind QX, of know, terms as rail I fully QX. by we contract run see And market I crude can think that the this see But some the gets we volatile. – today, pretty could land market do looking acceleration similar be saw the a of at range space hold if the pending. sort as in I’m things probably government converted.

You probably and close quarter the And run as continuing to can year. sort see of look out QX, QX. fourth rate a little bit upside QX we – that

Chris Wetherbee

Okay.

the appreciate I helpful. very color. that’s Okay,

Nadeem Velani

Yes.

Chris Wetherbee

but for seems maybe And profile remained reasonable has pricing. just players picture question players. then some, think I has there pricing higher amongst focus competition the Canada, in yes, it around a that been And both bigger

about be from get variation dynamic Just sense you the last kind what months? there the how XX of in want seen to of XXXX? think we’ve meaningful over the of course a pricing Should

Nadeem Velani

don’t think team’s our extremely It my Yes. so. pricing XXXX. value of on through with I the pleased – I’m for service results

is of Just because around compete, team’s my prudent built their and reminder, we’ll we I have as a think efforts. where a head-to-head, need structure And compete. part – compensation pricing cost we big the we’re to low our

not also and spoke a go about. for to going to level as sake, growth’s We’re we down grow

inflation expect we’ll similar move be we plus, as I discipline that and, XXXX into for So Chris. of driving sure, level

Keith Creel

Chris, I both in opportunities, both add would the in see long-term. where just medium environment, can railroads and that growth short, this

I think that’s for pricing. very healthy rational

Chris Wetherbee

Thank you much. it. Got very

Keith Creel

Chris. Thanks,

Operator

Wolfe group Research. with Scott

Your line is open.

Scott Group

morning, guys. Good thanks. Hey,

Keith Creel

Good morning, Scott.

Scott Group

reports? us as has to Can volume first, questions see RTM just a the for got Is help then And you, a quarter, not, first just the models. be assuming? quarter of guys revenue Nadeem, you had for help noise. couple going and you if it? of And think so quarter we to be much just CMQ So, maybe how I in just with much about OR sort first should weekly

Nadeem Velani

Sure.

yes, until approval. the So are the in we numbers. held the STB acquired, get the are The being component Canadian the but assets U.S. we of trust CMQ carloads in that reminder

that an accounting be approval. get we equity will pickup until of the for actually So that

We’re hopeful in – by the middle part of this year.

in going So you’ll the of then picture. terms in fully things first-half full of of of at get the where that forward the benefits there’s revenue And a then point, bit the year, see kind see full we’ll midyear. we past the and of noise entity

not revenues. the corporation meaningful it’s in of So of current terms the

in So, as so total, we’re we talking that a getting of sense. XX million we’re speak, kind that portion if makes of U.S.

And year-over-year in to million as would last million as $XX a QX, $XX of million casualty be year, QX was – casualty. QX far closer that or we in the increase had sorry, quarter. about $XX Typically, number impact a

year-over-year expect that as the railroad running big should. we for pretty a there’s So improvement the we way

certainly to that’s So to QX going beneficial be operating ratio.

had I the level. of worst the industry kind in operating think, we mid-XXs ratio last year,

level something see XX a assumption. closer a should is fair to You probably

it So improvement pretty meaningful year-over-year. be should a

– bit the the out in our which of our it best very good we’re winter given state overall there’s entered operating where terminals, ago, network, a terms well. to we around it year, beginning that of a We extremely through but of very weather, network, we on always team CP in and the always Northern extremely came terms employees in give happened uncertainty a industry, We the be cautious week well. got situation and the little a guidance when challenging environments given we the at cold very had Railroad of in

overcome. not So it’s going It’s to can’t we not something that be impactful.

the through see and week through recover this February very nicely You’ll timeframe. the volumes

to very report, have expect QX a very, strong So Scott.

Scott Group

XX – hear quarter? Can heard I that you you first for said around – did I the just

Nadeem Velani

Yes.

Scott Group

ask franchise. Keith, your talked expand Okay, one that? being And you on unique great. earlier DRU can then you Can as to more, about just the I just

Keith Creel

At announced single this solely it’s served, be been DRU, built a to line the in CP. served by point, Hardisty,

a line to in down the is one there So build Edmonton. potential

decision should make, as I’m the we happen. in players we’ll It but not benefit of about serve not have facility. or Edmonton, that it occur that. that talked well, Some may because from their doing also may to sure that’s

this It’s the is moving forward. only So, that is point Hardisty, not maybe. one underway. a They’re at well

to We operational be serve we XXXX in expect uniquely it. it and will

Scott Group

the for time, Thanks guys.

Keith Creel

Scott. Thanks, Okay.

Operator

Gupta with Konark Scotiabank.

is open. line Your

Konark Gupta

and Thanks Maeghan achievements. and Nadeem congrats, for your

wanted begin just EPS. I to on for with a So guidance your question

because you before, I in but I’m have sense there like, at. obviously, about looking Keith, to of maybe causing high be single-digit low uncertainties us growth to talked you, you’re a little double-digit some you’re that with that at what can be is conservative of end? the seems if ask the low what So, is you you causing that’s share EPS caution you? bit Can here guiding

Keith Creel

for position be giving team that and is. a feel could a from great and exceeding certainly in And can’t exceedable. team To a this get not guidance. conservative. some, predict what have achieve case, of I’d to in be our to this I in full team pretty prudent. year that conviction line got I for I good – it’s now and it’s we me, achievable disappointed is team things I exactly – we takes that that’s sit in guidance. I to a being things, pride things congratulate this guidance sight, to that here And this that what believe

to to if hard rest worked growth. earnings lightly endeavors So prudent day-to-day, and our exceed to an approach. with expect right it that meet We’ve and we don’t we result assured is and achieve exceed think do continue is opportunity that. there’s be I any that end take to or of the But in the said, earn to reputation going to

going to pursues team. with that It’s this We’re that a excellence. It’s culture do performance. a culture

team to with work with word and, think embolden key is in opportunities being cases, our own railroaders strong exceed. unique a growth counterintuitive the We’re the of, with set the our its industry, and to best guidance able meet I to blessed conviction many of franchise again, about that

Nadeem Velani

one in to we we XXXX, raised, the the XXXX, Yes. meet. XXXX raised were In only –

itself. I record, think track for is for So

Konark Gupta

certainly on it. Got that. share market then for opportunity. the Thanks And

towards we few the about that. – over last announcements in contract So years last your been has and heard some I’m there a at of obviously clearly, like Day opportunities couple Investor

up anymore else looking the is remind before? out there are can us months, XX think there or know, CP you opportunities existing kind is and kind any up? grabs? you base opportunities has over automotive mentioned the CMQ, but anything you franchise those there that laid new You for that of there opened at that anything are from Thank within Is I you If else you. next to XX intermodal opportunity is about of

Keith Creel

and speak to on. that been yet. things some exciting hope speak those able Absolutely, to of color be things about soon some and talked I’ll yes, We to able let John provide we to haven’t we to

John Brooks

Yes.

in domestic at intermodal look I’d So, franchise, particular. our

and So creating we’re quarter, fourth needing them. just to recently Bison in we two Consolidated agreements solutions with industry with signed and them industry, leaders in long-term Two the wholesale in leaders trucking purchase the the Fastfrate. without

will marketplace drive the the in first-mile, industry that providing new seen. We’re solutions that hasn’t last-mile innovation

over road again, there intense team XXXX XXXX into to and is these opportunity railroad. the that, conversion our over an that my think to and focus a whole and others road present with, two new of the We with top conversion. drive On partners during business

that good onboarding Ming, side. Yang combine of Vancouver, the things look, we’re So future at port doing on auto the you all growth with the

carriers begin excited for markets, didn’t The you CMQ, eastern our CMQ new and I’m partners our super is mention on to from creating layer fuel export. product energy, short markets. access new commodity never into reached chemical that refined about all the and line that and but that our the in gateway of into before and the terms of about part and perspective, refined one a customer plastic as side new CMQ of growth we’ve brings Keith only thing routes to that the Vancouver Eastern the business the to the fuels And not growth diversity

frankly level XX The has from Northeast interest overwhelming of And you, can our been that look in out us it should excited Canada sure and see I we’ll that U.S. leadership like. of tell it’s last and XXXX the And the my has makes team Eastern folks. about – don’t part what to XXXX been but I a these and property story, if on days. talking

Konark Gupta

Thank Okay. you.

Keith Creel

Thank you.

Operator

Tom Wadewitz with UBS.

Your open. is line

Thomas Wadewitz

Yes. Good morning.

Keith Creel

Tom. Good morning,

Thomas Wadewitz

see. Let’s

line that strength I going forward like think continues, we or energy, revenue RPU strong ought we X,XXX per on and Is the Just, I for chemicals assume had very point that guess, plastics that due do crude, about think XXXX? car. to on that model a I you the something fine that, in line were in how per to maybe but John car.

John Brooks

Yes.

right. relates some price last, So the We we Tom, then certainly And lot a also in we We nice to good increases it it the of general. saw – pretty was in A crude. by there. that mix you’re, front did on space. benefit, driven tailwind had the as

moderate. continue of that you – and begins some to then think to I it moderate into see QX, of sort

Thomas Wadewitz

So year-over-year kind level, it the that that at but of stays moderates, is you’re saying? what

John Brooks

it then you we move and acceleration as to – some begins see I even through could moderate and QX QX beyond.

Thomas Wadewitz

just wanted a I one quick I Okay, great. I I – as add can if guess, a, know network. well don’t in the

something or for constraints, that a growth mid to single are very good or is is growing. you keep of got if some have the digits this good line RTM, single line a kind your about outlook into network you eventually out of consider, positive year, in terms multi-year pretty network You’ve you How capacity basis? on potential the line of kind in get we opportunity where, the commentary about or to do spaced sidings stretches think or whatever, bottlenecks where the

Keith Creel

all. horizon material, the we capacity that concerning that’s on Yes. no increasing lockstep there’s couldn’t with of at as that’s capacity nothing a standpoint, Nothing and From nothing constraint Tom, lines address far growth. as

a in the Chicago has I remained better albeit Chicago other well can the of are as Chicago, been as my investments. given some given railroads keep infrastructure own bubble As implementing, up, PSR always always, of right conditions, the the that benefits never condition

space. I to to I attention pay don’t that my in of So it. false let sense sense security get

concerned, this point, not overly concerned. at But

place Obviously, port railway. attention as to in The is Canada. It’s our to pay competitors’ Vancouver. our railway, critical well commerce is as the I critical that to other

everyone So so the with we to to focus And the partnership is I we compete make working to. as I’m capacity much sure attention Kamloops. on pay as of in protect seized that that’s why hard benefit something

their all I I’m to as success because I business do formula success. where as that, I want for if to success, come CP got them just that realize can much support And know to I corridor network, tech can for we well my upon, Vancouver, country. formula make destroy in or that all especially on to which Israel that roads, close in the being as sure commerce the as doesn’t capacity so value in both depend given it.

that day So manage not capacity manage issue that your we don’t and in it question. day we long answer is an out. to can’t Line

at better, You to can to never can look business. you a that our fluid. We take continue. that ran and We’ve testament at faster, a our highest levels. process more ran That’s expect

Nadeem Velani

RTM double-digit mid we our And Analyst expected. guided growth. lower reminder, And growth growth, EPS Tom, RTM Yes. we a when to was anything XXXX, XXXX, Day if than had in single-digit

that growth. as lockstep So, that was – have multi-year RTM plan mid was capital our plan support into we to that single-digit

expected So if available there’s we than then. more back probably anything, capacity

Thomas Wadewitz

Okay, Thank appreciate great. you. I it.

Keith Creel

you, Tom. Thank

Nadeem Velani

Tom. you, Thank

Operator

Ravi Shanker with Morgan Stanley.

Your line is open.

Sawyer Rice

is government you around This just Rice I some on couple ones of contract point? the on me. for just guess, timing of Ravi. can Sawyer morning. update Hi, in a from this Maybe at on following cleanup us CBR had, questions Alberta good we’ve your current expectations the

Keith Creel

Yes.

So that associated agreement up party are our markets they’ll sell expect, volume the That I’d we I of we their their ramp likely February as that would say, some into. is working move with we party with highly is suppliers, be destination they’ll may to see into generally, terms of in completed. assigned here.

So fairly tight.

Sawyer Rice

see you between November, taking the just CMQ to here? a potentially about short you how back, rail? And the on other us and in allocation think then capital about Understood. versus investing the line refresh in Good back modalities it. how just priorities maybe M&A transportation you maybe step balance Got could think announcement

Nadeem Velani

Yes.

billion to some of that invested you some a several back will. modal then a years, combination infrastructure a our have year. basic over if sight line CapEx to major into invest cars the to the add locomotive hopper next have $X of fundamentally, of as we we of modernization power, billion So project, in about And $X.X million $XXX investing additional

that, look the adding network, where to will at we Apart from there’s opportunities.

types than of chain rail on supply other focused more We’re opportunities.

it’s So a just not out available lot – there’s there.

a So, right the unique time, right at price, and the came opportunity. that was CMQ maybe the at

look increase Beyond at continuing our dividend. to we’ll that,

XX% payout of XX%, the look through buybacks, X% we’ll December we’ve in consistently of and returning then to program buyback time, that done in over X% We to which at that level. a get to guided X.X%. kind ratio have announced cash new We

so be that’ll for the capital other allocation. And opportunity

Sawyer Rice

it. I time. Got appreciate the

Nadeem Velani

Thank Okay. you.

Operator

with Ossenbeck JPMorgan. Brian

open. is line Your

Brian Ossenbeck

the perceive capacity, was is the the the looser, might where lot talk in just tightness challenges and obviously, on if look how long sort Thanks perspective headcount you’re the to if was in specific there. morning. labor question. elsewhere clears you’re what market anything wasn’t a some some industry Can but not doing that one taking headcount But of any labor labor Maybe ago, looking it from the there’s areas proactively of shortage good more the to about ahead of to widespread expand a grow market? for grow? get Hey, don’t too the so. reductions you you And it I think more be in you and of

Keith Creel

CP. it’s Well,

in employees at we’ve that invested need got labor. warrant that, in Let in doesn’t trained doesn’t status. the point our me and We’ve We start with right have now. – surplus the unfortunately, this are demand business business that still furlough

growth. that So upon we incremental bring additional as call to on RTM have we

for pay you’ve with we’ve tremendous And labor this employees about said, a in breeds well. company There’s treat success continue in that value that our proposition. that success. tight But strive it’s we market, the and we success succeed even amount and a got we working company created well, and a to of pride to

had and retention employees We’ve our not challenges attracting and, rates. and meaningful hiring training any in fact,

have the of improvements if If dramatically proud – at industrial, to not last you best. look double-digit railway two years, especially I’m add improved

paid enjoying coming. and are employees enjoying well. being success contributing we’re creating. So their They’re jobs. They’re They’re the to

So to any problems additional train able and growth. not and have lockstep hire be do not this in point, our to we foresee I at with

Brian Ossenbeck

talk do details just to right. be to it capacity was segment more have too as that start those for mix All customers? something that next potential little when you. do you And start tech might the might to to can the previously there, overall Keith. the early if transition Thank transition John, that all unlocked year? for with the you a over Is about happens going diversified? Thanks One that think what you conversations

John Brooks

terminal X,XXX up. new an they that’ll don’t or grow know silos here mix a opportunity as service six grain ongoing their We’ve We’ve moved recently and in big if Yes, six commission business. new I that prepare five there’s market. GX change. trains opened elevators the open to foot Obviously, here to our Vancouver XXXX there’s primarily into

working that timing of additional coal to transition. expect right on that we’re There’s opportunities around right this come the

So, it’s definitely too early. not

but I of think We’re having today, in those discussions with diverse terms the pretty opportunity. it’s customers

Brian Ossenbeck

Thanks, right. John. All

Operator

Benoit Poirier with Desjardins Capital Management.

Your line is open.

Benoit Poirier

Yes.

So results. the the for good to accretion EPS opportunities the be to you on dilution congratulations potential from Could the to to EP the potential X% eventually, again little Vancouver. the bit a right – back how now? replace could scenario business another with Kamloops And come back tech offset that come

Keith Creel

Okay.

tech it scenario, To me, it’s of say I this. standalone its about the me worst-case and Let could is X% a accretive. said, let business then I in as of loss if itself terms, well, earnings put the headwind, margin but simplest in

Our as that. a operating of improves result ratio

going growth that of color. faster bit in can grain, Now, service improved with the opportunity convert and a that the corridor, be that’s a more provide across be effect, But that capacity I everything available times, to to business. said, John the book incremental and asset see unlocked the and we move

this at incremental in can that real. positive National. after steps. to advancing It’s the the shortly switch substantive. be that coal producer taking online growth, over is Kamloops Canadian expect fully Beyond believe rapidly this and is I which with this point, Riversdale coal through net to John’s it And discussion, It’s transitions alternative

through it’s that we transition. opportunity and up and to intend again, fully an So after accretive that be leading to certainly and realize to

John, want missed, don’t anything but. you to if I So, know add I

John Brooks

is of of a I, it business. the book again, think Benoit, large really piece across I

our Our add ECP continues energy to train. team to on

service think, We’re we’ve best see, grow in through industry and the export that. I market mousetrap going fuels only refined Vancouver to to the the got

model coal. the sector. and growth It’s going of do that. in grain like the to capacity that’s underestimate don’t future again, X,XXX-foot it’s It’s what power And related to intermodal So our Vancouver. model operating in the the

Benoit Poirier

road? going Is versus pricing, non-hazardous? there a what we should a the about the DRU forward? big forecast given Okay, down or the exposure respect crude good and the the And as towards And the be that’s rail, about to discrepancy need move – same with bitumen. How it’s by you crude to by really need bitumen typical will it’s rail, John, color. will

John Brooks

I know number, priced sort a if a can is crude. safer it you standard a can don’t to Benoit, I you give But it’s Yes. this, of – relative tell we’ve how I commodity.

looked the don’t I we’re it at how to know we differently So it we the terms market in working that partners, that’s… and ConocoPhillips market get of with – have to our product.

Keith Creel

is an going that important piece to improve. of is the can’t lose think sight of we I length haul

interchanged it’s and today’s Whereas model, going City XX-year is be the with interchanging is. We’re for gateway of Kansas large move much origin crude to replacing that than closer the ConocoPhillips. over much that deal that with to that’s business given of we KCS City a percentage gateways, the up partnership Kansas to as opposed shorter a

Nadeem Velani

how that that at business Yes, on depend is and of of in sort time. point. It mix rolls fair that out will a our

Benoit Poirier

great you very the that’s Thank Okay, color. much for time.

Operator

Justin Long Stephens. with

Your line is open.

Justin Long

Thanks Is then, per about labor RTM Keith, to think earlier increase with mid and headcount. in a benefits way well? the inflation? relative and made the should framework this single-digit a year, what see on headcount growth as employee the we And that good this I good that about wanted comment that to kind longer-term low ask and on single-digit morning. to in expecting front year trend you comp of you’re

Keith Creel

trains incrementally make year. good XXX to in It were There to trains with grains mix or mix XXX car are across if coal Board, this all monumental be our It’s general. XX-foot obviously. rule X,XXX-foot proved train of approved length growth changes we through the of potash dependent, limitations, can’t those true a – But trains. that’s all be concepts. in true We car Yes, drive or last in to set year. It general, our thumb.

But RTM tell lot about don’t it employees. cost employee on negotiated our to to when a last our talked pretty ratified comes progressive we can an basis, yes, growth per year, some to in talk it. you, we success agreements effectively, I And have our I probably and our them, tied

on with base growth going And we of was, of many can a growth union there, base So realize XXXX. side grow our we’re that up the lower have flat in X% collective higher the of side contracts side opposed in it obviously, as is to the that given wage model model. or RTM as to the start incremental the agreement contracts that if appreciation and of X% to

Now, because be that our do that set up, to employees higher we I’m of the grow can contributors ability to key so to provide. able side we our it to and I’d that, proudly. with are love model service not they be saying the give they able that to

So all RTM. I why by carload, always tied get don’t RTMs expect XXXX, by the not the the the That’s we We in given to speak CP. paid space it’s RTM, and a headwind at RTMs. it’s the RTM that in

So, color some give question. again, that to hopefully helps your

Nadeem Velani

add and model benefits other And about in equal the that’s that $XX talked quarter. the under each your only you pension and million comp we to should headwind

quarter’s terms comp that’s and $X.X XXXX, the benefits. our And you big you and fully think to headwind in was extra add each XXXX. variable. in we of million a it always be to stock-based be It will the a then comp can expect headwind an performance, So in whatever big

Justin Long

has headlines announcements is be we’ve And question improvement the some the RTMs framework of a updated the helpful. one annual points Thanks. or we’re that. kind an around lot the the all freight something That’s put Obviously, market basis digits, that? for it single right growing picture other if mentioned progressed, with about forward? has has together, still When are and the – way seen to you on of about progressed, how that last there XXX maybe going how it you economy around contract in mid the thinking OR Is improvement thinking of you OR. year bigger big changed

Nadeem Velani

Yes.

Justin, I a OR. for a well it’s good of sake bit look else product at of It’s question. doing OR necessarily of just don’t it’s We everything a the the – scorecard. mean, and

to growth’s leading going to growth It’s growth, we team that. and growth. profitable for beneficial been his shippers, that’s sake, service John, in the do to So, OR. the be successful and That’s the to pricing the have continue sustainable, be our to give then that be very going and going industry value not to

in assets The in investments leverage, of terms some point executing of a of improvements get operating of view. executing should making terminals fashion infrastructure we’re team allow the safely achieved. operating that cost in will and to we control The a that controlled be and terms and from productivity

of that naturally into and to the you benefit All goes should OR. blender a the see

And in can see strong We put very I be which of stock-based the reason outside industry. the improvement And what a we no OR. to headwind and we comp, up should of we in back-half some achieve I’m is of relative numbers continued mentioned, that there’s XXXX. outside again, the expect on bullish to

Justin Long

leave at for Thanks that. it Okay. time. the I’ll

Nadeem Velani

Justin. Thanks,

Operator

David Vernon with Bernstein.

Your line is open.

David Vernon

Hey, good time. for morning. Thanks the

this purchase. So, to network to extend in the ways the a was from rationalization switch a for Is line you just of bit wanted like bit a like of in Keith, it’s network, to short to bit short sort fit value in with shift of enhance of the a Obviously, prior the decision a opportunity little this little that looking a seemed little terms line. philosophy I the or further one-time network? ask a about good

Keith Creel

railroad, look Well, one. we’ve is grow this, looking philosophy to we’re compelling for and people at opportunities continually railroad always our was sold our do predecessor some don’t. ago. some certainly I know this years value accretive This network people the embraced a this that XX

or reasons give they the to a explain the For to, can made market. decision exit justice properly they that only

that offering over able that that has lay geographic changed, XX the footprint, a We’ve years, railroads competitive that produce we’re evolved. you service strength when compelling sustainable, and very world long-term very, it changed for represents in opportunities The growth. got it’s profitable to

and much fix strength that company value of and railway created growth this the the in win to three just too shifted scheduled the and the the we’ve going years sustainability a into when We’re of by that It precision across folds one and executed we from right strategy long-term those railroading. marketplace. the implementing sense. fits our we makes mandate the help It the stability to last right customers to using the capacity

convert continue We’ll to company got that I don’t compelling dry we’ve and act suggest it get this as powder. any see have balance look we’ll themselves I available. So for are expertise within would made it. sheet that the the certainly to these. we But to

wide nothing So but the see look immediate our again to are eyes future, I open. in continue we’ll

David Vernon

think should employees think will as we’ll And How rate extension we to or imagine into over kind CapEx higher about be need there some those you from one? it loaded, up maybe little return the the business, will you’re might back-end that bringing to contracts? expect? start just it may – the more going I’d be Should it be level existing put on day labor about the bit the bit time for a – the the get some be little on profile network? be if a to a you to of there integrating you’d into in of coming return be of

Nadeem Velani

to some nothing move day that’s you’ll mean, of the one, Yes. see needle I small anyway. accretion in but going kind it’s

some talked of growth levels up condition capital opportunities network some about, the that point, the So, it take we to terms expect, in to of will back of the we getting your time.

be it right. opportunity will to rush, going do is back-end more loaded. that it to So we’re we’re It a not strategic going

David Vernon

guys. All right. Thanks,

Nadeem Velani

David. Thanks,

Keith Creel

Thank you

Operator

Ken of Hoexter Bank America. with

open. Your line is

Ken Hoexter

comments But your just Nadeem, Hey, the more congrats appreciate Maeghan more and on more outlook. the just you’ve kind side, a the XXXX. volume in about Nadeem about quickly, in this double-digit XXXX, XXXX growth want that Keith, returning that. afternoon. surprised your revenue you’re on conservativism been of Would meaning, great. Good kind I the adamant to awards. about? Just about really is cost so you on and follow-up earlier be or And, outlook, because concerned of that talked

little of where side? what wondering or you’re I’m just – revenues So what’s cost conservatism, a the leaning – bit

Keith Creel

And going in – trade that that ground from when what, fourth wet I be have know knew resolved. just prudent do to I to the was of this harvest in favorable be I this crops all to the Ken, uncertainty and year. was going last was don’t we we this winter space You our quarter, had moisture and view, if the same knew a first knew weather what going in we

that, You me firmly for just an goddess know I our see you partners achieve in don’t could this we the pride convict ourselves owe yet. which that that business. I conservatism. other issued, in to and opportunity we’ve that we to

line the as good exceeding I’ll exceed this work represents and what But the fortune, surprised these and on exceed meeting cost is. truly the to be hard leads side, meet on well and exceed, see earnings, if to that’s bottom side, as some team don’t we the all the opportunity to on I and which revenue given likely, the and potential opportunities. given meet again,

Ken Hoexter

were more I – see in why little another of to fair. bucket versus if it in truly just a one That throwing bit adding where on that terms you wanted conservative. you’re

kind or the opening that you what is you’re you’re what and the – CMQ capacity? talk that looking Is opening Montreal talks of And guess, kind kind talk when the a or of that is me, I elsewhere? feature, just about there about of this lastly, can peer that is for portion So minor is at port, gauge then your Just growth you that’s this you in St. – when you’re do for is up Eastern. that additional potential or helpful. lot what Maine, of of Halifax to want John, East about up

Keith Creel

to call direct and it the on solutions creating is existing for don’t option, standpoint. from see and new door I now, a competitive being as business obviously, as served but trucks the to inbound competitive I a or that that Maritimes Maritimes it the see option competitive calls Halifax, on opening in an currently the

railroad yet, service we these with though from John’s detail But some of providing some right. two because moves we’re do the having in geographic wasn’t discussions the very solutions in to even color cases one. point, the that have a as to customers there, frankly, advantage was And really provide going you as that, moves, a to we’re in go been proposition devil’s three lanes move would this new encouraging the the industry existing there, the to rail can’t about and given some and well

look short West the partnership that will into John, and of with what like East And mile a the into to Coast like from into final experience with we sort line railroads in certainly feel believe like in speed and St. the single-line does Canada, Midwestern be will Coast markets. and compelling the

truck-like a that’s does that speed pretty mean, to darn that’s Montreal I it, a not in compelling, says you day, about reliable. think That’s especially did from a it. when St. standpoint, John reliability compelling. service And it’s but with if matters, railroad

that St. the late do going the I think by are and to party days, for believe three a it. to value those tested Those put in to of and them are ignore. you in compete, are value they truly that be realize to early reliably, to consistently, too John see early that the little to sign up got the compelling that products And these they Chicago just about it’s bit been the are marketplace As customers. once still haven’t

Ken Hoexter

guys. time, I appreciate appreciate that’s to the the Thanks. and great first XX forward Nadeem time, quarter, Actually, looking stuff. I that

Nadeem Velani

Ken. you, Thank

Keith Creel

Thank you.

Operator

Suisse. Credit with Landry Allison

is open. Your line

Allison Landry

me, Canada on Thanks I’ll leverage you portfolio that think take with Northeast Brookfield that And to for Is and But just either of may discussion and an there there the sneaking up Wyoming? Genesee one. Is connectivity Canada. U.S.? & the Eastern the that willingness may just anything opportunity to up specifically extend on that further for any be to transaction M&A? CMQ in the Eastern anything your or relate ask specific then just to comments following

Keith Creel

what value. depends. the may on just and to it & could it is went into It that we there play, Allison, Obviously, just to the railroad make Genesee represent Quebec transaction, but CMQ of depends. is numbers that specific may sort work. just own city. network question to say, there’s depends come it of can say, used piece and the the not of are story, maybe, That reflective we that Wyoming that I or if compelling again, a It would sell the to willingness

that an that’s opportunity. with So said,

how shortest important think the about way in the it simple and think terms well the at Canada, of this the ending to as other in the key major point of I And look how this, and strength is franchise with it’s our the starting network, I in end metropolis centers our of or the book Canada, as markets the critical Midwest to to America. and the – about Vancouver point, or routes

St. Vancouver you to the can to I If the Vancouver. me, be routes John could John, in East East there’s key possible look I to Midwest. go at St. be in the and get art those It same of that the the the could the

So pretty in do possible. is, can’t that you think create what’s a think, compelling. don’t that’s franchise the network, you and brother And vision. But of again, art a has its that that. can sister, impossible East, the it’s in Vancouver the if that we the I West, have And we

Allison Landry

Okay, great. guys. Thank you

Nadeem Velani

Thanks, Allison.

Operator

for turn Creel would Q&A allotted like Mr. time the our final ends This now for remarks. to to call over I back the session.

Keith Creel

for for of your you confidence. thank vote Well, Okay. again and your time

lightly As at I it’s this we said, it – take don’t company.

the sacrifices their safe contributions. for discussing again forward our in to that they this again going possible day. anticipate the as We’re quarter us expectations employees service for you to to to to our or their productive what a and look with all end your and and that hard you their strong for customers we put and be we first and meeting markets XXXX. make win in our in can results exceed We of work meet trust reward reward Have

Operator

XXXX Canadian’s thank This We concludes attending today’s conference fourth call. for Pacific’s you call. quarter conference

now may disconnect. You

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