Canadian Pacific Railway Limited (CP) 26 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Maeghan Albiston	Vice President, Investor Relations
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
Mark Redd	Executive Vice-President and Chief Operating Officer
James Clements	Executive Vice President of Strategic Planning and Technology
Fadi Chamoun	BMO
Ben Nolan	Stifel
Walter Spracklin	RBC Capital Markets
Konark Gupta	Scotia Capital
Chris Wetherbee	Citigroup
Jon Chappell	Evercore ISI
Scott Group	Wolfe Research
Tom Wadewitz	UBS
Ariel Rosa	Credit Suisse
Brandon Oglenski	Barclays
Amit Mehrotra	Deutsche Bank
Ken Hoexter	Bank of America

Call transcript

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Operator

Good afternoon. My name is [Raisa] [ph] and I will be your conference operator today. At this time, I would like to welcome everyone to CPKC’s First Quarter 2023 Conference Call. The slides accompanying today’s call are available at investor.cpr.ca. All lines have been placed in mute to prevent any background noise. Instructions] [Operator

like the Albiston, conference. now Markets President, introduce begin to to would Vice Maeghan Capital I

Maeghan Albiston

Thank thank us you Raisa. for you, Good joining today. afternoon, everyone and

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

here and Vice President and President Mark and Chief Redd, me and Brooks, Chief Executive Financial is Chief President Velani, John Executive Officer; Vice-President Nadeem With Keith Officer. and Executive Operating today Officer; Executive Marketing Creel, Vice Officer; Chief

I that, With Keith. to hand over will things

Keith Creel

formed but Thanks, finally of for first a time we’re as to here today. newly family. Maeghan. been CEO speak Listen, an honor the CPKC it’s the journey, It’s the

You know, by XX days it’s XX last fast. reflecting the that go days,

pride employees not spike new We final since I’m network drove the mark we the energy can and week from entirely is you two historic and passion the at but seeing the our that tell across combination, solidifying this quite I energizing. that formed are

I American has never Commerce conviction this company for North and would for the have For what customers, been personally, employees, deliver for our our greater.

which thank history you that CPKC integrating feat. and like to ensure for integrated to to the great smooth on to to tell also is We the successfully. a we two been commend a moment these can small work done point show I'd intend companies, this to take no all team that's I start

Running about is now a proud that FRA on XX. take the first what to continuing the it's quarter CP railroad an record that a model performance is safe safety injuries So, team's to I'm and front, results. down and down running in Most personal let key safety tremendous quarter first It's on accidents performance, all additional built something ingredient with importantly, and strong CP year's CPKC. operating train XX%, the successfully PSR on the in. last me reliable final move pride we a our

first On side, an and revenues we produced the financial EPS in operating the X.X quarter, of of billion, of $X.XX. core XX.X ratio

with continue front, labor the On here Way to ratified agreements on progress Maintenance Employees of several with agreement ratified We we side, [indiscernible] hourly Canada, quarter. by our in well agreement employees labor U.S. the represented in other negotiated the with make recently the a as BLET agreements. the TCRC collective also as the

to our and about that up we've expect to volume XX% continued with growth the deliver. the that notice numbers also we year-over-year train headcount to for preparing You'll hire

of the the John opportunity minute, I'm that couple A talk beginning, CPKC come about going our and to service June. recent week bit comments is this at are going extremely with we've about last, Schneider announcements is know made transaction, it Knight-Swift more most create to two in with a the a but you partnerships response only and this on to customer excited to more in

provide over said, on to markets. that with John, some color you, the So, to

John Brooks

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

we So, softer look throughout delivered I'm first quarter. demand. the very growth the of pleased team saw The that pockets with quarter certainly performance. our volume Well,

momentum us new give well served we us exciting as into and initiative business this as unique CPKC. Our chapter head

book tailwind. and results last a were with be renewals CPU looking across be speak continues to plus the fuel XX%, the environment first XX% revenues of the quarter. the Total strong the to were inflation for up Now, up time. business. on I'll pricing FX to at XX% standalone Volumes quarter, The combined while

quarter second first quarter performance, XX%. our on Now, revenue revenues January saw was up grain partially or metric well exports, taking on currency last were We speak in tons. were of basis. look to strong as million our and record posting softer I'll XX% volumes a another corn our The for strength the Grain results February breaking the X.X in grain, record closer challenging as compares Canadian offset up adjusted at largest demand grain on Canadian by year. a U.S. quarter from

Canada ahead, with last first base layer crop, through expect we we've XXXX. grain as seen our relative conditions to of movements grain challenging few the weeks, in year's favorable I to a Looking business although still crop and move stable compares franchise provide in

days, new to with the Finally, movements CP the CPKC recent infrastructure to from leading train the Canada although grain flows customers a multiple as in the St. the working team is new U.S. CPKC Mexico. and Midwest the X,XXX enable Louis, will new network This in emerge our such movements grain of in down number efficiency markets it's network. expand hard the development and the see with Gulf, across markets upper development system early only Mexico. foot high into I'm to South excited Further, of industry on into

as front, We XX% in both domestic On we and increased movements. saw the were revenues volumes on up the XX%. delivered a potash quarter in export volume solid while quarter, potash growth

expect through of up business, to across X% China has reduced modest Canpotex And were could in the As as see a the continue out to on the I revenues impact volumes base. down coal its while QX, remainder export in diversified I XXXX. expanded shipments, expect bulk close quarter, its decline to XX%. Despite were growth coal effectively I potash in customer market look growth volumes ahead, near-term although share

to X% plastics grow and by merchandise, the saw chemicals XX%. volumes revenue energy Moving portfolio on

portfolios Ontario. transload with and this LPG of well driving significant performed our plastics Our gasoline along facilities growth and volumes volume moving in distribution to quarter, strong

to and revenue QX forest in with The as opportunities grew by revenues Our in book forest in Despite XX%. portfolio XX% find customers a this increase metals, in volumes as well softness products this deliver worked sand frac sector, volumes were minerals, steel driven and year-over-year, our consumer record X%, some The increased with we products products. demand XX% up fears strong book. while growth and this volumes. of strong closely in carload and pricing higher continued was volumes

automotive and as our performance in accelerated volumes restocking XX% up Automotive while also pace. new demand quarter. executed to this and into saw on past XX%, compounds We were Demand an fill the park remains strong our at segment up industry revenues moved we up the inventory has ramped were volumes in Bensenville. auto as shortages automotive and strong continues in we Edmonton

of also business, X%. were volumes where X% led in Port this this the quarterly intermodal softer wins the volume our at Now, are in revenue up up segment. as we was experiencing demand with finally side space growth John, and offset the on of the St. more CMA self-help International intermodal than growth

from segment. domestic softer in demand Keith of and we however, between releases, the will who and unique extremely Swift of press And saw Schneider launch XXX our spoke side, that Chicago pair created XXX, retail we ride we've by May On service wholesale continued with that partnerships recent to, able our the offset are XX strength will many on about we you've our Mexico. our course, food partially this to train new and are excited seen

in to months, the of tell customers interline only work with also it's marketplace. and been these the these the table be others I the refine over fact a lot can but hard at on needs, understand many help single operating not being place you, in network plan this that multiple will trials service fastest line taken our to we've haul the that customers'

business shortage opportunities XX focused us are the we growth. my and pick saying, no and front team of we for partners by the CPKC. a on are days is close team sustainable me profitable focused into is energized let in to team staying and our lockstep operating is So, with CPKC in delivering There of right

to launch products. We are excited new

continue sign up success on future. and move to into the build will that will the historic as new customers two We we companies these we

forward in to June. our all at We showcasing opportunities present playbooks more many of Investor are these commercial Day when looking we and

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

Nadeem Velani

Alright. CPKC the pleased Good team the and results about extremely this excited with John. Thanks, combined the the quarter for ahead afternoon. family. I'm produced path

the in from last a at expense challenging a I'll side, basis year's QX. closer to improvement FX on on Taking XX.X%, the speak at point Looking look quarter, variances XXX the came at ratio an operating the basis. a adjusted few items adjusted

were up the in the based discount million Cost main offset expense hiring, inflation at plan service of or and well by XX XXXX. lower current volume, and rates training X% higher stock as of increased drivers were benefits the the resulting expense wage lower pension as compensation and costs partially end DB year, These increase. from was last versus

expense last across million, higher by cost use driven CP and fuel by XX%, inflation. or from the down rents or result increased assets networks modest the activity up was Equipment million as or increase foreign million receipts X XX% versus and XX by increased XX% Materials X of in mostly price year-over-year expense increased a roads. maintenance were Fuel volume a year. driven

pickup drivers casualty The XXX last for increase XXX base. some surcharge and as fuel third-party XX million, in lower Depreciation increase the an result expense, million, a increase increased sales main land and cost. costs. of million to XX% including year, expense inflation of adjusted compared million, acquisition at were when cost an asset or came services delivery was XX Purchase of of higher a

reflecting pickup debt X increased for Moving million million and below quarter million, by a year expense income XX of equity costs adjusted the line, benefit balance. Net result Other from to compared net interest purchase was KCS components periodic a decreased discount KCS the lower the recoveries acquisition-related versus higher when XXX interest rates, accounting. XXXX. first last decreased in and of as

Our XX million, prior income. to requesting tax expense increased

rate items, KCS XX.X% was on related tax the the Excluding effective approximately quarter.

CPKC to approximately the of Running income rate compared quarter, statement, in close EPS adjusted XX% last XXXX. the $X.XX year. out was effective we with expect the in tax to core XX.X% when the merger Following higher KCS, be

cash provided of flow XXXX. We QX, activities with of XXX by XX% first million versus operating cash of continue to quarter generate in an increase strong

of CADXXX down call million business. in our to quarter, first the on XXX remains continue reinvested the KCS debt to used paying the first in we we quarter. de-lever totaling Our just to a And quarter, million. first which million, the sheet, XXX In we dividend close balance final over from received capital

You'll also is] the X on successfully KCS the [which in debt the terms. CPRC financial that replacing quarter, see completed exchange end we the same March, launched Notes, following we Notes of

and April, Additionally, to maturing in positive in Notes were and we subsequently irreversibly that approximately XXXX securities May KCS government satisfy discharge XXX million in November. purchased and of

is EBITDA. of X.Xx to leverage leverage Our target our debt-to-adjusted to path X.Xx net back down combined on our

Inclusive free cash XXX in on of the million quarter. KCS dividend, the we generated flow

to this end at with the it's at when on of get certainly to fulsome While industry us, point historic story it's path point, I to you worth Day the look been in to front a unique a it. long been of June. in opportunities our Investor update and forward tell. that I look at We're more a providing this

it I'll to over With back Keith turn that, up. things to wrap

Keith Creel

Thanks, been path our more up for look excited for our forward my I for going Nadeem. together. for tell for when I'll formed now, June our we're for it you is North quarter journey commerce we on and railroading, We let's newly open before XXst year start for to about communities, come open this and our the showcasing questions, that this up questions But never our America. – results. all you shareholders, that of company's tell create we employees, can in first in to I've

operator. go So, ahead,

Operator

Chamoun you. Fadi from [Operator Our question BMO. first with comes Instructions] Thank

Your line is open.

Fadi Chamoun

closing this It's afternoon, transaction. on I quick have of things. Good But a exciting. congrats everyone. very couple And team

get thoughts. focus with this aspect This to, focused and to of these overlapping I is mentioned revenue like? it on, but – gate your gate network [alignment] of CP are it you not, the of mergers, going you can remark but can Schneider look and us about John guess loads doesn't you're is in ensure to the forward? if then wanted a an Knight an to And seen you're just have estimate goes people give to network does customers in that out go an probably what terms give and First, it integration of I [ph]? Is smoothly? out kind challenges the what If grow ultimately what smoothly it on key we've integration of going what Is going is that ensure and idea expecting are some us synergy to your that Keith, after, to can you the prior transfer anchoring key of you faster of from your technology? the the kind this same just

Keith Creel

– Well, speak to [We'll Fadi. welcome let this to call. [ph] take you me be to back able] on

glad you have the back on So, to call.

the Let history have that me it. – industry. itself, we've And shows is a In I a start history that good integration an really railroading some This process known participated did issue well lived my it and with that time, our I've in into go integrations some going piece. in not through have. doesn't

So with has integration. with that been did I the they're we this. KCS of This the can you our focused at on underestimate said, counterparts in not team work when hard trust tell at magnitude

the bring not roads because safe the we and we provide for efficient well So integrate together. thing customers obviously do to we is service our last two as need

we the So, ground hit running.

that months. office we've I that management integration last an have the chair nine created We

cadence. couple We have need weeks. We of a a

We estate. our way different think XXX the business define that. our from plans Those to the time the work of disciplines way we groupings. down pay eight over way with we the have employees into to integration real customers that to are champions. assets in that integration And all our manage have we full We've active against committed processes broken we I

Everything a is covered better for term. the lack of

thought disciplined approach. So, very out, very

XX think that to ground day trigger day running. count we're railroading historic were day We going decided on you a celebrate minus was. that all hit day this, tell the City I We one. we can I data it In obviously a we had So, Kansas one We But history, it had in one. to warranted that. the down.

been right week. I've very, I'm next been ever there located we celebrated except is now. way. we in every we've John there And this. there positive in but went there week, going I'm a So, I this reflective think, Calgary work then week since. Obviously, back to Brooks and

be Mark XX% and focused culture. there to I'm Our located going importantly Chief Operating there Officer, Redd there. My time of my will most to is be U.S. office XX% on

together, a the that that sure cultures, that CP two cultures make quite beginning, We I've people To said a level are have customer have and we like-minded been that very focused, similar love KCS frankly these the playing for bring field. long-time. they're railroading, very from now smallest

and the fun most franchise a relevant to will a believe to network have in We North and America come that I work. become it's

well, business safe oversubscribe opportunities can the make we the don't to. on deliver we the to and correctly. sure efficient got committed just We the a We in that we with sequence network integrate manner as laid business and we've we these so service that

So That's the for that's next on next to X, months, is year. XX on. what what following year, be going my X, it's attention the

well be it operate to shareholders, we're to great and We're going thing it reflecting we one it history bring committed companies in together because regulators, reflected to I'm get and this with be communities well done it us it stick members, that right it's two board we be it's that's and said trusted reflected to do, to we've there's on what thing the us us it on through. and these be going

John Brooks

here. is This Fadi. back, John Welcome

Schneider capacity excited the So really part that and look, we best finding I team years, are years can can this you, having of we for the in excited, about utilize in and our worked I has of Mexico. of Schneider We're super XX right previously really CPKC hard tell here. marketplace. said as operations experience partners two Knight-Swift service over

going from terminals on haul into that day both step bringing one, new very and you and a to will shippers CPKC. team, be of are of the I'll the Mexico. those They single-line XX. door to value be convelling train U.S., on about and excited our proposition May will volume bring Knight-Swift Canada, The that tell synergies the

to We'll line be business up, million for Fadi. of And filling but just train that ramp you of the that's us. it expect should plus that $XXX business start

some intermodal be road. deliver the in the going trucks that is best you there's take importantly only most tell So, service, utilize I but not our and can exciting off can announcements on to markets more horizon service

can when focused into a it customers compelled savings and and very you is Chicago as Laredo overload an against are down I'll been as we Mexico. Greenhouse on opportunities capacity been can going that it's to long can this that service emission this, down XX% from heading much compare these of have tell the you truck on the gas of bring with up cycle in you to XX% what We educating that capitalize also sales this the tell to to I power network offer. excited what do,

industry of that's lot XX, customers bring. couple of are ready And I It's differentiator. service tough been this May a the come these years for will a of believe a for railroading and what truly

Fadi Chamoun

Great. Thank you.

Operator

Nolan comes Ben with Your Stifel. from next question

Your line is open.

Ben Nolan

guess seen in Yes, in expecting or just far or the a or may are volumes, are heard question what April actually competitor you're in we even you a this despite other you years really where is so seen guys my be is, they thanks. it haven't something years. in already finding and ways it I to environment recession from your haven't supplement Are impression in under recession? numbers, recessionary their seeing seeing your Canada that

Keith Creel

very in that tell anybody rail we recession a John from very bit as not color, We're the can unique. could has you more provided even the have other if beginning, of makes proof. but bad impacted. network Obviously, be we it some story America. combination insulators only unique a and But unique this North industry no let macro we enough, I'll I said in have was recession this

ports this immune in space, self-help the your To international a grow. the Ben, service sectors some not intermodal the of to certainly all down. point, been definitely say, wanted North out find it Vancouver aggressive. – America some shift able to business some completely of our to customers We've able volumes been We've area. for is best-in-class to are that in CMA. we're in would been I We've to So, we're with

success the You're familiar. Port very of out and John growing We've of actually excited. in I'm I'm had ton a business – St. that of

partners a weeks with service their You port. started up know few [indiscernible] alliance ago a the new through here

network, being by an but with Brown, not So, intermodal we've quite seeing We're our that decent our recently been you area think out most has hit KCS only is eastbound if by insulated area imbalance flows. that degradation would of West demand volume also pressures. albeit felt the the it. network, I domestic demand, the maybe pressures call about but certainly flows

opportunities. to Obviously, So, think there these immune we're CPKC team initiatives my and again, better. we're going new the of delay in to business those my synergies as expectation day there's but keep to self-help converting what and are a we the are continue CPKC in regardless around buck opportunity float helping every network. does I opportunities little And of Keith's to not these be to some reports some in trends those these of the some on months, me an areas, coming point, us us macro that at where out for in

Ben Nolan

Appreciate All it. Thanks. right.

Operator

from Your Capital Walter Spracklin RBC with Markets. next question comes

open. Your line is

Walter Spracklin

Really taking to but very much, thanks look to Yes, question. conceptually. come it little operator. my more Schneider, back a at Thanks want

line to a but and Chicago it of lot that proposition to very an now to kind sense call win, want a is, to certainly easy makes KCS attractive it of us is I where get ballpark that to dollars with don’t bring UP Schneider and had you those an perhaps single I that it's a much wins with to a KCS easy deliver converting think, interchange can more right same to example single where service of was along and you gate bench interchanging now or you out lines. can there a proposition revenue some line partner out customer. the Can for in was how over

Keith Creel

Yes, Walter.

a of the little kind bit, [weeds] in can on me getting there. compelling a So, [ph] there's tell you when here. you're opportunity I

I nail head. hit the on the think you've

that our We those to conversion very on are and Investor going Day. to opportunities speak specific

details a though. single think haul Certainly, proposition can't you extending I I there. described, important I to line go you this, was tell lot Schneider. So, will into of and that haul a what that value

going that capacity road. proposition of about the reliability and over to to again, a that – competitive Chicago, Laredo city you on into Mexico a in to trucks it's of to day we're if And delivery, much But value with down fifth the service. create delivery terms and and it's third point into taking In on more story at is on a as the that, look road. going Monterrey delivery of trucks about day I'm day off fourth

after business value their opportunity and able long advantage, own emission And been the again, headway but in own fleets. And truck go saw I to prop to with has gas compete. that after, one on railroad think opportunities Knight-Swift, the make some line of saw just haven't as Schneider those to to the to sought that savings demonstrate pieces really much service stay get to the of greenhouse haul single on as their the rail use sector they

details story. So we'll into get Investor part Day – also of our as but those

John Brooks

want I Walter. a add there color little to

that You be this north, it to to service road to think gives same this single I able be you their today Swift about freight into south, that going to Mexico, going be line go competitors them in all question, this for? think enables? and compete what Schneider asking reach what and reliability both, think them over about the it about this talking

and it’s there's the that's So, out not Swift with road our to currently Mexico. Schneider to competitive to a able partnership It's to be to vehicle. be get Mexico and it into it for moving rail get moving that's into going them bring network us revenue there out moving across to of in not

that not rhetoric. call, excites maybe connecting term. that's of conversion and service It's in once so of between iceberg better Mexico those spin, a Chicago to And locations tip seamlessly, it's the in product know yet just the for such, lack much. Chicago this it truly So, there's me a it's we the not the changer. would It's the Mexico and game put don't to what I best-in-class marketplace, we

new market, see a people the us that. enjoy in markets that that It's going Schneider we're with that its encouraged I'm we uniquely super value know markets don't partner about, Swift with it's to the and and

Walter Spracklin

more color. Look to forward fantastic everyone. hearing about in Thanks it That's June.

Operator

Our next Gupta from question comes Konark Capital. with Scotia

line is Your open.

Konark Gupta

I with Good afternoon, and my into I to on historic Schneider dig contracts just Knight-Swift these once operator. Thanks, this congrats and intermodal everyone, echo in moment. wanted more.

So, my I understanding job. is, longer to your those compared guys? those you your that trains that line, route. single getting line compared in way probably mean, on between West significant operate in faster making [Taxmax] of you little are a [ph] mileage, changes you competitors the there terms the and How's to Chicago bit was in Coast any service are

Keith Creel

it beginning competition, the said the is. way this And competition. combination alternative. what know we're our And kind to to shippers combination execute I not that's down We and versus just trigger new we options again, from you think the exactly create new it's very boils of this surprised, that for surprised going over, would scroll create

think this announcement in would the Montreal, that Falcon Complement I and history ironic, that I ago, made our comment about consolidation. from I my going I in facts the to made very issue. finally this two a service right STB But the The validated this that case beginning. years it's seat We premium get was facts they So and that same matter. friends support show specific got it – knew Express was yesterday. or for sitting to because heard then is of you the

So, speaking from does Chicago CPKC service really you it, getting shorter if convert let me just it's the it market. a to that difference? the Fax, the make moderate So is the Salinas Falcon is true to which miles XXX serves distance, be explain shorter. it Yes, that you don't might Victoria, to because ramp

in However, X.X. days and we ran versus their long we miles the delivered a four XXX reality is, advertised

the them So, we're to days beating market. two

it's City, flies] in shorter CPKC a what [indiscernible] advertised [crow because a haul, is UP the actually to U.S. our the [ph] where go as that's CPKC service. [Inter-Porto] via with closer of terminal which Mexico miles the reverse CPKC [ph], happens network, there, CPKC let's that service Falcon versus markets Now, days And the length XXX shorter customer, enjoys terminal premium get the delivered it's aspirationally was But service at in versus what I the across a back. we you that border when standard calls this it's from X.X heard the these service to X.X. same on yesterday Mexico. from untouchable XX to

to So, today, is it much perhaps with touched XX, May but superior it's on going a service. be

So to be winners fact combination, of of of about with We're those the off to and making just everything service people said rhetoric, unparalleled are spin, be reliability. the true that. game here They're rhetoric going trucks taking perfect people truth, we're matter, facts this truth spin, industry. is going again, history this going to be winners in a the partner to in and fact And in about this not we show that's of service not serving us launch based environment, train that our to road game

compete. ready get we're to to So, after. ready We're

Konark Gupta

you Thank color, much. great so a Keith. That's

Keith Creel

let surface [Falcon] name it. come up I'll going we're to It with something We're that [ph]. know that tomorrow exemplifies truly won't be what to you this the going is. superior

Konark Gupta

Okay. Thanks.

Operator

next Our Citigroup. comes question Wetherbee from with Chris

Your line is open.

Chris Wetherbee

be kind perspective terms either out a months, afternoon, of that about XX. that would kind next could I understanding kind can, April of of have a you're curious guys get of days, things were right Keith, seem that KCS weeks, of there obviously now, kind for about just of of how couple had while about or the you oversight at you think sort going changes cost just how that now but in of Good you're thinking thanks. sequencing thinking however operational gate, curious with the it Hey, of otherwise, I'm guess, operationally from you guys. or passed that? it control, some

Keith Creel

Yes, let that. of that’s in me for in of thought say guide this, Chris. ahead responsible the planning There time was executing a lot

that. going here speak Our COO, I'm Mark is Redd to and to let him

Mark Redd

thanks in We've the stabilize much in in Chris, focus around Mexico the for improvements to that what U.S. bit pretty the prior we're And got are just KCS. metrics And building basics. Keith. on thanks, had operations our back to doing on on [moves] team really leadership It starting now. we'll The is is a what [ph] to Yes, control. aligned. really question. Mexico We're place And just place.

PSR also locomotive dwell, around out look our both metrics. inventory speed, focus in sure look just speed, and optimization railroads. leaned You'll at make both that car in yard reviews. We'll fleets our We'll areas, yards are the at

So, – we'll focused themselves, but the we the the details stay really how out just get metrics into getting two start just railroad on pencil just on also number of and would MCP. just just railroading and

Keith Creel

the Mark] is, as gate of cross out the on KCS' other it's that Livingston one, has about best Chris, commend well. think talent, practices from about day Tim I pollinating, of right some it's moved [I talented to [ph] and Mark CP We've point who’ a St. well. at stands Paul so got Shreveport is Paul, Shreveport. the in Canadian network. former We in very on We've as operating Pacific got the that who officer he's Tracy Garlasco, Miller, St. got

networks to to got through well for drive sure make went very outcome create change we've that both a to an a Mark plan out better CPKC. on So, opportunity thought methodical

it. I'm accelerate. into progress ground So well to and they're running the that the going with we're encouraged hits

Chris Wetherbee

very Thanks it. Appreciate helpful. That's much.

Operator

with Chappell Our ISI. next comes question Evercore from Jon

open. is line Your

Jon Chappell

from there's couple you take want want you. it's to mean ready you a stages, come afternoon. bit a to maybe maybe to little integration you don't but to XX. on that or Thank things tie take on very clear on more can together wants earlier. to the sound anecdotally Keith, does than day business I of the a in chew X as more bottlenecks of I Good things you're it day like than to early ton

do for kind in freight about demand that today, you how do early there's So, manage that? you how which capacity of pricing you of you're integration. And stages knowing the for more probably taking have think the than

Keith Creel

me that last manage with relative on it and X side got got the the the Mike operating partners the marketing Well, our with the reality way to is the the to Foran opportunities, got deal Mark we way business CP We've on managed our for they've is the is the modeling. key we side execution X, in middle. we've John with on years. to

all going to allow well, not oversold. business, to us this opportunities, this very assessing connected are network we help So, I'm of to sequencing get these

can't as today that disappoint as will customers we partner take we be they So, the former we obligation those do The to former tomorrow, if to to could, and CP, all have be an is they with. KCS, not. it especially would much last thing going starting and I'm we're that we

to obligation and to to commitment launch a right going as well got We're way. Knight-Swift, them on Schneider, to we've as train the bring way. So, each this

doing out start. then thought bit continuing that the we're It's of and We're to going a while, word. execute all the week sidings. could service, the our going we build-out we're And again And that we to X-day opportunities. where a SDB these every that's so to we're be with going what's to business merger, of be to And was in-line and work. gave our plan men women sequenced our see that infrastructure next. We're continuing

ahead not our So, this. get going We're of skis. to methodical to we're about going be

I ready them fail they we and just customers I network this them. as of not they our on bring then benefits the would and think love appreciate our rather honesty yet, say we're think would yet, tomorrow, much much as we not

the not to to be just PSR execute we're want what get business going what at letting not our over about. We're network is to to true subscriber the handle to ability going model do. kick can. exactly execute. the right our in going for and operating sure this able and our can We're to going that's make fail make we're got to by one revenue That's thing aggressiveness to We've

John Brooks

point, tell can impressive. Jon, I excitement around plus got the how there a lot sell, that. of might sell, and we you team add to right just made me in a sell to going was I and Keith's Brooks. to also want just a to entire Day to network. this to two the sell It talking little was the customers. excited. and sales more But grow temperament we're And color spend a one room hours marketing full together expectations I just around City, in Kansas John It's

operating our of that process used We're hour in the fits our you, look we would can to the incremental and We're at service. that work with And customer, to of that layered consider we've what capacity network, deliver Foran we that can we I CP and it we our bring the I business can very have guess control. ultimately we sell, opportunities closely going tell going be and to onto value team. and distinct XX that that really Mike KCS those sure to a on Mark process with at the network, sort trains about we make any

team the hold comfortable I They to not oversell this to though. back, said. nonetheless, network them going are got So, like as this I'm Keith we're mandate. quite but understands thoroughbred that

Jon Chappell

Appreciate that. Thanks, John. Thanks, Keith.

Operator

Scott Your Group question with comes Wolfe next from Research.

open. is line Your

Scott Group

Good Hey, thanks. guys. afternoon

guidance longer-term standpoint core now revenue we'll think then Any there? guys. and bit price how then want so an quarter. And any puts and either the John, I'll CP on So, I however on of in color know takes about little plus to color RTM ratio of a QX you stick operating and some get it? shorter-term the June, from you, think thoughts, Thank about or mix consolidated, this to X%

Keith Creel

Hey, Scott.

into Just we're some you gave more April you from outlook, I been opportunities volume some of what reporting the John some of you And ask near-term the we've months promise, headwinds, color. as insight our you some a as we we'll of the couple RTMs. and far some give we'll give seeing patience and think

that at Scott. it leave just me let So,

John Brooks

a numbers, to I challenges I other I some have the synergies. to we on April again, you, as immune if do completely lot that at the look I not no in those identified. better. think layer Yes, roads we've continue by fared we'll upside Scott. got mean, can you of little We're these means, but tell think a the have And

I performance renewals. continue front, contract to our be with pleased pricing the On

say mid-to-high digits. to single going I'm

negative that on longer and us we've part continue We sort our business. pace. naturally bit Mix on has bigger as of seen of franchise shifted haul a with a move bulk that, little

the smaller our mix would the as to relative lack I look and accessorials. see we view to that in congestion an I bit the CP I actually of others and some as say industry [accessorials] don't we You in result of A issue begin of other freight terminals operating begin alarming that see of the forward. again, that negative. [ph]. being headwind of a But on see as related of shift a little of to little that a to as benefit upside bit

Scott Group

Thank guys. it. That's you,

Operator

Our next question UBS. comes with from Tom Wadewitz

Your open. line is

Tom Wadewitz

some have Wanted years Yes. whiteboarding not done analogy, congratulations this on deal about XX this Good doing operating good afternoon I you, just thinking in the something mean, was and that and was and that done past. the the a CPU if business? and CPKSU take Thank idea that reconfiguring and in you should the and be I it the eventually to called getting will approved. ask the as is persistence I you're that exercise that? things starts ago, skill flow but you. think bring an been probably really adding you better on what be just as not, think about there there were for new on timing. Is train might like just place Is of I like traffic guess process to a And system. changes

Keith Creel

still former Tom, do CP mean, part that's I whiteboard we on the We of business. network. the way

discipline, our tweaking the part plan, adjusting making a plan. the of plan, stress plan, of part executing of testing and just it's the the So, rhythm

So, it's going then flows occur, growing have a responsibility to of as we're be should be and unless still we to not static adjust. the never static And or shrinking. business or ebbs

was So, in himself [ph] when bit tell whiteboarding of I can quite [John] trust. you that a did the company

leadership team. cross to eyes in we'll see Tim a perhaps his team Tim and you pollinating, me, when that upon about of he'll previous is. There's definitely that. executing and always abilities about part that going his something leadership with new set talk of true didn't, build I for Saint part about that's Livingston And Livingston ears skill here that be Mark. where Paul his that's are true and playbook that's taking that's and in bringing when Mark impact the the sets of and Miller, we're his Tracy about talk But

celebrate It's for kind nothing of apologize something other to of Both didn't the nothing To to those things me see and a ashamed it's replication new of it for. creates gentlemen to of, because will it's be it's that. opportunities us.

to that what That's the part that anything to I'm of and people key will this anything way, is. PSR or be to as that railroad it I DNA with with So, whiteboarding and a have long this ingredient as railroad run it our is do do that going. railroading

John Brooks

and just like. of that that will goes time align have, freight what KCS I would we about alignment thing make up where really and good about [indiscernible] to understand every standards expectations. connections, that looks is like, conversations. the what and Calgary will I talk add We'll talk sure May ourselves would we'll add only with That's the The we that – out meeting. what good how the what have we'll job We'll bring eighth team the have looks – the on

Tom Wadewitz

in broadly of do stuff you you like to sorry. more think PSR work say, know, of was of going a the process, some a in I'm so as I plan it's, just it not we in than the should to a there's lot a big past, new like is and change new a more But implement gradual a the schedule. schedule kind sounds this thing schedule? where of the it and then to you of, process time point

Keith Creel

one. phenomenal the day Yes, schedule go it designs ready to teams did service having a job the itself, team

unparalleled. railroads know I that to So, new had do literally the schedule we able day don't say a that. is ever to been system one

that lot So, out there schedule. of go and you so – the test prework running. could that, hit was that's ground it's boarding sessions stress into wide we these But you a

railroaders, different. are about they're discussion you in and resource best morning you that stops the jobs give but this customers a sure the optimize you we a morning. I'll inspecting a listen, right, walked I Mark's are performance sure I bit make right, properly provide little [Indiscernible] office is times make don't this. good It's we about color make locomotives. And this do little about got correct the point. in why to you're and can switch practices, local you and case your You tell And to that plan. you, road you the a

Mark Redd

through as I I was, I've And inspection the we in detail I'm we but locomotives, just also Wylie, trainmaster – last a actually actually duty here So, probably mechanical don't the midnight well. that talking a come what a crew had and he walks was Texas. know, had to on for night noticed what asking

So make sure mechanical brakes person during locomotives, make off, that, I XX the are minutes the learned and that we went through just the it. hand up they're set right, about sure spent walking

that a engine now let's brake So, says by And asked XXX that They time when that of is a job XXX that – and mechanical think engine every locomotive, or just person is, times on or and yards. you just off facility lead about They much to Joe have says the get the Jane so for all on times card don't the by been card a save leave. whoever test. XX comes out shop don't engineer to leave. gets I've they signed briefing just that a alone how save? X do this would They will year has just do all can whole to just start that have can the minutes multiply XX,

Keith Creel

want don't to Yes. that be I Tom, misinterpreted.

that that locomotive at hand then been a work. of to qualified is mechanic safely. do engineer certified was locomotive there, engineer expert mechanical the on at is trained trained signs course and qualified the off in it expert inspecting it net not an You've operating got it service If they would that that's a off and employee who

safe necessary car to so car so productivity to get miles done. about. those all needs The that locomotive we cars a be locomotive service we about run about railroad. Not eliminating to eliminating that to be eliminating moving is work talk so it's additional component about can trains can work and optimizing that day. we that drive that That's drive isn't take can per done the and efficient This talking the we can what This It's convert can the redundancy, productivity across and processes. it has that reliability, railway to those so process.

Tom Wadewitz

for the Thanks it. Appreciate Great. time.

Operator

Your Suisse. comes Ariel next from Rosa Credit with question

Your open. line is

Ariel Rosa

did afternoon just had else historic KCS in leading the and Keith, like the seem you of challenges, of a a good operating closing here. it combination of echo everyone congratulating number into I'll Hey, merger. on kind

perspective Just like and those those from wanted to the understand your Thanks. what accounted of timeline look issues does what for some fix to issues?

Keith Creel

a quite suggest has of in fix deterioration the did lot a the I leading believe John that bit and Well, would metrics the begun. was up Mexico. and stabilize team to the I

Specifically, operation the U.S. running was quite well.

were working listen, Mexico On are key hard some the some piece employees the There Mexico. and this. availability. that data the they're in our to to opportunity to were there Mexican congestion in a front communicate team with John are that challenges though, labor to address labor

I City I've twice. Town it their I went was doing to success Two town I've Mark's about Mexico enable of making growth that your in minds is doing control Monterey. Hall went how the of the part John's can that win Mexico that, getting they employees and sure days understand the And that. in been just before that employees. part and down. Mexico out of enablers. Mexico Those hearts you myself. down I and maybe guess before, before. done a did halls the about that in down day And date.

are part And creating they they They I matters. special. something. they're energy, make I to We're there those important know think that going they're I'm to And something can like have that you feel all something. they how of engaged. sure down employees tell that

the think those [trains] this women that educate like importance officers, part this, men progress not they're we importantly equal and of employees of the most we they just I and as are but and the feel operate [ph].

they understand And quite American North a continent. families, big is a game to I important opportunity do that opportunities be going I that's not Mexico before their the and for sure how think them only but for this to to for think the And frankly, and there's make changer.

to performance improve. So, the you should expect see

railroads building is cars our the could level and about. just more we that up PSR in taking nature their getting our service are leaning out car doing with that that eating back of the out taking the that's team running be turn and next the Mark's setting are wells to, us they it upon efficient are valuable the that intricate sides things yard, a reduce to hire, belong of space and to the work, them taking that fleets about some in The so fleets odds today all that railroad and dwelling, up

doing. into we getting as we're continue that, what details. will that's performance do improve. the to It's about And And the about

Ariel Rosa

thoughts, those for Thanks Keith.

Keith Creel

you. Thank

Operator

with Our next question comes from Brandon Bank. Oglenski Deutsche

open. is Your line

Brandon Oglenski

culture, here. last you management Hi, I aligning from not this the Keith is for think but a that along remarks, prepared most How are important have and question while the border? pretty you. these is coming operational incentives team, But in of the Barclays Keith, south or now your off lines, in well. about first existent as Deutsche. especially I'm you question being challenges Thank Brandon, did the that mention congrats been much

Keith Creel

person That's value, create tell I'm It's I'm person I'm a hard, when share on a you great question. you me. also that that but you lost working believes that not a value. And should believes I'll

a model. compensation something we So, as compensation, more done CP implementing we've far are officer as like

they've different the KCS obviously, a had trust. KCS program. in So, The been

organization. that create We're things the all They in those value. couldn't deeper equity, issue going

some the one a fact, CPKC, of our I one, we or enjoy XXX% well. in obviously participate more creating of able purchase The been I to as day and want in share program not was in we're have in announce other more owners KCS participating And employees. to the time. did quite KCS, With not employees, thing former for The we're all XXX% employees we proud program shareholders. announced company. day CP

Canadian program. or share On the in U.S. side CPKC participate the side, could purchase

their XX% went on the side, that. then have in KCS we've So, into seen since for of employees registered that and effect signed XX days, up

think they differently as and So they value. perform I I that should you, they're believe owners. kind behave to going this, differently enjoy owners, they're And the tells if than the create of not value and in

the like, side that's introducing very too incentive something sell the we're CP plan. On sales

sales the out going that. they're going exceed to force be to So, and motivated meet sell doing to their budgets be for handsomely this as go they'll and and product, they're rewarded

all that trying there interests to some to compensation but aligned so we not create employees' shareholders' the sweep at ocean, our motivational get to sure trying slower. we're we're value So, time interests same out bolt our can corners, out make faster are with that creating like the the at not measures CPKC this

Brandon Oglenski

Thank you, Keith.

Keith Creel

Thank you.

Operator

Mehrotra Our Deutsche next with comes question from Bank. Amit

open. Your is line

Amit Mehrotra

us give sense there's year? any and a are new of these of, a lot and parts then synergies up obviously of but Thanks. business to just grain, is growth I to lot of obviously RTM another And year? then which great. this over any Nadeem, the expectations just synergies can couple component moving know around of some volume sense But on RTM of at macro, synergies growth synergies. know, you just I pricing the this you'll a update topic assume component I end a June, there's the pricing and years. a last wins

you market mark synergies would And just where them of give if you. kind us Thank of you so, first a the of wondering you could the sense put to be pricing out? kind if to relative when

Nadeem Velani

Sure.

into we're We're XX I'd then you know, obviously volatile macro say that view now. and our days. incorporating evaluating it's plan as a it's pretty still – been their So, still right

I’ll the the of is give for RTM So, an not going look you happen. me for year rest to to

also of as our update into on this you just Scott more know, forth our the plan. a whiteboard operating at couple we'll And have side. months of details earlier, mentioned and we'll on isn't side. as the Investor and to I then whiteboard think their process and through go we I recall I'd the visibility in we'll It's update process Day revenue say, meaningfully so the

at spent our so week the of sales we've us some are of some look we in and costing opportunities my contracts of planning that inherited. this his some of team financial etcetera that with And team, to revenue and in John front and marketing and some time team,

as So, I just think that's boarding. an point on the white well important

of in couple of outlook of when a get months, like. we back to of the XXXX second So, the maybe you terms sense what we revenue year will a meet for looks in half

what execution. that longer-term At type we'll you outlook same year terms a the X we'll visibility synergy looks that in X time, of of timeframe. also to give view you And in into give like

then Investor So, visibility give I you be Day, term. and going be we've into part come of that near acquisition the big you visibility of we given some it as application there's at the out a to that now. think that out between mentioned to more part synergies John is and our of laid color. the of as and going part more But part

As yes, as outlook. the ago change far acquisition, that And the and it's opportunity, the as as revenue of far overall the should entered process environment, be we certainly years environment pricing meaningfully. from an the pricing X.X

what bigger And than would in I so, to We're the is probably size macro [pie] we've the midst of said but size larger. result in years the challenging a what a of last expect we've going consistently is environment, outlined. of the pie synergies that is the [ph] few

a it take might going bit why a we're on longer as how It to we're to execute that. that's realize give little longer and might going outlook you to well take

Amit Mehrotra

Great.

helpful. you Thank Very very Okay. much.

Operator

America. Ken next comes of with from Our question Bank Hoexter

open. Your line is

Ken Hoexter

fan, Patriot think and the but afternoon maybe CPKC I'm congrats Good not Patriots Rail closing - think certainly on is so I great. beat a Falcon, as taken. but I Hey, the well.

some and the projects SP go can merged, some bit I look came issues, a that Just mean, that that watching those hood, it there through take the remember longer you are maybe projects about this now standstill. little to have network us might longer on under Maybe just might but whether synergies. it's walk guess where afar, you I bigger take you UP and the while, you other don't at there you're the Are major software? a I I asked now And from that almost when a know for through Keith? side. a

Keith Creel

be He's can't Real that. not to turn I'm to what? We you speak can't our over, before commenting. space. Chiefs. We Hey, in know patriots. But I've getting be it resist I to Clements. James got got that I expert

Ken Hoexter

Yorker. I'm a I'm me, Trust Patriot Keith, a fan. not New

James Clements

of is Technology. sure at were said it certainly that approach launched measured we we And one, Thanks, Executive yes, we to Keith. when put going Clement. go everything through Thanks, it before make President going the in to STB James you Vice very Strategic and did that launch a integration, Ken. we It's place. were I'm look Planning and to tools. what the day tested some And important we we

combined integrated understand provided operating mentioned, how network team the that's can that their plan team is We've was have As running step. Keith operational visibility also that we their the And work they the now provided information needed to the entity. entire so to running. the our first and the Mark data. for And for finance do we've and have

as doing platform what systems we're we're big bit SAP, a Day little it about roadmap. longer it's We'll the in well, calculator between, as is timeframe. have in operating example, integrated that one different with Investor what our whether an But of but real will We systems a more at X incremental year releases with have talk tools, integration, isn't we our plus carbon doing today.

in coming as of QX this that year piece. see We one

we map and taking have we made live the the we approach a plan that so So, a to measured and STB. we're very to long promises that comprehensive road up

Ken Hoexter

that, your throughout synergies? them longer that on that now? or might will like I time something just Nadeem know just does to maybe SAP clarify – So of frame some that for be process change

James Clements

not. absolutely No,

we and those team start have to questions the converting so could created, As did Mark the an would into the the talk asking operating we've visibility on side, see. drilling ability example, the that about operation. it you opportunities they down day when one that And

day So, of those the better one them and synergies. ramp they'll tools on given part and better on get and they will we've be just that

Keith Creel

is I view of – going synergies. gave And assessed longer, it year when our when when split a saying the that think that pie I'd to say years. is, just we're clarify, pie a I bigger. said, We we've X did third think going that of Yes. achieve Ken, of to we I'm mean third. get the just kind to we to bigger third consistently to first it's be And the in pie there's this, going we're to we say not we

we're And to that So, this We're way. point, sustainable, risk that an once. trying in not a developing a be X-year to and isn't in approach take going Keith's at This our business the synergies. of extended greater by going take put do best used everything going service a is all story profitable to one a larger story. to industry and be providing going network to and to at we're measured to the do provide on

Ken Hoexter

Keith, for James it. time. Appreciate thanks the and Great.

James Clements

Thanks, Ken.

We have Q&A. call the like allotted turn over reached our time to now would back Creel. for Keith I Mr. to

Keith Creel

joining Well, thanks for us Okay. today.

this. close just me saying Let by

important. We're disclosed XXX just into over. plus combining CP's this years. not XXX beginning. is story two with think The is proud chapters It's KCS year is critically days XX in forever a combined store. I iconic We

together. and been solely think best to and way before. bring I uniquely only never the three at done We that's it. It's nations look

those suggest creating never rail network relevant America done will most create would And the we're to about in I again. nations. it be North

extremely but about forward me look it's sets more that. again, We next a to great Have June. most. the years day. exciting, beyond That in three that are So the talking it what's

Operator

This today's concludes conference call.

You may now disconnect.

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