CP - Earnings call transcript Q2 2021 | Canadian Pacific Railway Limited

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is [Sylvie], and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific's Second Quarter 2021 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. there a remarks, session. speakers' the will question-and-answer be After conference. to would De and [Operator the I like Treasury introduce begin Relations Instructions] And Investor now Chris Director, Bruyn, to Managing

Chris De Bruyn

thank Thank you you, afternoon, [Sylvie]. everyone for us today. Good joining and

Creel, also remind influence Before this forward-looking described President Officer. actual remarks differ will and The results Velani, Officer; John presentation Executive may and other and Brooks, be our followed Slide The Vice you formal President Nadeem risks, we are results Marketing want uncertainties, Actual our factors President contains U.S. Executive and contains I Chief in Financial materially. Executive begin, Chief and to Chief information. measures Vice Officer; the In the filed now that It regulators. release one. on could This you and Slide press CEO, and Creel. presentation Keith time, on questions we'd here Mr. introduce the President in of is outlined your limit interest X our me today non-GAAP appreciate Keith could by if our to and with as MD&A With my to Canadian X. pleasure Q&A. is

Keith Creel

those in thoughts in want afternoon. saying by my Good my remain and affected Lytton. British wildfires with comments my I begin the Columbia that and prayers those by Thanks, to Chris. specifically,

actually and who hearts First family Nations go know, been members fire. their out Lytton the CP village the at Lytton CP to Lytton You impacted. and our to homes everyone The that's of in several lost

unique it's industry. team sustainable growth I the XX,XXX behind are more the strong of than to CP profitable thank the that to [Indiscernible] truly [indiscernible] the the CP. Next, railroaders drivers at best want continue story

extremely be a continue team with. It's that it. We proud prove to I'm railroading to

our of those record X.X miles injuries, trip last right some derailments, getting And taking It's continues accident XX% the personal to on That’s pursuit up. for car than as both train culture. spend of operating has the second team in this of a the the ratio only results proud of importantly, per impressive both performance. to record excellence, on well all second numbers X% produce better the an best something and of this what on Behind to So, operating decreased earnings built stronger attainable reportable on nearly quarter second daily, a and customers record billion XX.X, is safety and to the records year's revenues extremely most Records reportable quarter Mark were collective This improve. focusing delivered at plan train down never company. is focus respectively, train quarter. XX%. right. at for quarter, frequency he injuries $X.XX. team Needless improve efforts lows the the One really of thanks length Through continuously weights, are railroaders, X% that of record obviously growth quarter compliance day one our Redd, and we we're with as time XX%, quarter time continue on. you with and delivered on able serves industry very XX% impressive say to results. railroaders talented leads let's and quarter to focused a Special

improvement, be truly at this Canadian precision our scheduled of undeniably a line results Pacific railroading technology, with PSR continuation accomplish. can our profitable story earnings to people and approach outcome. our these show operating through in efforts that for results, in safely results of top network a model and proven pursue in margin of the excuses the improvement results what shows states. team it The being for rebound through a constant value focusing prove efficiently improvement. shareholders. and value, financial our and season unique significant creating make. here to The Sustainable growth, process balanced no track customers producing quarter This a growth, process downside continues managing again that investment a has post balanced continuous pandemic record You the to commitment a the It's is perfection ongoing or and and creating running areas, the truly an yet in

some markets. said, I'll color So, balance the to turn our to and me on let for save Q&A with John it comments the of over my that provide

John Brooks

Thank right. afternoon, good And Keith. you, everyone. All

So, line XX% you at by despite with results we grew revenue time the I XXXX. record top X% supply all a quarter. record our billion, team achieved as Keith second pleased And extremely up chain versus choppy year-over-year. said, X.X We quarter I'm this delivered tell this can environment,

specifically positively were driven very the QX, mix strong, at price our more in autos X%. to fuel remains and FX pricing talked carload quarter, and X% combine RTMs be and was be looking up by Now to and combine have positive environment, merchandise as the X% many about, headwind, moving volumes. mix a The

the down speak a quarter, currency closer on taking results performance, X% quarter second the Now adjusted the look while were revenues basis. a to X%. on Grain revenue up at I'll volumes were

grain, in lower continued a to of grain record moved Our prices, U.S. Canada, our tons I'm that products million that this this movements volume day In to out. driven lower like report grain and over export and crop to thank year want up grain resulting all family have the CP an I record. on every grain the of has of customers was drive QX, by high XX in we to combination including did carry CP metric XX% supply quarter and be the strong. all-time company as and relentlessly to happen. our pleased make factors, setting records grain close members demand volumes P&W In Canadian

demand the looking monitoring likelihood normal across harvest dry We forecasting Now a prairies. levels. high early for the conditions are see ahead, we're an and peak

our the development year, crop out close impressive. grain been has we franchise As

X,XXX added foot have our We elevators to XX model. more unique upgraded

coming next by the eight more network end Greenfield online will the elevators three year. months. upgrades in our X,XXX six of to add We more have And the

our this over now new capacity at service. of hoppers X,XXX in point have covered we Additionally, high

were going decrease of Moving on in The to impact export potash a result on the upgrades to infrastructure front, volumes at our volume reflects in down X% as the the volumes quarter. ports.

terminal. We XXX are The land greater with now their Portland terminal trains be increased chain facility and able at pleased supply Canpotex throughput. investment will that at resiliency to enables their car Portland

We continue to for use. fundamentals potash demand strong see

our were to the up business, supply revenues challenges. chain coal as expect of while half franchise back into the and up COVID in well, XX%, XX% out we executed volumes lapped the upside We close And bulk to the XXXX. and potash year related were

look into strong from to expect the We tech recent recover demand second volumes the year, from impacted as half we fires. of the

Moving to energy chemicals merchandise, and XX%. on plastics the saw portfolio revenues increased

of demand gasoline, excluding exceeded recovery for destined into continue very our first the be QX. we more year. the ConocoPhillips such XX pipeline shift solution. friendly, sustainable, business product. excited up up to Now, from rebounded as LPG XX% honor a for ECP USDs Gibson note, ramp by Alberta ECP and we're as innovative I USD Energy, products train to about DRUbit, environmentally crude from This This rail at expectations to I’ll be and does rail the from to forthcoming in all Hardisty, XXXX It delivering Arthur, lows. asphalt, the we're as CP’s expect volumes and Texas DRU crude, is the to expect terminal also facility long-term strength ConocoPhillips. second partnered XX of to a half train launch to this for marks Port competitive traditional trains month with trains this is USD, in as beginning in safer per of

up as pushing forest our in lumber prices from revenues and products quarter. ECP, Moving volume to highs hit an XX%, the all-time were on our revenue best record

I with metals inventories solid remain seeing driven start note to related home higher support markets. finished revenues the expect steel [XXX to steel as that fleet housing we strong. for drilling low our markets. largely were rebounded of and to and scrap. relatively XX%, recovery demand oil XX% gons] we and good adding continue to strong continued a are volumes volumes mil to Further, frac are improvement increased would We and MMC, in customer by and sand see In as be up demand

automotive the quarter. XXX%, up were revenues front, volumes On while on the were XXX up

comps, business with space relative lapped our like Honda the drove wins easy So, FCA, in while outperformance OEMs industry. Glovis, to we this our the

was business, inventories were as on the up while see low remaining increasing side finally to of auto we looking And dealer Now, revenue we and during up. to catch ongoing QX, but industry do continuing demand be chip the up X% volumes tries expect levels XX%. again, to moving intermodal production quarterly with strong, expect the challenges to

and We to reliable anchored record With franchise. strong pleased domestic capacity we with for by have I'm space perform retail continue growth, this intermodal. in consecutive product extremely had now our well our three quarters in our Since intermodal through moved that current we a XX,XXX over containers our and of acquisition start we're of Atlantic this CMQ. run growth in have the the exceeds on Canada into this service, up rate XX,XXX. market service

Chicago, option from Montreal, for St. fastest direct Toronto, service John the to and Our most customers rail is beyond.

to growth COSCO managing and and on multi-year capacity. contract the well core With OOCL. record announce intermodal from new Vancouver across lanes deliver the front, container supply port delays, a with we've both international On our through utilizing congestion, imbalances expanded revenue significant and will pleased new strategic originating while vessel This I'm we had challenges. existing documented train Montreal partnership chain that industry.

onboard partnership customers. in solution service volume offer Maersk reminder and of generate over facility continues a capacity opening mutual The value Vancouver CP’s We as our terms the contract COSCO, And and OOCL, our customers. for unique transload in million can incremental expect will land September. CP grounded we The annually look offer a and transload reflects and forward is finally, for in our to to stickiness International domestic capacity successfully uses revenue. to intermodal in service facility of this the in and $XXX uniquely that

the direct off of Vancouver to of service rail service congestion customer. from the by trucks this product truck, alleviates Additionally, the road in roads using the taking thousands port by thousands off

close how pandemic. and So, outpaced the industry revenue volume saying by than let me through no on this the different team

deliver on are XXXX, continue to through industry our again our and initiatives. self playbooks execute XXXX, we and halfway expect the we help to Now to compared leading

world to we robust we the Looking economies around demand the year continue and initiatives of the to have as balance recover. environment forward pipeline XXXX, a into strong to and continue expect of

on count the continue deliver can You CP sustainable to profitable growth. to team

pass So, over it to Nadeem. that, I'll with

Nadeem Velani

produced Great. and Thanks, exceptional team proud contract win. the has I'm in the this results John another on of congrats yet quarter.

our by and achieved revenue QX of costs. execution diluted controlling the point that As with QX a record outcome XX,XXX in and The effectively ratio executed XX% railroaders operating team we while a XX.X%. record plus the all john mentioned, was team of decrease operating income and resources on did managing we The improvements, EPS OR, XXX grew of adjusted in adjusted fronts growth, revenue XX% solid XX%. basis a

Purchase total speak you'll volumes down the expense our items and an last currency higher up last we increased a in on-hold. will and refer prices X% so line speak related was million X year, The expense improved year. Recall in XX primarily of The result or million support fuel basis. to the resources quarter, Fuel XX primary rents from QX or Depreciation the or and wins. increase was in in equipment base. PS&O the employees, contract as training results, headwind other XX%, acquisition X% at recoveries in Comp adjusted the as program X the increased in of quarter], bring on that note XXX increase in as most the we million to demand on million closer benefits expenses was the a [X% increase look The from XXX adjusted of have the efficiency volume. million driver accommodate million, XXX costs adjusted results a versus lag Taking XXX services fuel surcharge up a million Headcount costs on in offset improved the improvements of rent XX at than asset automotive adjusted million, of results main I million below expense was was million training volume. higher the to was as lowing expense a transaction, Looking or the environment. increased of of few we were more successfully result $XX increase X%. in an driver in I’ll increases KCS timing demand environment. in costs the a an for expense increase was side, and the today. higher XX% was to expense. of a

XX line, periodic of a lower lower interest to the Rounding XX Income discount reflecting expected, executed the decrease our higher primarily increased $X.XX diluted to below Moving recovery components reminder, expense A share in as income the rates. net of up statement, as benefit related million, X was in effective by to quarter. taxable million income, tax XX%, partially out result other we a offset costs or a rates. the EPS grew quarter. XX% adjusted split in X the tax

of the free to generated we wrap termination first to on cash from increasing XX%. flow the with very ops, up, fee by Moving in cash excluding half things strong XXXX cash

our to of at of range. with positioned debt Our and adjusted balance adjusted just X.X sheet EBITDA, well remains bottom times, net very targeted the liquidity leverage

repaid undrawn, while cash, approximately facilities $XXX return our share available program which have or currently strategic of buybacks, is paused. paper all commercial buyback shareholders options. We remain our through credit dividends, million to our remains We and have in to

reinvest our of year. of capital capital improvements capital say, year and billion X.XX volume hindsight take our and proud continue to CapEx the environment to continued XXXX. the remain our industry spoke ROIC to last to track gains build stewards of efficiency, to guided in meet established of in last and we've efficiency I'm for with the are We leading we we disciplined about how our our We spend which in increased proactively agenda. laid growth the on spend pandemic, the the the adjusted XX.X%. I to foundation height support during has softer on advantage railroad safety

we unit we the the ties where culture is of of proud CP team average. XX% pandemic have down and gains. into will per three drive year, year opportunities. year-to-date those them the generate versus value. cost down like Our And versus to and build X% our rail for last look I'm challenges meet do team relentless to It's a efficiencies on at and find then head turn to ways on to better

see So, of we challenges, recovered well QX network and while has a some has path the start the clear had forward.

operate shareholders. over back demand to strong turn control to customers in, for environment communities up. that, team and the I'll resources, We in have things a and all deliver and costs our place ultimately manage wrap With stakeholders, Keith the it we to

Keith Creel

color. Thanks, Nadeem that and John for

team sum to partnership strong can Pacific. well very our close volumes self a very ever In this out see us to we set to know, in initiatives, Canadian up improvement team but line, importantly, and it exceeded margin into XXXX. strong a to] XXXX environment, performance driving before. to demand earnings at has John expect bottom well You enjoying uniquely see continuing XXXX, against strong with our up, by safer which XXXX very you our health continue and came it operating also the growth, growth, made this point [brought than That volumes income

it let operator up So, and open to questions commentary. the me for with that,

Operator

you And Please your Thank you, Chappell [Operator patience. at go Instructions] John. for will Evercore first Thank be question from sir. ahead, your ISI. Jon

Jon Chappell

Thank Good afternoon, you. everybody.

Keith Creel

afternoon. good Hi,

Jon Chappell

you've the you this pretty activity the I everything month, emboldened order have week, you've you guys thus executive and some this with at year. about point, and passionate Keith, maybe thought might STBs more merger have this the want know, in been the to transportation been updates you hands letter it's you but maybe say, far house And, said even that would there. earlier earlier with this published

those you're here? us important speed think, posted, you you what know, post how on some have maybe letters from think and you can proceed been kind just how to thinking, things catch up So, you of of

Keith Creel

that Well beliefs with thanks. I not has and my changed, of all. successfully the has can the tell at you not proposal strengths about conviction the KCS negotiated of initially, we wavered

not trying class-one compelling. there's debits competition, essentially the service, you it's all combination growth, zero no In It's lanes, are about fact, very that facts new credits, enhancing. to preserving stronger. and No it's only enhance. presents it's pro there's overlap, about that The It's and pro suggest losers. grown winners, pro

we the unique obviously, it's facts the STBs those that obviously, So, that, And know, are it's in with think very in on, being facts. said, weighed you hands.

re-engage in stand weeks the the the to KCS. We expect decision ready coming with we and

to. letters. You know, support we're not outpouring letters And has gratified support of by deal, the signed on. continues over X,XXX that CN that even support still our go got We've to yes,

I X,XXX, think over have their which is proudly they number communicated.

emphasizes labor executive they’ve the suggest and [indiscernible] week. all you over been that importance the to competition not their is say the order, think for overall, to at XXX regulation. access, well this said, has But through But what North good of to that opposition the our best However, of we We that. executive both of ensure think this way fans can the forgotten to that how need are American any for customers not Customers unique that the discussed way and this? importance being emphasizes letters facts, regard it which certainly there's enforce for new I'm specific unions, to, going about just combination. with affect beliefs of our outcomes the with not promises. it without economy. STB more fact, the I competition, look does we're to think Amtrak speak we also in order, this

and our well sits So, proposed for that we proves combination. think

our be that that beneficial. even Consolidation and firmly [indiscernible] beneficial those in to where week. listening under be spoke believe complements reading the We satisfies certain to and and to consolidation I certain it facts circumstances. can perhaps believe know, circumstances can last Chairman think statement I You Oberman spoke

it's with should So, where see in up strongly engage, we you and started. STB, about So see Canadian feel STB know, goes. re-engage trust? know, KCS, the it We're capable hands. I'll their to we'll the I to stand just you to it's the in again, finish where everyone nationals this, And, else. very a wait ready like opposition We ultimately, rule in

Jon Chappell

it. you, Thank Got Keith.

Keith Creel

Hopefully that addresses question? your

Jon Chappell

It does. Thank you.

Operator

Thank you.

at will ahead. question go Next Chamoun be Markets. Capital BMO from Fadi Please

Fadi Chamoun

evening. quarter-after-quarter for kind on mean, reason. do growth that story X, that to, kind do but you enhance of that very of outcome kind markets wanted and M&A basis? things have can laid industry, long-term CP to execute continue the here, to agreements a growth strategy you've of enable And transaction. Keith, front, that on as a get produce whatever just Thank kind come out as are XX kind story would for marketing or your the thoughts of for an CP organic growth you. can Good a I the there peers CP stimulate to and What harder things the access what years pass are your could, leavers? in commercial of thinking the as of that far becomes longer-term out, compelling, kind you to, as Are in go you M&A X,

Keith Creel

in Yeah, right with let line you’re thinking. of target you a Fadi, me,

of ago, flying for the our four competitive years has me acres to though, you our speak in our over so which very that It's been network, been our strategies start stakes thousand back Let unique by. to time our our still is in land years Investor own take ago, a space. currency, It table backyard. is We development three of Day, success. will across have part

for opportunities be Vancouver. build-out capacity that it initiatives land be out, gateway, it assets several help in still there's CMQ additional the property, build-out Chicago it self So, in be build

the to Pacific. think of obviously, in many still that is drive believe, about there's store attributes industry to and combination chapters of, Canadian that’s growth know, opportunities going spoken We’ve for I unique can organic unique our you well. of of need of we haul, unique When M&A, of with Fadi unique rails, the don't the make growth think that access both, of length speak that perhaps enough you in you replicating that. with the to origin a the So, KCS. to markets different left and with as Mississippi But markets, to shortest strengths, Western about and to marketing even case in assets, the some our absence that, some those east with of partnership, markets the itself, I alliances

and new bashful be M&A origins look we them get way customer to we'll the in the it doing do shortest these markets be Obviously, controlling to that can the about Supply So, in into the them can They've and be we opportunities. be terminals give the that with Solutions. it controlling of Winnipeg, capacity again been markets what's the be in Chain of strength, the Montreal, the leverage and it it in to our leverage those origin, unique to if it going to continue it in the at Vancouver. Calgary, to certainly at our give for run best growth never it try it additional destiny railway, be power create we and the our link, absence Chicago, Toronto, product some opportunity, we're allow the in in but the would destination, own outcome, best

We industry unlike else in enable have to anybody a unique very opportunity that. this

than best in think the industry So I better but one, think the the balance we best. you M&A, with through M&A, again, to unique outcome. the a outcome of going we're of priority absence comes And make the very

Fadi Chamoun

you. Okay, Thank great.

Keith Creel

you, Fadi. Thank

Operator

Thank you.

Please Allison Credit question next Your at go ahead. from Landry is Suisse.

Allison Landry

Thanks. Good and questions. my taking afternoon you appreciate

then efficiency, an ROI? point CP about to do could out what way, especially have perspective, EBIT the the different Keith, this dollars could way, you and And that you record to trajectory track growing is further from how focus demonstrated you set arguably in where of OR tell improve obviously, bottoms can XX you there the So for quarter. and if since mean, train I us in growth? the much ask could you the industry weight, length, shifts what’s one maybe a OR that's a long-term terms OR? productivity I for QX. and better that what just achieve But bar has fuel the a just, improving seeing Granted, metrics, if a address a of have the Is think may in new

Keith Creel

with got let ROIC. in the industry. We've me start best the Well,

So, pretty it's where of at. I'm proud

on think get to strongly one And numbers. you healthy a Again, place. don't particular focus it's the sustainable a operating you on I'll outcome ratio. of key, fixated then operating I proper business in if It's running way. the natural back assets in the network. you the ratio. We growth I on all go a you any don't and a the too resources property number, think When bring have optimize profitable the that's create fluid place to have

to going that's to your controlling to drive cost, output impressive and your is the asset a earnings be your operating going margin. You're growth income, that's very drive operating going

was, cars]. network capacity journey So, perfectly go, equipment. I have for We we to, fleet do it's you I a linked flawless even [or industry optimized, have it's instance, better We have you [indiscernible]. you put] I’ll to of that of – been how it until XX [dream we further have than we tell have we're best, go don't high if facilities. constant organic know, part every converted a much train don't all don't can for of now, and We at improvement the much give haven't

that were a part was sets to the ago, partnership evolution. was running a efficiency as not car Portland. You part year know, enjoy half we to is XXX with to UP Vancouver pre-PSR you if of same go Portland train back and still [DUP], and car and a I train. XXX trains our our, But XXX that car We're the running of where running now of know, we that

continue network all you across train strategically we to the make gaps expect dwell. locomotive invest, in improvements are in incremental productivity and us Terminal should length, train to way the weights, there continue So as to in

become You a benchmarks, is, know, excellence. pursuit and pursue of it's your that's records continual Yesterday's you your improvement. floor, truly what PSR

top then tension, You XX terms, have a accomplish create once XX, list don't another have in you top accept you list. guess And areas, constructive what, you those you've a excuses, of list opportunity of XX. you simple got

it's an imperfect So, an It’s outdoor sport. science.

those a the manage just fully how how to some an to of go So you And that when that you to comes? business into when you're manage of do the It's how resources pursuit to well, down, can how positioned adjust that, and the you lumpiness. the ability so going never adjust resources? a rebound You're pandemic, get perfection. when to flows, understand avoid constant business goes

of some quite until well gone coming truly to that through as cycles frankly, as down you And challenges manage it the vice understand those have you and versa. how and up

You the CP results producing. is that kind have can't of

line going in and to pretty we're the So our to your going margins. bringing in work-in-progress, it to we're to invest remain and invest you'll bottom I into we're end our technology. going believe on continue it's hard, point, driving again, growth we're a going And we're people develop at the to of the the as impressive day, humble, to see result. to our opportunities, continued earnings process work culture, I improvement. going identify to believe,

that recipe a for it's think giving. gift I keeps a success. It's on

a know you unique very a If shareholder you way. to the PSR in satisfy how truly railroad, can run

can a and you in It's day-out. and do it the manner the just can recipe efficient customer, railway how for a safe satisfy and You successfully. to day-in run

Allison Landry

Thank you.

Keith Creel

Thank you, Allison.

Operator

And at question be your Wetherbee next will ahead. go Citi. Please Chris from

Chris Wetherbee

than opportunity being know, take obviously answer one give for pull in it half? of ratio back year, inflationary versus the like line made you. XQ, into maybe potential top us XQ with the other, a maybe sense OR pretty you’ve but strides environment, you looks that think sense of seems the you are how and bit a Obviously, kind you great full looks a there some give a comps of like plays maybe are how your pricing Good better bit on sort of I if first and the thank it of in little of the the uneven in? second You to half. that little the a robust there. Maybe, some out and maybe Hey, half little operating then year what sort can afternoon. down easier ask of a can The costs

altogether half you how be looks that the sense a if back just can that'd maybe So, of [indiscernible] into us great? in the put margin and you. opportunity give Thank

John Brooks

Chris, take let me that.

a obviously, had overcome half think in, negatively, a challenging of a which So the impact we're bit got know, the can some, prices, year able we of to we've this, you I you been OR know, winter, that. fuel we bit

has You dealing the wildfires excuses. the that of we're that some know, and that in we've got impact July. with these aren't But

us, the out to safety point pointed opportunities casualty of the from upside – been know, and some the so effectively of view. you never run railroad you've a think has I and

know, remarks things ways more earlier, challenges group to driving You to find of team and culture operating know, continue Keith's of Redd and the present that continuous railroaders are efficiently. the themselves. to standing do remarks and improvement Mark offset you my those opportunities to some

to that. year on our not a me, point off There's off you improvement, point the could basis that’s upside we've backing you XX.X, do XXX at probably know, So, absolutely. of of XXX know, of at of said improvement the that, beginning ability, we least basis type

an of from pretty point what half can of the back efficiency in bullish do the we're view So, on year. we

Chris Wetherbee

Appreciate much. it. very Thanks

John Brooks

Chris. Thanks,

Keith Creel

Chris. Thanks,

Operator

be from will question go UBS. Wadewitz ahead. Please at Tom Next

Tom Wadewitz

February. hope you SCB, just Yeah, you you voting good M&A you but on stuff? obviously, You trust know, scenario you I scenario SCB give there's doesn't I additional a with to it. a – ask the could deal respond wanted and I’ll see and to and to know, mind, expire to KSU if afternoon. the where reject don’t question see wanted But, how one

would know, is the a to engaged break obvious quickly with SCB? again. of try want So, there The a date you do relative the you there might be also how you You know, for you could get voting the the, about, an might whether that you be you you wondering your how is to could expiration achieved. on if in it trust you CN a those? to uncertainty would of there's do, re-engage know, what is process, kind consideration scenario fees, to voting you just on think know, or sizable thoughts we've period period time if approvals of but rejection about, from time know, there that, where the talk just I'm about this waiver KSU an

Keith Creel

Tom, would pure part. on be speculation it our

what it of It facts the of the it focused know, depends KCS shareholders. depends end to on the at day, says been the on clear on best how the they STB question they're say the is guess the you And, know, You I and we've on. obviously. what strength and

they're the your We've think our that supportive. compelling willing take? not value know, decision certainty. to think uniqueness strength, You made So, deal in much national’s you question they're we've to best it's approval, of anti-competitive. the value STB not are to decision. willing be and KCS got the KCS a been going be We We we think going not and you the for assess it's of unique creation think to it. about window risk they way answered And We've risk day, feel much holds [indiscernible] stand know, pro-competitive. to at we'll authority see. be bashful in us, got again, with question to story, it, the It's end should up facts Canadian allow a proposition. is saying We with There's open Maybe so are ultimately, how shareholders, to how a partner just got National. to answer again. but the will bad. a our And is, know, you compelling, to much when think take? we'll shareholder Canadian day, they the KCS are certainly the the they to the opinion, end is, it? and is We facts the at to a regulator I and the think the our make ready view know, but has do, very engage, I We've path STB we is the experience what

Tom Wadewitz

better in back know, were STB granted? a your waiver have respond, of chance originally can there's as think out you Maybe do would you as give they if or to a approval risk good you narrow little they're understanding say when voting and your it your they know, trust were, a and that, year expired is just further you to time come goes the kind that any I bit

Keith Creel

Our been facts have changed.

Now, again, in speculating there's Tom. because be I'd this, no precedence

is us facts my The which trust rules on uniquely the based old granted. the facts, just to allowed my view So, allowed old are the guess. uniquely be it's us And under granted be to rule consideration.

but only long of we are here. our is the that get a do same end-to-end that don't don't, STB would we change, all consideration, maker, I the again, skis or want ahead for suggest pro-competitive, but I there's precedence, to assume facts they and I the my it’s not assume get As don't as those and those same And facts would believe it's consideration. reasons. decision compelling. I get Ultimately,

Tom Wadewitz

thanks it. for question. the entertaining Okay, Appreciate

Keith Creel

you, Thank Tom.

Operator

will be ahead. Brian Please go question JPMorgan. from Ossenbeck at Next

Brian Ossenbeck

quite assuming but question. challenges the about good network, minute? a markets EPS to guidance RTMs you're Hi, it's taking end Wanted for we've in the a afternoon. still Thanks talked for over the I’m growth, the high-single-digit to there. that Obviously, few on switch been reiterating earlier, has for the as double-digit still

few [indiscernible] commentaries before. how confidence you maybe, But you staffing see gave and you then Thank growth? convinced kind what to feel you and that level the and in on where that just of maybe of us of us growth, point feel a about underscores to know can walk separately, finer John, I you. you resourcing through expect target that hitting So, more some where just terms

John Brooks

All right, Brian.

approach know, uncertainty farmers we're you is, and experience of [indiscernible] we've grain And wanting being a moderate, see now on they maybe tell know, during that in mine disruption, going and breakfasts will chip guidance my our I delivered. business we’ve definitely chain look get half grain strongly around of feels outages, the first snaps, crop shortages, and but the as success to and and standing strong across probably business I yeah, have pricing you been So, produced the through units, as draughts of little push has harvest, all RTMs. harvest, strong double-digit have issues, cold our into fires, by demand, a harvest. supply you XXXX side you frankly, what produce the it bit like as seen can drought, their to monetize everybody you

strong grain that's book I towards that year. feel confident So, the of to the going end us give a

business as to strongly. We've the our International domestic know, the see strong, for going it's business side I consumer You no retailers to said, change in records, side intermodal. reefer terms continue of records, of are set there our set of is I taking. our the growing is, business, the in we're

going only You other know, felt of you things about, back also I half those space, we're we the tail think through move a have in that the pressures. improve, catch all the we've talked things of some as I that wind think those to not roads of know, the some But as year.

our business. a with market that wins, I see international see couple and our significant upside You Frankly, I in upside.

think you all the and ports the of some in for business about in and U.S. the have If Chicago, Vancouver St. we're know, challenges had open challenges you John.

back see the the those had those vessels year. add additional feed challenges. of the plan ports know, taken half to few Chicago of as I at into others You some continuing can opportunities have to a we've And market,

know, automotive by the the strong, that blessed You of products makes selling is, book top that is OEMs are automotive up, you know, we're they're mix produce vehicles. the an our

getting, the other maybe models aren't. versus most companies, I they're those think, in of So, chips getting areas they're

continue got potash in the we strong the auto that coal. got to from space, upside. feel challenges We've and in that the not fires makeup area. So, won't but very face I We've

and frankly, slowing Brian. business either don't the and forest I see down So, products steel

luck. could So, and the part of second you continue luck some the resourcing? we'll chain little know, we use supply completely issues, a then it, We if get don't our I'm Oh, bullish. and on but to make

Brian Ossenbeck

Yes.

John Brooks

maybe Keith know, this capacity the but say may to and we've you we to add, in it frankly, with do want way. I'll business, bring lockstep it on built definitely Yeah, railroad a

know, tied flow. my Foran on understanding hip constantly team's You Mark and Redd Mike those to to

have that see actually So, we're said, concerns. I frankly, because don't chasing intermodal capacity. in the spaces I we the we And some have as opportunities

Keith Creel

concerns on Pacific. would I add resources only side. at business. the We're no Yeah. ready the for There's Canadian

we know, we during locomotives thought we're workforce. we year, and things the and back had we to was pandemic We up we have to engage You back compensate crew about employees a XXX fine demand, on ramped pandemic, you we as away, if, big our did last for we the storage pulled think days was a over we've in capital, running that know, didn't need, some to ready got when there do. way unique very in

that with enhance them and committed get the the pandemic, industry off, a challenges in employees has and exchange help those In we us. in to and that we've perhaps stuck our for the good laid fact, us benefits had prepared place training, ramp same on to through the They're that have not had. up were business. for the We're more

we satisfy with bring So, it so our to the it we're efficient a that to closely to on customers line bottom manner bring customer’s continue work to or very our in going needs.

Brian Ossenbeck

All you right. Thank guys.

Operator

Stephens. Next at question go Justin Please from ahead. Long be will

Justin Long

comment the conversions I recently afternoon. to trended how truckload on Good on if you and network. could wanted Thanks. see they've

lot organic to merger, going the forward, about the convergence, related but just us opportunity when addressable think you that truckload for You've through the truckload like? way talked think help can about what you a opportunity market any conversion looks

John Brooks

Justin. Yeah,

there. couple maybe So, a comments

I know, a first actually with on of team You call earlier. all, was my

Operator

De by, it moment, One stand that Bruyn Please appears disconnected. Mr. has please.

Keith Creel

have still we do Operator, guests? our

Justin Long

still This is I'm Justin. on.

think have John. lost I we may

Operator

One Yes. while we reconnect. moment,

Keith Creel

John's on. John. Go continue, and

John Brooks

All right.

I with Justin, areas So working couple team earlier today of I specific conversion. truck to was saying, my those a was on focusing

intensified know, have across the pace U.S. retailers a felt side little pinch maybe faced. has trucking the what, of major more Canada you similar our face, to know, You

Canada upper Canada. particular, truck only In retail between, Midwest, looking Canada in how focus the to know, you how utilize our with Chicago the very the Not we we fair our they're – but of can amount on into they also even Eastern of our in up And, you a to very at, market, Twin carriers into major those and a [NS to there's opportunities. capacity in and up effort say, border the CFX] are ultimately, Cities conversion at some markets. work opportunities western those Eastern focused convert into maybe know, and as cross on at looking of So, companies options. book truck the dive the look the convert

So, we're you team. $XX million to focusing areas some intermodal to I'm for And, the those always a my are domestic that conversion million of know, target having road $XX on. rail

Justin Long

would And a to about million is look be at If $XX to domestic outside think merchandised if there front? of traffic, reasonable $XX that million a the what well, intermodal opportunity there? it's way as on you target

John Brooks

of at, You you, converted I we piece significant specifically, tell know just business. look I can steel a what,

through transload about way down Previously new I converted now Louis that year where it the or be to St. and and down we've into in our that believe business down our was marketplaces. not, trucking, all those the Mexico it'll a Transload. million to $X into Minneapolis market, rail truck think the

that network why So, after it's of business. numbers. we've these to across picture. be But really created it's of, a little to hard Justin, if quantify big our type it's know, I foundation you the surprised type go similar transloads wouldn't

Justin Long

I time. Okay, appreciate the great.

Operator

you. Thank

ahead. Scott Group Research. be Next Please at from Wolfe question will go

Scott Group

ask wanted to question. a I Keith, you thanks. Hey,

industry. to challenges them, but the just sure you get do more referenced perspective want it's, the mean as for it business. you're just industry? with the I rails, in capacity not know here. seeing rails said fix PSR you people in equipment? doesn't the I help respect the I'm to your the You interchange And right way. maybe your and didn't other Does as simple it Is What's the it more And

thoughts Just how to your fix about curious, this?

Keith Creel

question. that's, that's a know, It you global global pretty be a very answer. will Yeah,

and on railways. to That's of have wave of you're traffic came West mean, having balance. if with the out you all different a things the the I that here. in think can know, different to think in tsunami Western it's the key that's East bringing tidal imagine, stories, rail Coast, I about I it digest

there's While PSR be PSR we to noise. of reset no in economy, lot or this going a

supply completely sync. are of got You've out chains that

network I alone. think our about know, You

next containers to to tsunami. moves so about the hauling on get get equipment, the those made can they think to load over because the I've get lost all revenue empty air forth, the back and I'm I bring back next all just intermodal to Coast the West

So, and back of It's know, it's inside sloshing forth it, water sloshing a going big back and you like tank. forth.

Some is of this inevitable.

handled overall, in if I the the pain at know, you the think is going not know, look of way experience suggest I'm the it, for industry this, customer I You to lot overall, but not, pleasant, have it's outcome the believe done has time well. industry at I would worse. I the think the PSR, same whole that And if a been for

all having Given terminals, in fluid more upon frankly, congestion and now depend the operations additional outcome. better to resources quite cars had we've and to they get a

of of So, think matter a job. it's the I not a any railroads don't good doing

Obviously, over a efficient. it. the we and frankly, PSR think We've I those a years, process. a the have is of learning us pretty lot. we've years that doing learned apply We're been lot learned XX for it

it don't know I [pound look it but what to for speak to We results up. themselves. our coming know Our We manage how to coming know want manage to how down. for. we chest],

you just sometimes don't know know. what don't And you

has I done So, overall, think the is, well. industry

outcome impressive supply railroads investments customers the to outcome think other doing the industry. and they're of that choppiness the you see they're think see would the otherwise. this for an I is the of than hiring better been have out extremely chain, Once I going the the some and because doing, and What I get it that PSR making. you're for

answer. we this that easy this, I'm through much you're see, at not across process those improved know So better to to get a and And going again, we But that. an adversely we the going doing not have go same I at all trust industry it's the outcome. as time, minimize been impacted, for

Scott Group

thoughts. the for Thanks

Keith Creel

Thank you, Scott.

Operator

comes Next Hansen question, at Raymond go ahead. from James. Steven Please

Steven Hansen

good Yeah, guys. afternoon,

got starts move but again. to have, year you I'm the to well. the in John, trying benefit. obviously a We're to I hit move be the product one spoken get is, the relation early farmers sense Just guess, for against in XXXX, back guess the harvest up derivative The see to I off? me side as can we'll some a that quite dry half quick just a derivative is coming how last about way is you've for to do that the strong a grain degree, think it dry the and We've already grain But you think as period. know, they still it. I think

John Brooks

that's think the right I it, way about Steve. to think

staying You our be no close by customer. know, to going impacted yields obviously we're super doubt to are There’s this.

the blend strong, will terms in terms a maybe sort pretty of uniqueness recent be getting in – will some total close be we're depending quality peak I as could which crop is seen different size frankly, things, we've it the different more proteins what on we're will then of ends normal up think the being. to in and movements. XXXX of in be know, message some But as and needing impact in the years, You as bring in

is, I know, mind going think to the you other thing to keep in movements. we're unique see some

some areas, farmer You where U.S. know, out of some the actually opportunities pricing the to producer, feed the U.S. Canadian the some has present right is I good deficits to in going chute markets. think and

nimble able So, need we're starts to things doing crop be to this once up it do to to handle here. be we the

Steven Hansen

helpful. the time. very Okay, Appreciate

John Brooks

Yep.

Operator

at Please go Seidl will Cowen. be Jason from Next ahead. question

Jason Seidl

Thank you Keith and Appreciate operator, time. team. the

intermodal say, out side that going the How long year. strength re-stocking? As about are you that's a talk mentioned XXXX, the we into Could companies customers hey, terms you back bit look people where you beyond on we to even to or chain? to levels back your into a a are starting re-thinking we prior little of think lot and see do as continue that, the want to because going stock supply to in get at of they their telling are what looking you are

John Brooks

can Well, start I Jason.

longer the They And frankly number You bullish the, had retailers. big their met this international that part that with And into recently whole creating going a of the that last they just continuing, push year. the BCO just XXXX and be was to you that right contracting were see, has shipper settlement on better ports with met a they know, at this the itself. and tail. the and pushed know, exact the same of sort actually that overseas the demand challenges major this of quite were and longer some really profile that of and continue bullish extremely is Keith opportunity probably I week. on They

know, would you now, you XXXX. is, is have the to the, New a Chinese You I well know, right of couple and past this said, likely Year settlement the months just maybe know, through ago, push

Jason Seidl

shipper was And this clarification, just intermodal that an you for met with?

John Brooks

It was, yes.

Jason Seidl

That's Perfect. Nice great Okay. color. Appreciate time. the quarter.

John Brooks

you. Thank

Operator

comes question Next Konark Gupta ahead. from Scotiabank. go at Please

Konark Gupta

the into good Thanks, to wanted afternoon, pricing everyone. operator and just and I dig mix.

you was support store good DRU seems visibility or pricing how as kind guys think very what combined, from have see So, on mix ahead, of you of But do looking given X%, like you as I short-term next back well. then well [green] a here? next being bit tied mentioned same being little just pricing, kind chain the And the quarters does here, supply as up? evolve of over Thanks. potash volatile in the couple the how with obviously and starting coming mix

John Brooks

Yeah.

to I all just don't the has accelerated renewals year, the upper even strong. QX, guidance that and for our into know, So, QX changing, the see probably hit on pricing, broken started in here. of actually, back I little record I in now consider at of last see book a remain we way sound bit to But, you in a what a pricing looking our expect I it know, QX. like you range uptick stronger levels QX. of it of

our high-end of in end of in our business carload merchandise particularly terms know, intermodal our You at range the top pricing.

but over of year And FX combo. to the move next quarters. fuel the the on you a here Probably, a do and expect QX. picks little was mix moderate front, to as a remain we bit quite expected positive two know, we you as little bit as strong I too. expect it the a that You moderate to up, seen we've you probably maybe still know, mix described in headwind I know, potash bit, little and through

tailwind I you think per that a bit if us of going on RTM that So our about forward. gives front a little think, sense

Konark Gupta

you. That's great. Thank

John Brooks

Yep.

Operator

from Desjardins. question Next go Benoit Please Poirier ahead. comes at

Unidentified Analyst

actually on of my taking question. for It’s Jeff Thanks behalf Yeah. Benoit.

of new the wanted I come congratulation OOCL, detail the please? back this COSCO you bit seasonality So, provide just with contract a one. Could more for you Thank timing? much. And of on contract about to and very this the kind

John Brooks

week. actually rate actually it contract the should at this lines into seeing through ramp We're so to a point up starts in we over August. expect rail some up freight be some I Yeah, immediately. convert full QX. And run our at And here – to

flat frankly, we it just coming out it build not Maersk at allow south that got there business partnership good direct through This us into capacity. shore. also, a of business, why it's also us know, will the Shore, only lot and leverage serve, capacity and to This And that through is Centerm over XX%. but the Chicago that Canada, COSCO And from OOCL that works. out a Eastern of our flow to matters run really to for train will on is, the the We've market. terminal You allows Terminal, that up share to takes will which our which use South trains Centerm. begin

we're customers that provide the quite Maersk our excited terminal. product of coming COSCO, So, out to service other about OOCL, and we're that able

Unidentified Analyst

you again. much. Thank Congrats very

John Brooks

All you. right, thank

Operator

Brandon Please go Barclays. at comes Next question ahead. from Oglenski

Brandon Oglenski

Hey guys, good afternoon.

got disconnected. Sorry,

Keith, really here. for with help, your can years past, have years could opportunities guys, look my years the know, question X years CP, marketing But XX been I'm you organic know, know, you this know, carriers you the American other driving that beyond Or to you while X in with guys these maybe hope growth? further road continue I were as to think think down response the you organic alliances you question know, I but I network not of X So, do drive here? of some is for guess, to well, next know, about you you you North being earlier, talking you repetitive how, John growth

John Brooks

John. can It’s start I Brandon.

to about nailed ahead. convert Keith said continue ability head the business. growth something this One with network that I it you on things. provide you has, capacity combine two land that currency on So, truck to know, I think our previously, And it's he is, a as the look can talked earlier, we the when

a, partnerships. You focus, know, alliances. in you think, know, how to bringing, roads other, marketing can look think you extensive U.S. the rail. about the think to bring there's they particularly opportunity U.S. I with is an more And in And I at the

you rail competitive. truck spoke that, As is, that we make know, to Keith move inner take line, and how it

create more You of line and single maybe opportunities you just know, shipments. looking constantly really know, you as and if also, on network we're with what service, at a to about you markets. what well, to you can lot areas these and got you combination, long a we it's the haul those our if begin opportunities focused think doesn't always talk more But that about, are, But our of you really know, more on evolves where M&A model are we you look, U.S. land. PSR know, this happen, in do the that better about, So, seamless potentially opportunities those terms are networks use drive, truck own think get know to conversion? how know, mindedness truck you roads, to can and you combine like how we our service, you know, you

Brandon Oglenski

Thank you.

Keith Creel

you. Thank

Operator

call now the We Creel. over out ahead, sir. are Mr. of I go to back turn Keith time. will Please

Keith Creel

soon. third strong. a Have sharing XXXX forward. safe results look today of everyone strong to meet of We Meet up quarter about XXXX that extremely Okay, and this more Certainly, I productive team's during results. our carry into to excited where started go finish thanking for expectations, the guidance, even day. to and going but We're or me wrap our well, the momentum a joining the looking through execution us year. let with proud balance forward exceed quarter,

Operator

Thank you. today's concludes conference. This

You now may lines. disconnect your

Canadian Pacific Railway Limited (CP) 29 Jul 212021 Q2 Earnings call transcript