CP.TO - Earnings call transcript Q1 2024 | Canadian Pacific Railway Limited

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Operator

Good morning. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to CPKC's First Quarter 2021 Earnings Conference Call. The slides accompanying today's call are available at investor.cpkcr.com. [Operator Instructions] I'd now like to introduce Chris de Bruyn, Vice President, Capital Markets, to begin the conference.

Chris de Bruyn

James. you, Thank and everyone, for us joining Good thank today. morning, you

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

quarterly some regular and on. our their discussion to supplemental be revenue addition in note, focus combined financials, operating available QX Please will at of will performance investors.cpkcr.com. Which today's

our Executive In by Executive With followed President me Marketing if you questions Vice Officer; President will Executive Vice Chief our and Operating limit time, here appreciate and Executive is and our today Q&A. President remarks and our formal Officer; Vice Officer. President we'd Mark Nadeem your Financial and one. Velani, Creel, Redd, The be Chief the of Officer; interest Chief Chief Keith Brooks, to John

my is President Keith Mr. CEO, introduce to It and Creel. our pleasure now

Keith Creel

family Foote's morning. extend and Listen, before we CPKC it's only heartfelt get our Good family Jim appropriate and on Thanks, friends. condolences of our the to results, prayers behalf to Chris. think to

railroads worked and memories we man, a dedicated this personally the that to can industry, As to I and serve experiences. of Jim industry. serve him wonderful that for myself to had during many of us a man. I'm the multiple to he lost honor you of going this many people the his you with. cherish the last He in to week, know, the we the have this industry tell Dedicated service was dedicated decades

better. that He there him, companies he his it friends, he served him. he on industry. his loved experiences not are I this things and knew too Jim, The about be can will loved tell will It's forgotten, led you family impact a the left and he have industry. soon. a man his lost are loved of nor undeniable memories that this couple you, and If will nor

the family. and Payers to best, all So condolences. again, his

So with us for that you the to joining on want -- thank call today. let's said, I

get So to our results. we share

to As will, strong enable thinking my comments I always can results I share family want the today. start that railroaders XX,XXX -- we the that of

As aware, last this to spike final anniversary steam you're event. here just our week celebrated launch our of in another we We're today afternoon. historic tour combination. actually all X-year to just Calgary, historic We're this celebrate going

get employees super in exciting results start after to all day X celebrate get do Calgary AGM, and with we So and iconic and our trip across historic to our nations. this share these we

thank operate spend down to City. and So get for we're XX, the going to in XX the to all days, Mexico through way communities the time that and we probably next from Calgary

So launch we the culmination in have I today. been X vision the creation, created this specifically years of with thank employees, enabling that ago the this again, involved

have will I thank of that. you participate So hope that. network this chance a for many And you to across in

the expectations We're we're enabled tough our on delivering this that an I We're new creating relationships the the Mark, progress. it pleased recovered the to a we year create customer with our exceeded the the January, I'm looking QX expanded the team and was we you, earnings Yes, operational and markets an can It's a is and but commitments of over of pleased made results historic that more produced this last and our competition. creating, been provided a at back expanding and quickly, favorite service be in with from new the quarter. tell safe the So only can't strong and we're operations I'd start I combination. We're because to service, efficient bonds that year we RTM you, collaborating, story, during tell delivering have contingently. call. perspective.

So quarter start ratio which core $X.X results, about X% the first revenues versus an an the last X%, bps wind year, which increase X%. produced XX%, of billion, for the the a of Despite the of up of an $X.XX, XX increased specific to operating of EPS volumes is year, was challenging increase quarter. from

the XX%, in on the network the operating the displayed, the challenges the pleased dwell extremely the as the to XX huge true other created resiliency precision and weather gains to team we operating It's Mexico, I'm assets. to key locomotives have been gains down metrics that in productivity, locomotive improving. model. this down strong network made of Car internally the winter park base. with demand. XX% to On metrics. where large that in from productivity. The the carried railroading operating improved serve of We've dwell and per see to fact, across the improved speed quarter The January us power both the improvements allowed Car our and across over and velocity, the bounced Mexico, performance, to credit how team follow momentum with up back many that we network redeploy Mexico been continue as address optimize quarter. a in scheduled productivity we've locomotive demonstrating Several significantly were operating parts improvements we Miles pronounced during cars of to able stronger-than-expected Day, online the our in they've able asset year-over-year. Active We've quarter a

these a PSR when an all-time at we're Mexico, delivering said better come in I time highly at GTM performance. improvements fact, as In think importantly, CPKC Prime. And to continue it's

a John as commitments change would impact like seen of have and changed, I'd leadership the his in contributions made had. his to Again, John in the So we that March, you CPKC. to management to from releasing thank leadership our for team Orr he

better KCS the to was deep company an it challenge railroaders talented leave as and trust team. leader, extremely its departure the our in a CPKC of month. on until We're John have fortunate that. in well last service I that and to As did to PSR did while the your just as He bench believe the it's

So one, the but John depth of possible the teams actually not made a CPKC. the by easy to the was have it release we decision and an strength was

it The that into sense plan team was always COO for Mexican simply the to have to Mark performance with our strong the accelerate in I've eventually as that mentioned, Mexico operations made a that report experienced and place, plan. just we in

the customer a entire operations to drive our continuing missed to departure, haven't We're they to credit beat. So customers. improvements execute, since team provide great service John's and

start to start the had performance in as options so industry we've new and along network happy the the relevant closing, rail to -- uniting the service efficient with safe competition continent, We're I'm delivering poised and in the in far in to to So our North with America well. most be quarter happy I'm adding second that our year a customers.

hand numbers the Nadeem Mark performance. the the up So speak said, Over bring to you, operating going on to it is close, markets and we it to over to I'm with then John that elaborating to before some to open questions. will to going color Mark. to

Mark Redd

right. All

career a executing for this CPKC. quarter. been like I the and time morning. good the I'd like extremely this this their work to at talent to of year. Mexico at I'm great Throughout has And So spent this Keith, were quarter. hard at spent them well. deal was level. recognize for network, produced recognize terminal terminal XXXX on time I thank you, their or They This outstanding service. spent as and time to operating having very terminal and extremely team the level dedication in delivering continued for of the terminal, my the achievement. Also of Freeport I'd pleased named I'm earlier CPKC quarter, thank in of low team pleased the proud high safe here with

experienced have as Keith a And We drive to strong team continuing improvements. noted we're strong dedicated sustainable had railroaders.

also a high up extended January, GTMs a is full XX% network. Now in fluid recovery posting demonstrates extreme and operating very looking our efforts. the the XX% weather at while Western morning, collective Mexico, up this record and corridor looking average the speed in locomotive cold year-over-year all an down, to thanks made quick dwell volumes We level of strong in the serving quarter, X%, metrics. And at productivity strong team's metrics train

earlier the Our due weather to fuel but in -- efficiency quarter in year. I the throughout the quarter, the improve X%, declined largely this to expect

is still leading looking So X% year at morning, at the from FRA X.XX, the at FRA safety accident X year-over-year train industry X.XX, personal the X.XX%. up ago. this injury up

improvement for safety strive expected journey. we ranging While net and the quarter, each

and Notably, Home we CPKC's we've Mexico safety building which culture, Safe as is the Our to KCS across network, on safety focus so remains industry-leading do alliance out well. rolled record. in key to continue maintaining an

advancing we to we're initiatives as of So have Mexico, I and improve productivity some capacity. the at key identified year look last that

create are success far, network our parts Yard. we we we're can We streamlining opportunities on for and operations of more both other use but up down able at operations more is also an finding to the in so during cycle can and the area [indiscernible] where commodities load. and we've freeing This locomotives streamline so equipment to We're seen we improving also synergies shut times, handle operations and switching were focused customers. quarter,

part we in focused In on $XXX our sidings of help capital, quarter, million also more -- capital at safety. and capacity as [indiscernible] Looking to we're fluidity. serviced merger remain the commitment. Mexico plan to sites service X in growth We've with new and capital the

at be the out closed rig the this to we at on If in We end completed look Laredo by remain X% year. target the the point. of

in summary, excellence. entire All the I'll in good and resource will and the to and pass place growth. And shape. had an with asset improvement John. it and generate network network. In year the team further We're over providing restarts is support service line-focusing, from that, growth of we projects to industry-leading these a perspective, is the the To in great

John Brooks

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

with from on of built to so momentum. I'm weather we've far started and are And QX. all of have year, strong, So despite and with we had gaining the early we momentum as see the the opportunities the a the some made extremely belt, full challenges we start company our combined progress We've still us. ahead pleased under I the our year year

delivering on headwind, was X%, RTM revenue of combined slightly the with to X% RTMs. we mix. longer unlocking RTM per network growth advantage Now basis, negative length down carloads RTM to franchise, of along I to looking haul quarter by ahead in the is the take on at and seamless a lag the up expect freight length strong provided This haul for This of average with offset fuel January. Since continue on X% of of is X%, to RTMs shippers growth. outlook a year-over-year the slightly our year. of X% down in delivered versus Carloads result were X market fully flat on quarter we that our a growth flat results country as pricing last

we've further capacity intermodal up short-haul the addition, business off our lower for lanes. growth strategic border, Mexico shift also long-haul opening In and seen our running network margin between in

our CPKC in had the Now adjusted to taking look closer FX -- I'll a quarter at results combination performance, occurred speak the versus first on XXXX. a revenue comparison

Starting XX% up X% and X% U.S. year. grew with over revenues grain bulk, prior grain growth. were RTM on volumes

corn Our which CPKC. along Alberta, wheat to is more from soybeans and area to Mexico, shipments and a with export franchise P&W new of is growth strong shipments benefiting for of the

of Volumes year-over-year. a draw XX% down as decreased were result weaker XXXX volumes our territory. harvest a grain in Canadian

on-farm came remain fall still better they peak. in stronger given as softer the than shipping supplies anticipated However, in

this this the So until in while we we compares headwind year-over-year should the franchise is the adding in grain a business. overall is volumes resiliency our may to note still new And our how example we summer, Canadian combined essentially see of to headwind. performance crop. better-than-expected also book grain I U.S. of Canadian be grain within offset great get network a strong expect that this

growth driven volume slow a and January, and Moving start ended rebounded on quarter very were X% X% on by Despite in solid up we a export growth. Revenues shipments. with domestic the potash. to quickly

from growth demand as December and XXXX We April from positioned potash to the lap solid year. steady, Canpotex are outage occurred we their last in comps at Portland of that for well remained terminal

impacted while natural for and and coal. revenue U.S. January production prices X%. demand gas negatively Coal in Cold declined exports volume lower weakened weather tech

in We QX. tech as claw tonnage with look move that to we expect run a didn't good back

resulting by Now moving we from volume plastics. the Plastics the multiple DRU revenue on volume offset to X%. by outages faced, merchandise. customer higher Energy strength was and in quarter The growth This fuel partially Chemicals driven cold shipments grew was oil, and weather.

markets about are diesel Looking Coast wins portfolio, and plastics, particularly refined connect we the in synergies in new as Alberta we with this the we are fuels Mexico. and renewable at excited Gulf that capturing, the between

now on are Looking gains, set facilities at the forward, synergy up our we of and solid stabilized customer a ramp-up ECP. for production with our ongoing year network in

down on For X% volumes. flat revenues were Products Forest

Forest economic record face, conversions broader Products quarter space. the strong by solutions market. in in producers the haul headwinds the line driven volumes were we flat and synergy despite with all softening We demand had with the strong a in paper connecting Canadian new lumber Texas

from down Basins. Minerals volume our sand impacted Metals, decline. the This on X% by The and partially X% by weakness the steel was Volumes in quarter frac was offset Consumer were demand and Products a ongoing revenue Bakken Permian production. to strong in largely

at and resolved, for Dallas Texas opening availability. X% record will our expectations came auto market, that automotive before. well built XX%. the that located vehicles accelerate compound to growth also and they've I issues handle continue seen below production excited I'm the capacity them very terminal. numerous the rest out tenant, up June year. compound to in not of an through due and was General report the those Automotive model and up our vehicles unlocks by our to I'm compound top-selling anchor produced revenues certainty chain parts giving the is new quality never our performance, the With to sold entirely and pleased. largely with within record see new expect new Results reliability proud Wylie we volumes this holds service, OEMs for of the have our another supply to Despite part quarter is including Motors. This like QX of many this and largely playbook in in

ports volume on Lazaro. On the some red the after from and Vancouver disruptions. Starting looming both X% was growth Strength through potential a X% labor Intermodal. intermodal International last of side, East strong stoppage Volumes through Coast return growth. revenue and impacts volumes up and work the on sea was were down with summer XX% by the driven Vancouver of

worked temporary drive with and volumes stronger-than-forecasted volume. customers these port, manage congestion some Although the our did the at this to excess successfully port we

through of year-over-year. terminal Lazaro We the Cardenas. grew are also by over encouraged the Through February, at TEUs by ongoing trends XX% Port this

volumes intermodal, domestic In were flat quarter. this

across service cross-border extremely And in business. Express the over well volumes short-haul with safe, Laredo. Midwest to by service a this weekly Mexico service reliable we Growth shift border Our since in perform offset have truck-like flagship continues XX%. seen on the February, has grow helped

density and ] we reefer product We pending between with our Mexico of U.S. approval, CSX the this year [ up start into and operations STB as to from Mexico expect traffic build volumes on our we and Texas Southeast grow Schneider the U.S. and through

QX. volumes QX to closing, in in in off So start good expected than came and a better were

we've months, excluding each month, January. year-over-year X volume the past at seen in Looking growth

CPKC. I'm we grain, we that, what synergies, for year combined with it company, for continued to accomplished I'll of Nadeem. the very unique a approach on and look you I to have have continue progress with as line our forward. With self-help sight macro as environment, to remains forward headwind cautious pricing we our we pleased pass first and Canadian go to sharing a opportunity be opportunities still While from a and a disciplined

Nadeem Velani

right. All good Thanks, morning. John, and

at looking So numbers. the

adjusted per operating $X.XX, adjusted share operating ratio the was year-over-year. share combined Our XX.X% X% XX%. and up core came was and reported at Earnings in was earnings ratio core $X.XX, combined per

is the last prepared the adjusted quarter, exclude related costs, D&A, on core to interest acquisition remarks. acquisition-related with will these quarter, to the our for and impact decline. Similar that illustrate January As continue gradually combined KCS for the effects closed XXXX. purchase in X, the expense of noncash operating primarily combined operating expenses shared of I results a these the to acquisition first speak what along merger, FX accounting to earnings which adjusted reminder, we

operating Reported Slide on on a focus where Now and provided at Slide my comments. expenses I combined look XX, income closer taking XX is operating our statement. expense will

]. was by wage course price compensation. adjustments, the share $XXX XX a and of or million $XX stock-based on Comp with was inflation, driven point headwind $X.XX the quarter. Stock increase benefits by comp over increase along The Excluding expense [ benefit million headwind driven and in the amounted a to from basis [indiscernible].

rate of higher $X million at discount We current also saw plan a to XXXX. pension year-end our lower from costs DB due service

fuel in to Looking of the Overall to decline combined driven or count price to we price. OR. operating down by to head the was decline $XXX an in the million, million was point amounted the to fuel flat at drag roughly headwind on quarter. basis earnings a This rest X% net expense be well continue a quarter. Or to $XX X%, $XX million basis. Fuel to $X.XX XXXX, adjusted XX the impact on year-over-year income was about average primarily as core expect

expense in quarter as was of X%. driven across the by timing down track Materials legacy maintenance was KCS aligned. are schedules locomotive network activity and The the decline and CP primarily legacy

noncompetition CAD bad cost cost service million. and partially the fee waiver X% from costs, other terminal combined premiums was higher expense of by up higher Equipment with increase X%, was increase a were $XX a This year-over-year, an to longer The shipped due or cycle onetime up a velocity. The along million recognition insurance offset from increase and in times XX depreciation and higher hire savings and CPKC debt network up intermodal of length haul. Purchased XXXX of resulting synergy efficiency as receivable lane increased inflation rents asset base. was higher services a from partially payment XX%. was offset car the improved expense by were

the Other headwind Railway. on Canal XXXX XX. was the million, and was periodic partially to the of components earnings compared $X the million, net discount equity container income benefits. increased the impact below $XX to Slide of lower Other and comp settled foreign reflecting offsetting reflecting through from currency hedges line rate Moving volumes higher recovery benefit and Panama

$XXX rate expense $XXX debt a a was The million interest We basis. combined basis. on the decline balance. be the by Net adjusted adjusted tax for approximately or effective Income core was was tax year. reduced an on or core $XXX million million expense CPKC to $XXX million driven expect still adjusted XX%

XX. to Turning Slide

We provided and in activities with growth Capital invest XXXX. $X.XXX of and QX. $XXX generating cash by priority. billion approximately billion line $X.XX strong our flow we are this in in remain operating plan reinvested million, cash to with our investments safety quarter, And

As we point stable year. CPKC's during outlook We despite strategic growth reach in or we XXXX Moody's safety that merger our earlier weather very $XXX that XXXX, ahead continue repay combined efficiently enabled. We and will Mark are also report debt. investments has the to the fourth absorbing continue rating discussed, credit million in still upgraded review from late adjusted evaluate returns I'm of to the capacity, to in which communicated expect in the came early cash that of in to generated positive. In call quarter quarter pleased free expectations with positioning we Board. making and network this shareholder the target our leverage the at flow challenges in to our on quarter, TMs quarter,

am we to the pass a we start of lower here. from to key me resilient, as our on were With momentum year, benefit inflation structure. and for rest the up progress margin let and with We're that, the disciplined also of This through year. I gaining we Our environment and improvement the us to it well operations pleased over Keith. pricing network. across expect on move investments seeing growth cost sets continue made our the

Keith Creel

Thanks, guys.

up, it open operator, Let's questions. for

Operator

from Instructions] Shanker Your Stanley. with [Operator Ravi first question Morgan comes

Keith Creel

right, we All should next go operator, to question. the

Unknown Executive

next the question, go Let's to operator, please.

Operator

line your Chappell open. is Mr.

Jonathan Chappell

and relates of real we've I line means are guess, on yet? you that. from seen as truck? to what as guess imports see that John reasons, we Apicore. it won't that opportunity it is created, new or new for a to big continue the Lazaro seeing I late. what in that those Mark The But you real services get up? means it open you've guess Chinese impact from trade a vary acceleration me. John, to moving mostly New Is that that's of And to any Mexico and you Chappell into I

John Brooks

Thanks, John. This John. Yes. is

trend steady last a has growth saw starting the half year, of back Lazaro platform we that So at really continued. and

through and have then now, in efforts is to a out volume all I we efforts rail. you, up into we're the the truck John, tell do port the said least And and I that's can is, mix, Michoacán good, cross-border. more good but state and pretty that down the April. It continued was appreciate That think of a Mark of provide principally, Lazaro. I March product between here the a right of continued and at up there team we improving intra-Mexico, But and XX%. well, at primarily of product Mexico. I February, safe

we I volume density see So, And on see of into exciting this half we as you'll build that we get into continue again, a to believe then business begin the that the Gulf second sort of there into Which, to as into into itself. good that see XXXX and part Texas opportunity do of that chapter our move cross-border we'll build volume. to year I and up market. believe grow the

Mark Redd

and certainly at so And capacity, John, John, can move me business we've room people Lazaro and to we locomotives I would to Mark. each and we just but need close communication each pretty we other, got add move other. place, stay with Thanks, we've that whatever got in

Operator

question Your with next JPMorgan. Brian from comes Ossenbeck

Brian Ossenbeck

get on your night. comments last There CN to are the by the some wanted TCRC latest negotiation. made thoughts with Keith, union I just

unions, I at the being. pushing least least in quite think back from on on offering Just that time because -- from agreement few sounds like an and obviously, our it least it hourly perspective there's parts moving want standpoint, to get are at to of potentially at the a terms your changing

if Texas, approval. So to Southeast the you the that. And then, thoughts to through could your John, get I related into what you the meant that Speedway? the wanted and clarify Mexico Is just about MB&R on pending STB

Keith Creel

start the a I when that we the we the it that's decision based month. ruling that piece it we expect new in over of the and Class following Speedway in and comes, Brian, near the application totally, far or next the partnership today come, I Speedway it as does on it with over NS don't when month's of operation create anticipate and provide of is, the to represents competition alternative if railway and we I'll that CSX to just facts favorable the the are to future. prepared time complement creates, service of as within is the to and and that ready it know what work a STB, to take today. But the exactly a notice start with hopefully, the happens month very the

we've excitement to for We lot. say excited were with TCRC TCRC an see I long positions with a months, way this future I'll very them expectations. have I'm can changed So of The negotiating you not conciliation. not tempered very, We ago. the about file TCRC with that we it, the The for week. I the now were were I'm forced that. or optimist. the tell been realist. maybe a

have table. options We X on the

concession away home exchange That's for of. benefit and from change, change, held a asking one, other for with to fair unions only realized a which rule deal pay. that only We relative what status a terminal the we're [ tried to pay employees work I have increases, the ] call, and what other wage equitable a, would not call, in quo I have

change. I you what want that, a that able tell is progressive life. of this in quality leaders our wins, assessment, that deal. the They employee to expectations. it's better at in to certainly The And see benefit and ability it the customer it, are of the hourly point, wins, in that it. be turn, and second that provide willing scenario, addresses wages, is a that term the The happened. my want And deal, win-win agreement. progressive conditions takes wins, want to in They wisdom takes Those need. a hourly employee employees which found is understandable. really but not higher can has hourly in retention It our

I'm but again, Now realistic. be optimistic going to

That place -- where to that lead So a weekend the May. of does us? us third leads

XX kind but those uniquely also the the only is And you for operate pass-through same dispatchers. the with dispatch worst in those Same unique occur, same trains work. downtown dispatch homes have they situation of from Metrolinx, we within the the XXth trains come so time go Not reach hopeful have strike to freight employees be in plan Vancouver, as passengers. not actually [ get to facing XXXX. the our which to deadline is the that core thing to line, city is May a that the agreement, were folks notice into best, an one, rail the across facing this well. And be in at hours, Toronto May to existence. or running able going And a that well in ] would move our make It's Montreal drop dispatch network. be lockout sure would that it what situation obviously as If If Vancouver to only we to is CN if at about I'm our earliest trains In but -- on we're with trains you for network. trains dead notice fact, but our XX get also to their The that the to we're strike could a of point, XXXX don't, we which be and we'll don't that the optimistic the in.

of going time damaging. we're good employees, certainly avoided. the for the itself I've our of a So I've It's Canada. as and told the that But going if and this in uncertainty of to our country at told a that not is I have be as can to is truly told hope come and government, something customers I've strike,

For the of a demand be and if occur to the to occur. worst country for year absolute prolonged, later it occur the greater. have must our in time service in when for needs is have it the when it for it the we coming to never been That harvest

many, be as will prepared can't hope from not is, but railroad again our the I'm shareholders, customers, of negotiated That's a experience, bad needs and be at I very it not hopeful, at my is and table that balance balance and came have it We've TCRC in realistic a historically. just been this of our of having times, we that we I got as we So how negotiated we I'll our to view, serious believe, the unfortunate it, this given agreements negotiating with avoid time. this the can fellow balance because the and will event to employees, that the that do many deal.

been remain just Just get with leadership able hasn't with unfortunately, yet. it can to there happened again, change. that haven't group. And I'll strong but we this optimistic, I'm hoping

Operator

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

Walter Spracklin

a XX%. benefit coming what's to And Macro back you that. Mexico, perhaps bit obviously, January. would your we're many you happening John, stride. guidance. its perspective Lazaro of a in go surge April the QX significantly in little we remarks, in That's expected. containers I you're Vancouver, to When came volume your into macro than that prepared going number. better here up not you indicated part, better is wanted poised into think catching from Cardenas outlook to in and I May than mentioned look it's I a a from say were trends. small at In

so volume many when guidance opportunity. kind So also single-digit your at look just and positive but of more company-specific importantly, you macro, low inflecting curious,

where to do as digit? that frame Or Is that kind just single to low being curious of XXXX? you overly just here for see Just it conservative? upside guidance you

Keith Creel

The you very coming. in responsibly synergies think is we're running markets are I uncertainties there. some being are observations. is it up new network out some frame made The the conservative. And There's there, well. developed. Walter, place. being demand a good Certainly, as I'd The good

also which to we very and half. got ahead. have I macro don't to a assumptions yet unique We've in got responsibility in a going the very a strike. But some know second that, have assumptions. a union potential We is conservative are what the do opportunity. We've story look unique

there's So then if we it upside. than some does assume, better sure, what

we I'd isn't or all, normal If if harvest what got we have grain do in long a bumper we at crop, face don't looking as as a a it'd or upside. we're a strike a at. Those at have, where you, we've we drought? might have clear, be those the levers think then situation sure, position are responsibly become a upside. have Do tell to we strike is some we really potential once yes. And be again, then that the

Walter, a in think This a in that second do our make close jobs you're we're yes, what other We've and place. just come to stay a And get end, talked come you, side. team I'll prepared potential is be outcomes we're for this hard seeing I on in saying to the prepare we'll any in very, the guess out the conservative I summer, this quarter, And true. position sure end the responsibly those good we've place. we is of and these for of position better worked strong come we and then, to about. of the until to going And exciting. challenges us It's ahead very of have tell

Operator

Fadi next Your from comes with question BMO Chamoun Markets. Capital

Fadi Chamoun

off the on follow-up move of what the I'm the strong QX gauge to for starting potentially second one could framework question way volume. grain bit a wind In we're I second right as kind you quarter just give volume. us there a Maybe -- some of kind quarter. Yes. for thinking quarter, into Is little down we the on mean,

my really, about use with kind to contract or of truck CP? to improvement mean, on with what on triggered the in question And I of are ? there you for is renewals that that this And main service drive time of level in price quite is are you're this service-related will the markets. that kind realize terms some changes of [indiscernible] side, pricing you can something basis a year good, the take thinking merger But into now opportunity competing the pricing you're maybe unless environment pricing

Keith Creel

proposition price pricing. in level let going a for markets customer. marketplace. we're Fadi, win in -- of I'm it But to customers a you the There's this of value There's it's the service, the the The valued me color to run company, allows conceptually, their not service. let for me selling our our because John get worth railroad, Let of in the reliability railroad, value to a into the capacity comes on it It's tell have we commodity. way the when it. something we

story. to valuable And very proposition. and our going unique we as It's job we long our never that's do have as providing to service. So a a apologize well, always value be

we're way. the this I On an to quarter, most, the starting -- what's carloads, side, -- RTMs. of it ahead on we're in looked for I morning, matters we're But X% and again, at over responsible, X% strike, what a We're looking somewhere potential basis, up -- the that's the around strong. modeling not for RTM quarter. again it's conservative X% volume at X% very we're think really

we're again, some right that. where well guidance about those our But to will And then achieve and happen, to talked to I've change. we're if that be sticking on that's already things of track able now, don't

So color you little a want do John, provide on the price? to

John Brooks

Yes.

been certainly in the May get we days particularly some June just volume. and cautious XX that better little quarter we're responsibly in exactly, But But right. It hopefully, definitely a or June. looming, other terms to that's there's going of things looking in the May so. Certainly, So has on at and you're upside . The terms last Fadi, strike of grain with stay front. business, the with we we here if fall we're summer. decent grain see, going weeks. last pretty here get and might the the of May actually to off. couple a in that push this rains and expect in all seeding see companies pretty I that early to that optimistic met into And they're might I'm

that certainly, there. And So closely. we're provide some that could upside watching

held and delivered top in 'XX. carried pricing. our to we about the QX. I'm super the very in You saw last continue there, be move forward. with in as asked that we It's pleased efforts We we'll and end we performed the on coming. quarter And with I half execution disciplined 'XX. into discipline it of the have the

I and been had previously said there were that a up half the number renewal repriced for of coming agreements first we're this maybe legacy year. of hadn't KCS

what the been making said, been we're for in the those. those on context focused on Keith getting service that sure of We've value capacity the we've and provide. focused So we

that So QX. I here expect in to continue

If area, we've in were domestic the would intermodal X where I to call softness front. maybe that seen be out versus others

I'm volumes seen truck pretty really express that's wins. pleased on start also a there to volume, with in some the our obvious, second signs train. we've expected be Mexico I fully our had and how some that to year the of the in life building of of push grow think there But I we've here slugfest nice Midwest the as really half terms market overcapacity there. towards challenges might of relative though, the we year. some out

year, if or of there So we as -- keep half that sorry. look might QX be second to the the we upside Again, going. can trajectory

Operator

with Your from ahead. Wolfe Scott next comes question Research. go Please Group

Unknown Executive

question. Operator please to next the go

Operator

will come Ken with from Hoexter of Next question America. Bank

Ken Hoexter

Jim question team, Keith our and enjoyed Great. Scott's as I'll discussions. take thoughts always great well. on

ratio talk you competition? level? put some quick. then you the touched progress talk Is So Keith Are the you that would to dollars sub-XX into you up, there I And you sequential performance operating guess, the can quarter? out second does this point? perhaps, there at -- thoughts that about set normal as synergy talk Can The intermodal left. short-haul that targets? well. noted Nadeem, on real about there John, or lanes And from you can increased

Keith Creel

exactly would to exited at Ken. revenue on we -- be. said million. $XXX synergy the On we the double said the we're it We We're synergy side. We where going question,

good So the we're cost synergy track position. in side. on certainly a for Same

are synergies in said, little bit we not a So moving what line ahead. if with

space. pleased very we're in So that

John Brooks

that it's Mexico of lot at our it short-haul the the you, On we're completely stuff principally in between that our It with certainly border. capacity crossing. and a business ran terminals railroad. be fine quite To stations border candid stuff, our it's Mexico in and exiting consumed honestly, Ken, with

utilizing our connection fact of I seamless talked our into has being the the capacity has So grow haul haul. frankly lot and ability XX%. Midwest average a year-over-year, the ride with premium intermodal length up upper just average up over of into that I traffic X% -- that want our we're of moved us length the a think for long the customers the to up opened is the Canada. And up border about to that haul that's the FXE at

expect that continue. I So trend to

Keith Creel

that proposition good it's into right thing. bad not a He's model, Ken, a value thing,

Nadeem Velani

And year-over-year Ken, we'll obviously see the and sequential in improvement OR improvements.

be you We happens QX we I'd grain that grain about at the that to say situation. a might giving of impact number, on see depends volumes that So depends some what it's QX out going not decline in start I'm just the of that -- place, give going labor to somewhat the year-over-year say I'd you -- to Canada seeding to grain depends. improvements we we'll number, see running and improvement. in and it as start in takes so a Canada. But continue talked

Operator

Raymond Hansen comes Your with James. from next Steve question

Steven Hansen

haul on extend are this the haul to the commentary longevity that it's presume the you broader John, increase, to But because the but an length of issue being? of circle of intermodal, want the just maybe wanted Gulf I quite in not of that length do trend? durability to I comment broader ECP around been on Edmonton volumes in length. just as And market just back it's of well. any that helping these

John Brooks

Yes, Steve.

got maybe -- more It I like strength layered business. that, this ECP short area -- strength spoke potash, in a saw in accented in coal decline alluded longer-haul the synergies, looks also into this We haul a on we Alberta shifted business, MMX that just the largely grain, the plus those just what the about moderate little you do in and with on expect in railroad away So the which future. to of even growth quite anticipated. that of we mix to and some Gulf railroad. very But domestic and the top the a was in our believe is down strength the from certainly, to, normalize. the I of than progression that in volumes international, in definitely Intermodal short-haul seeing interesting QX. U.S. we're QX is natural the Mexico. I

outperformed, our business we fall other because think I a But as did really in and you, wins guys and automotive I of the you we I'll very remind we about all is, The short will strong expectations. QX set quarter. just thing point demand. it the have And forecasted some think certainly, of it's with record pent-up important out, mix that a

high So length seeing per a in RTM haul materialize traffic QX we're and in sense didn't there of of lot QX. up certainly there that good was ramp that here

Keith Creel

into opening supply bit that, of to add we're stop fully When Chicago. it differently. I going today, is going think Robstown length to In That end don't links We've built the I I at Dallas, automotive quarter color perhaps Mexico we'll a vehicles create going out Texas to are Canada. Laredo got going John, for that's of going you to produced It's go Ontario going are that a to we've that St. and to chain. Wylie bit to haul be normalized, linked our think I'll to terminal allow currently of shipped be Paul empty and closed-loop CPKC. normalize Minneapolis, because little St. supply little down of out or today to Paul until June. in end haul the say going June, see to and up to

that offers length multiple of itself, unit improvements fall. incremental a to get built and X-, that one not significant, business to it So X-year X-, chapter overnight. It's of out accretive in driving again, is X-, thing We're story. think, that plan, this going I a

Operator

Research. Your next question comes Group with from Scott Wolfe

Scott Group

Sorry about hear you that earlier. Can guys me?

Keith Creel

Absolutely.

Scott Group

as just are feel going I still strike strike. I or do better story and potential almost your earnings growth confident of differently, revenues terms -- QX, guidance then look double-digit get I like if up it normal the X%, short-lived that doing like really picture, flat. do the point income assumes forward, growth. this uncertainty, guess of a do but feels to have meaningful strike, strike It bigger -- showing maybe have like earnings start we some operating significant Like referring up know about to a said you keep we guys in you sort year? at a when the So . And going to if we going now we're is at like feels where growth, improvements -- in you revenue is Keith, model think margin

of the and way going it's sort in about model? that there Is we're to it right to now we're that up all the think start showing

Keith Creel

point. at an I inflection think we're

So this you've starts accurately. as think got to thing Scott, out, I that play captured

Nadeem Velani

we if year. hit have Scott, for kind double-digit EPS strike that still And of extended. our the guidance we a that's not can I'm comfortable

Operator

with Your UBS. Wadewitz next Tom from question comes

Thomas Wadewitz

growth volume? in being do do of Yes. that get I on approval you've lot goes is from to things -- new How think asked lot of kind kind think SDB new new the service kind the about new as of guess from it origination Or Norfolk think about of mentioned on. connectivity when you that you -- you that gives you a of get you you going of with things got drivers, some service or a of points you would CSX? Schneider, to a

with some there's to we Orr how got guess the that John you -- noise I obviously, leaving. you do the Or think or concessions agreement on related have about going

And you that if give and know comments and how might new Speedway how Meridian Mexico much shifting of business? on of don't think end being opportunity? do much some you on kind can kind up the I broader is opportunity So

Keith Creel

Okay. Thanks.

done noise opportunity unfettered compete any, nominal. in NS to partnership dispute CSX. with day, is about Let nothing. partnership much the me the agreement table. This issues right is over share there's Speedway that. Meridian be off the for the If We're this say end It's going just it isn't this. about compete about we've At to might have were the that of shift. All do to to all take

Southeast CSX's route. It opens We've within new that has them to But in they offer markets is can serve. a in competition investment It's situations overlapping an that growth. and for they're got here with that perhaps NS, about no opportunity. what some service customer customers alternative lanes And the markets both competition There's conversely, wins. this up The can off. worse X enabling we both uniquely choice, wins, railroads. partner create NS where

Meridian I-XX truck. the threat truck business. That's true runs competing That's is we're This from. where the that truly in competitive that to to is unless against. going going where only to be compete parallel competition to growth It's afraid Speedway come that you're this that is The is. the

about So much any -- nothing. do it's and again, to

I win-win is a think situation. this

been the I'll with in our loser NS ripe some agreement. our the the only dispute again, that close have And perhaps fighting behalf for other would over very dispute saying on eliminated with and are this of considerations that those lorries were

said to anybody what And wants exactly we're for saying. the we listen, to NS the if look see with nothing. and see you'll STB, that It's the And see is about what much do it. at the is. truth in what exactly Go facts has truth the agreement, fact, yourself filed exactly

and over to be. great let's That's and being NS the great CSX. with partners with get to intention Let's partners our and this, what competing being get is

John Brooks

untapped, on a focused non-intermodal on. Dallas shift. to we're Texas And the lane Wylie, both great opportunity NS got focus. a out open that truck see add at I that lane with would in a -- frankly, we've Mexico that I going think of And development, growth -- I comments, and that business is Tom, CSX. or terminal the story. we've going The are It's carload to got is development those there is just market, in markets significant up automotive, transload on the don't Keith's is either that

see been that irons additive. it fire had We're And part I this we lane. And the as the growing as bring kind reason, we've whatever focus. sales all and never shifting of that level just intense the There's of so frankly, to approach how in grow of portfolio. to for of we that other will many areas now

Keith Creel

folks creating. the this that's partnership say excited when partnership exceed to partnering that Schneider, same this I We're we the talk would with And too. or we're grow about I we're allowing great gateway super MMX meet to opportunity right going about us services, new think,

Thomas Wadewitz

you is Mexico brief new origination? going origination? volume the think follow-up. Or Texas CSX Dallas Maybe more one just of more Do origination it's be with is or to business

John Brooks

certainly is Well, that there truck. tough type rates. lot right a market Tom, -- Texas, it's Atlanta know, is extremely traffic, And now as and you truck the of with spot capacity

capacity. speaking, it. So might competitive, going that bigger fit find it's that pay for and are intermodal and it's market, we're highly our say, put hard slightly me those and willing percentage type for maybe have a servicing customers be that I to but commodities to those on a to to broadly would model

great of years next We've leverage over of that will service going X significant Mark of team you my the is growth down I And U.S. volume length development CSX and can right providing to X focus the into marketplace. over and fit tell in going on That's now we haul. We where Mexico. industrial down a kind team's can the opportunities generate are focus be got can in XX Southeast sort represent with that projects Mexico. service and NS my that intermodal to wheelhouse in with the of active right that in all into that will

Keith Creel

in plants other the are being complementary CSX. and we'll of piece the that development, the that think the developed automotive soon open I this book is case, specifically, all that on

to a Southeast that good have moved environment opportunities, right So Mexico, carloads all . are of the from lane, are that perhaps story. competition they're are that as This finished are vehicles Mexico for produced now. , get into Southeast wins of where parts is between parts Those today. Dallas takes potential Southeast markets those produced supply vehicles chains able moving markets. that wins. to get rail for are the Glovis the ecosystem us thousands wins, for established, being going finished on railcar loads to of highway. the There that The the those that a That ripe and be competitive from

Operator

Desjardins Securities. Benoit will Poirier Your next question from Bank with come

Benoit Poirier

Mexican volume that U.S. with a back just bypassing question Just to It at I'm seen it momentum there's tariffs respect with lot much the previous the increase apply in come on that Mexico. goods. a the to looks the with there's too also announced XX% We've on Lazaro respect like to, that China ago of driver stuff the obviously, that sending volume. some overall wondering, increase. imported not how in some it is would government long is

protect of kind and to want they the economy. the Mexican U.S. So

it's just of St. wondering you kind issues? keep Just terms diversion, And something could of the on seen mind. would some whether And you great. be the the have cargo to in if of in that on give labor update John, an back

John Brooks

Yes.

are has we're opportunity Panama our -- frankly, of to lines of those believe -- of the to Mexico does alternative CPKC coming relationship South with through the freight So matter some and whether looming give as hard. that's something all I presents have into as doubling I the that business Maersk's a a the to Vancouver I undocked Benoit, imports to and at think not today. But to Maersk surge a as going Coast fact shippers because companies. the it relative can do We with Lazaro, I'm beyond well. think it Chinese West their And Coast formation story. an in and the part And at versus or American California partner, Gemini with and become again, steamship frankly, on that the low in the Benoit, option. looking has that terms and alternative. recognizing of Transpacific selling I of look you own XXXX, just believe seen the not frankly, Hapag-Lloyd, out another maybe government managing and freight, in their think, Lazaro tremendous going of an East Lazaro announcement complement production. we capacity speculate of Canal? Mexican is . And the capacity And is some

in John St. and here moderated volumes sort actually lately. our say I'd settled of have

seeing impacts is East I in facing some to trade think the guess, the port. imports that are we that Coast world challenges some I of in relative

St. the of watching a terms being those topical there. close to lines get an in if, in we're said, we going strike being have a the of at place fact, potential fact, John as take that labor East Now the I Montreal keeping what's we were disruption those steamship both do Port on U.S. in And of think alternative with if, -- area. disruptions both in stories Coast, of that fall

Operator

Ravi Your with question comes Shanker Morgan next from Stanley.

Unknown Analyst

me for This Apologies is now? Can on you Christine earlier. guys Ravi. for hear

Unknown Executive

can. we Yes,

Unknown Analyst

that the felt Great. talk Maybe billion may At $X back, the you have you converting to very idiosyncratic of Investor taking of guidance Day, step a guys pipeline about but pipeline. of the guys are longer-term still outlined. it feel like does, having and I particularly around the success it conversion does want the definitely macro kind disguising be some

you backdrop long-term and that out the guidance, pipeline? potential kind the maybe you terms supportive So in just how can feel be meeting parse much idiosyncratic of versus remind of the us full maybe of macro to unlocking more is

John Brooks

just comments a on couple there. Maybe of

laid terms those all others. say Investor in than expectations of Day, may delivering little In my I -- out of we're in a categories. Certainly, on what would quicker we ahead of frankly, plan terms on some be

we has Keith And for in network this model areas. see opportunities. primary Lazaro. of bit back the laid closed-loop and little of cross-border franchise that. about little say terms in of that that in example XXXX that automotive exiting pretty development would with more is and year a million out OEMs adamant Day rate. say around story really a a of and spoke would that we provides ahead put do opportunity confident remain frankly, the Investor the itself maybe area. I I of area of finishing I line I the very as $XXX XXXX. were the that about more us a revenue maybe at We'll run said, clear a in XXXX pull-ahead even being that this But benefits that talking what in half double just those will presented maybe right As being at or that

out intermodal conducive you around about products type truck think I if the macro, right. is some call your not and the particularly being supportive very of think maybe

We're the to get trying upside what we not the create macro it's product. Control to going about worry a to that. tailwind, can control, story. And provide if we more just

Operator

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

Keith Creel

with old of year in is forever this very that's It's story. make to you in North our our and multiyear out give to the we'll work . I but unique laid a position just strong our a hard us. laid And got got industry. joining and these and story, expectations, that's and men get relevant be We're to I position continue a company that here give this does, made potential to exceed take investors' update. X America. to a through you. of we macro this in you ahead couldn't this to network that work been an what to is, happen Listen, proud guidance the to achieve away see thank strong this the out what day most that that's for commitments position. year. you, we've serve tell rail creating the in Thank and women customers' unparalleled achieve plan. our again on as We've a We've We're this employees, for can in in unique hope fine we and chance outage this network as work a created I us well to strong journey We're a you from today guidance us in is out, more our day them meet commitments.

exceed I this think that's a that, recipe for success, and if not team achieve I'm confident that. will

day, soon. a and Have great we'll to everyone talk

Operator

conference today's concludes call. This

disconnect. now may You

Canadian Pacific Railway Limited (CP) 24 Apr 242024 Q1 Earnings call transcript