CP.TO - Earnings call transcript Q4 2024 | Canadian Pacific Railway Limited

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Operator

Good afternoon. My name is Margo, and I'll be your conference operator today. At this time, I'd like to welcome everyone to CPKC's Fourth Quarter and Full Year 2024 Conference Call. The slides accompanying today's call are available at investor.cpkcr.com. [Operator Instructions] I would now like to introduce Chris de Bruyn, Vice President, Capital Markets, to begin the conference call.

Chris de Bruyn

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

Chief full uncertainties U.S. supplemental I our operating Before may available you our Vice Keith risks, Slide Executive outlined that Executive combined performance in X revenue want X. Please on Keith Redd, described President year this results today the Mark and Nadeem here begin, and President influence pleasure differ our [Operator other actual Officer; is and could investor.cpkcr.com. With presentation President The and is and Mr. Officer; note, and our and Chief and Chief earnings results remind on Executive QX regular also President Actual data to presentation Brooks, introduce we are now factors Marketing information. at contains CEO, materially. and Creel. in filed Vice to release and Instructions] It This Chief press our to quarterly me Slide their financials, my Financial contains and Velani, Canadian Officer. addition with Operating regulators. Creel, President non-GAAP Executive our measures forward-looking John Vice Officer;

Keith Creel

everyone, in our XXXX. thanks, our year ahead and us Chris, to and joining what review are views Thanks, Okay. as well afternoon an as fourth year exciting this full and what quarter for results as we see

as we results. CPKC want we these XX,XXX our start world-class by call always, to railroaders for the As to their thanking family produce efforts strong

leader we're CPKC of cover honor represent entire historic behalf family. Over as I as tell a my the year the combined to first the And the that can on going course results what company. you these to was of remains

revenues the last improvement, up an XXX quarter, was the points $X.X basis was and in ratio volume core So the that year. delivered $X.XX, X% EPS growth operating quarter, versus of for which X% of XX.X% billion, team up X% of of

which the set point we the XX we billion, year. XX% growth tell we the with And that of that challenges, an number year, of an XX.X%, our double-digit personal lowest up EPS the to And X% and core full transaction best, revenues ratio. year, that is on industry can of basis produce we out of at on volume Mark improvement, again, up of start the a the this last I did improve of to despite of growth, extremely CPKC delivered points, year guidance For all say industry $XX.X total versus I'm will safely. I $X.XX, frequency X%, and ratio but earnings elaborate you, frequency. the can continues it proud injury lead with operating

but can Looking policies, the we deliver of opportunities focused that year to growth. year expect shortage, we we network we're at have uncertainties the enables, that ahead, a no standpoint, but the of from trade there another front From opportunities this control. to macro that uniquely there's of out strong us, what controlling on guidance are certainly in with

volume mid-single-digit in at press 'XX the 'XX, the our Investor which growth that in in we deliver and guidance to XX% growth out Day. is set XX%, to outlined multiyear As we release, with earnings expect of line

construction happy the service to continue Laredo span growth fourth to initiative of safety extremely the On second invest side, to Bridge. in quarter. we of the the say we and I'm in support the the completed

Bridge. go excited Ottensmeyer host International ceremony to to Patrick railway week, an we'll Next I'm opening the christen to where J. Laredo

to the across that's most work his every grain as safe like support connecting vision you manner. Growth and this know, that legacy the and uniquely in the our our we're as leadership in we well investment network. service again, MMC XXX, in destinations project, the MMX-XXX, a which were Growth and the only of Pat's Mexico into our across and ECP, do efficient company. growth our at origins reliable making by and others creating will and creation portfolios Chicago automotive single-line That tremendous instrumental, value and that industry, this network we're that is network and fastest the this CPKC, utilizing of enabled will suppliers continue in not many but day bringing solution, in rail service closed-loop for TPKC. the carry-on As also

with fact, was that Supplier last named share XXXX. for CPKC vehicles week, the the in very In group GM I'm finished happy just of to recently Year

suggest, any of I just is for the on never picked would this industry basis. in are XXX service XX Some would annual of impactful? order XX,XXX years, an say, out suppliers, has magnitude my yes. at been I've only in that occurred and

our So and of that's that the solution enjoying the certainly the an this team and illustrates are unparalleled meaningful new and service to operating Again, team have the this from just industry-changing of industry. is a benefits network. the a executed from of customer many tremendous award a means the partnerships. that strategic a customers recognition delivering to Credit the voice team our that's commercial that marketed in service amount value example strategic unique

policies. of results in 'XX in out CPKC's those ahead that that trade uncertainties and countries of to a fundamentals with closing, macro there, as of unchanged. as we extremely is entered in to I'm lie to and us long-term network North the We're this American remain as between and momentum X trade connects it year. move build produced XXXX about the short-term So expect from going of ever certainly 'XX, fully say excited was. We've beyond. The throughout economy into uniquely the on strong amount value we are we we're tremendous things the proposition the proud the

to going the to back Mark. me elaborate it elaborates turn He'll bring John on Nadeem it bit to he and the will So to after with the Over said, will to some over you that bring on I'm a ops. Mark. color markets numbers.

Mark Redd

good thank them in of the extremely the also performance to for I'm I'd customers commitment Keith, delivering and their of best-in-class proud hard Thank team one and unwavering afternoon. Yes. to and service this safety. each dedication work delivered operating their like the and quarter throughout XXXX. you, to

As drive at continue year-over-year operating results quarter, in I look the to improvements. fourth we the

at challenges, weather impact train dealt Vancouver our network, stoppages are both the we year, deal strong to while weather properly length, in given looking of rebounded they these the fourth improved with to speak Just improved continue across strong we to while quarter. Despite the results handling we a we our to the by and efficiently parts These by improved added, the a productivity today, of efficiency the Port weight meet fuel with of highlighting we in and and winter the and are work start quickly X%, X%. are worth the of the also the volumes Locomotive of this demand, X%. efficiency by sized resources had end year. network

Looking at safety.

industry the X.XX, I'm proud train for FRA accident for do a results. frequency XX% although training is year-over-year Xs, will And stop legacy seeing FRA second reportable leading X.XX, improvement for Our never we FRA among our the quarter, in of of the row, industry accident year CPKC for on that year-over-year. pleased which the lowest better, consecutive was were and the of personal building CP. Class led striving XX to years a frequency the with I'm improvement note injuries very X% the to

us to turning made improvements help XXXX, The key by In to maintenance we capital efficiency. technology efficient investments So capacity delivering to leveraging engineering network. plan investments and capital. more the is several and drive across team accurately

serviced in of STB. new we year, X capital commitment as part to our merger the During sites the

We These been are we off stable infrastructure toward are throughout the performance strong to has customers. targeted as also capacity invested new and with in fluidity. delivering service paying Mexico our investments Mexico year,

Patrick the well, increased Finally, opening team at share capacity efficiency crossing. is with more Ottensmeyer Mexican The will Keith, is is the The most bridge the as capacity border the than and and my allowing improve doubling what optimize J. bridge. crosses border border. already I reliable to U.S. the on the safest enthusiasm my of

efficiencies looking at plan continue and network. our growth XXXX, the sustainable Now support capital across through to and to safe pinpointing is efficient investments

legacy our City allow assets our merger and lead make locomotive more sidings, in to along trains Canada and merger upgrades to the fluidity CTC, few power improve north. will Kansas capacity, KCS in investments directing targeted including also in We're Mexico continue We fleet, flexibility which in new with these corridors. to of investing in improve

ensuring aligned with growth closely service timing outlook, growth growth and our our our to volume -- Our network that and are performance investments lockstep. these is in

in XXXX. fuel taking Tier positive this growth, also a closing, our we year momentum carrying We will support that improve delivery locomotives are new are and XXX efficiency. In X reliability of

efficient Our resilient, our John. to growth, with network along reliable is that to I'll strong mid-single-digit over that, customers from and CPKC. With expect deliver service pass poised RTM it the

John Brooks

is right. Thank and our of team All to a an value the Mark disruption macro XXXX uncertain to good start. quarter, Vancouver, off at impacts and port the strong good to, solid unique afternoon, including out deliver overcame strong certainly weather spoke several customers. Mark, and and challenges you, XXXX everyone. The that growth, pricing this We to closed

Our growth. our heading network this setup is to volume into the well, about deliver and good and mid-single-digit performing feel year ability I

at results. QX looking Now our

partially a Cents was X% up with delivered This RTMs. freight pricing X% quarter, and continuing RTM X%, of by offset fuel we on strong revenue mix. growth increase per in

at increased Now crop. bulk. improved closer Bay volumes grain an speak record adjusted to in fourth quarter with I'll Canadian XX%, basis. Starting Canadian grain QX were FX Vancouver look a performance. Grain with taking up by and XX% grain revenues Thunder a our were driven up performance, the on RTMs

new of network to deliver continues We our also higher synergies. to as moving volumes grain on Mexico Canadian these saw

and has for volumes remained this our favorable well year. pricing over of prior our synergies the in of year That, the grain Now looking regulated forward, Canadian approximately X% with for comps grain. continued coupled U.S. first X.X% grew area. the positioned grain us half

market lanes KCP's Our U.S. to an City, markets which franchise volume to were expand of in XXX revenues solid customers. In and south reach. In market new X% a steady decline. of moved trains potash, Kansas grain these green down we as harvest, are franchise from growth completely for and XXXX, from new most legacy X%, as we over our continues a demand example, benefit

down the well of committed challenging year specific the of volume. outage, our volumes an revenue out while coal bulk was growth customer in impacted impacted XXXX. And U.S. and X% the by X% decline our Canadian work to business, and was weather record strong decline another fundamentals We we shipments. stoppage volumes a coal driven Now are to despite quarter, coal and through though mainly weather. The demand finish moved in fully impacted our by strong potash and with and QX, levels positive solid in potash, for in Canpotex by levels demand positioned XXXX our the strike were

to Now moving franchise. growth. our X% volume Chemicals Plastics Energy, merchandise on on and grew X%

LPGs, to offset volumes continue quarter. commodities deliver area. by though, oils, a self-help volume opportunities, We was this of multiple growth biofuels, variety from driven and in in partially synergies. across crude This growth, the lower by rail Fuel

XXXX, ahead ECP. demand to wins with in and Now year solid delivering strong we renewable LPGs diesels, looking in see coupled plastics, another fundamentals, continued

revenues volumes. up on Forest Products were X% a increase in X%

base down delivering environment, the and to Canada soft state lumber length way shipments unique space, synergy a extended despite Now this in growth moving of are we from including Texas. haul demand all

partially as and our growth that the supply X% will revenue Consumer coupled quarter. broader in higher deliver A macro space solutions with impacted volume with market We decline. the volumes was Minerals with position offset and and this sand. environment, facility partners work to These customer in a Metals, X% continue customers service housing a our this softer production for the Products demand and business down of were volume at the unique to accelerated improves. In challenges frac declines chain area,

to aggregate development benefit developments new growth and in network with improve. our in we facilities from the Now of macro the start-up Mississippi broader terminals further strategic MMC and on transload to dynamics with products our are to these network Mexico, aluminum as continues similar Forest new of along positioned two well

sustained XX% that and on growth, spoke a in This closed-loop bar, differentiated year service record developments a space. Moving and key Keith performance Revenue our continues to pleased extremely was to XX% I'm automotive. to contracts the this market network automotive. quarter of our sight in as such synergies team raise our another record of Benefiting unique opportunities. and our with up volume model investments from and In tougher growth new delivering compares, to line expectation ahead benefit and auto of we auto well tracking share future up ramp expect compound, franchise increasingly despite steady with are growth Dallas we gains. from the to as continue XXXX, in

our side were X%, on down driven with of revenue Intermodal, business, in MMX volumes and by intermodal our X% service. the domestic volume X% growth was Starting refrigerated U.S.-Mexico the growth. On up business

Looking of to as take growth XXXX, sight we hold. have several a opportunities domestic in start continued strong to to line

to Mexico, business with expect direct with U.S. service and Texas accelerated and Our in we XXXX continued add growth peak Schneider in we the levels service between MMX QX, CSX. others our and as Southeast the on

supply we on expand these St. further builds our of cold warehouse Americold's storage in This which ramping and now John, unique This temp Americold along our control Americold in Mexico co-developments as will Additionally, strategic projects Kansas build yard at co-located facility rail-served the with -- will midyear. in our of Port start with announced as reach yesterday. up chain. new serve City our collaboration rail-served CPKC anchor

On disruption offset the Port to The St. decline for were continues due Vancouver. the volumes down front, new the and growth contract from at up Intermodal that partially was Port John. X%, of primarily International higher of labor the volumes ramp a to by

to and increased from differentiated through CPKC utilization space service customer a our XXXX, growth ports opportunity we our offerings. looking lot Now in this of see of

and to weather we quickly So stoppage after rebounded close, work the impacts.

servicing Our and network the look going be delivering and are our good RTM And the value growth macro forward ability while sharing mid-single-digit uncertain, XXXX. the well, our capacity. I synergies unique achieve to year, and confident growth along we is pass extremely our feel from we to self-help, pricing coming in to I'll to that, that in in performing over quarters. With exciting Nadeem. with continued remains is it an success XXXX reflects of about

Nadeem Velani

John, as our I'd year like good in execution company. effort of a to full Thanks, their the tremendous right. railroaders and family All by start for afternoon. thanking and first combined CPKC

continues occasion of rise team produce to that exceptional. best-in-class railroaders to results the Our to are

results operating point XX.X%, operating improvement basis quarter share fourth core and combined our earnings on prior Slide per core reported earnings combined and to XX. up XX.X%, at CPKC's share $X.XX, adjusted X% was year. in XXX came turning Now the adjusted ratio over per was versus ratio $X.XX, diluted Diluted year. was a last

and offset gains will on expenses $XXX compensation XX, benefits efficiency tax train and increases volume-driven year-over-year was acquisition expense the to basis full million was costs diluted improvement our last was or at Slide and results an adjusted XX. Slide reported year-over-year and was XX.X% decline $XXX combined core compensation to The came share-based year. Taking by in core inflation, prior was variances on Diluted per $X.XX, incentive look earnings of XX.X%, GTMs. driven from weights, and Comp I at million, Turning and over the the share ratio a ratio on CPKC's earnings adjusted lower operating a XX from year combined operating share an $X.XX recovery. point for year. improved partially basis. increase closer adjusted our higher versus per speak FX-adjusted XX% by

XXXX, from running favorable place expect in-sourced to credits Depreciation inflation amortization is up average digits, was for that maintenance long-term in against and expense for savings The or subset work, expenses acquisition P&L mid-single-digit million by a down rents GTMs. Materials by quarter. and $XX This higher put for driving gains in within our single primarily $XXX in count net be of we received The was deliver. Fuel have lapping a driving our X% expect driven up fuel the materials volume-driven equipment and was efficiency savings the million, but XXXX. partially we recognizing asset resulted higher X% trains, from in resulting $XXX increase year-over-year a were expense PS&O driven quarter. Equipment we RTM was are $XXX pooled $XXX the year-over-year, was higher by offset partially savings year-over-year were mentioned inflation $X in the systems and to efficiency adjusted to quarter. consolidate heavier was and last gains parts or agreement parts by decline growth from was savings was million was which services offset for million improvement by in offset against The longer we XX% earlier, accounting. year-over-year IS casualty agreement increase increases in a head productivity year-over-year. driven a as These and expense. by costs. adjusted costs million low price acquisition and fuel expense. long-term labor and from million, I lower we $XXX purchase These savings decline lower Purchased driven other The expense base. Looking increased maintenance expense agreement million. were

We synergy into with gains excellent cost drive and momentum to efficiency XXXX. continue heading

expect be forward. cost gains expected lower of along sustainable structure to and these We with inflation our impact improving going continue the

was of line $XXX discount XX. the in we to on $XXX a was XXXX. recovery for million $XXX increase debt tax expense of million income the tax and decrease impact this million Year-over-year million excluding Full [indiscernible] periodic $XXX by in were below lower Other Moving or tax rate, in by line recovery. decline the a purchase XXXX, purchase a $XX reduced benefit net Slide Louisiana $XXX or accounting. components XXXX. state driven rate to interest Net balance. $XX adjusted from expense million, expect million, year million, was QX, Income compared reflecting

CPKC's For be adjusted XXXX, core effective to tax we approximately XX.X%. rate expect

XX. to Turning Slide

in provided are generating by billion strong XXXX. flow cash activities with We operating of this $X.X cash year

with rate. a versus year, is dollar safe U.S. during than we Canadian reinvested to reflected billion higher This the by FX increase outlook invest billion. and $X.X approximately to investments, XXXX, in is and higher in our slightly growth commitment $X.XX the disciplined driven Our capital our

us growth to in strategic capacity enabled. absorbing position investments across our this merger that efficiently and continue and the discipline has network safety Our

expect the to $X.X year. driven the expected Looking billion XXXX, invest billion in by FX than this CapEx. in free guide multiyear the with cash slightly outlook higher for generated provided we to flows increase Again, approximately $X.X We our on adjusted is combined impacts.

debt. towards direct be BAAX continued discipline results. to certainly quarter, of deliver and to upgraded see have flow dividends control, to target are recently increasing repaying return I back rating. and We position to We to credit our returns. In industry-leading us closer the after pleased getting free cash to review in the exceptional to continues very was team price shareholder on execution cost Moody's a

momentum XXXX. strong have entering We

although to earnings policies trade uncertain, and Looking the core mid-single-digit macro somewhat to adjusted XX% remain underpinned ahead, in growth. we expect by RTM XX% deliver XXXX, growth

is that, also program. Putting best we and We unique with have turn buyback free the you our I'm a anticipate we the truly CPKC reinstating with generating and flow execution are that results beyond. With industry growth strong let all while together, XXXX driving network investment that cash in of profile, Keith. this the opportunities share for our back to over things combining in investing sharing offers and me opportunity today, excited differentiated

Keith Creel

gentlemen, for color. the Thanks, Okay.

of questions. balance time to the take Operator, up you. open Let's over our and for

Operator

Wetherbee first Chris your Wells comes Fargo. And Instructions] question with [Operator from

Christian Wetherbee

Maybe we start on the RTM outlook.

with first And you're kind of maybe related curious And bit it you of you much in how helpful getting what little core you or can about I of or more might so opportunities there, think of new underlying business that? and how but unpack from some, it book opportunities, seeing kind John, of can cadence KCS customers? we specific half if us the second think, you out, gave break sort merger-related half, color a be

John Brooks

right, All Chris. Sure.

comments on of couple a this. So maybe

our not to it to we can and tied second X% simple in kind tied X% level, the to counting high tailwind, to macro initiatives terms And hoping maybe a something tell see maybe the about think tied I'm of X% organic railroad. I base on you, So really X% to there. and base half business for of we synergies. say, I'd if real

but weighted strong start. probably towards little tell tell really dissimilar about it's to self-help. the really to you a back So XXXX. And I'll half, I'll you, this. off more We're not a

think you I is first the think our year, if good. of our bulk setup, particularly about franchise, half the really

honest you, the and with trying brings. second we'll see year to path outperform a to be half, So the the I'm first to see what then half maybe of

outlook comps front, coal. Valley the spoke on in got has potash pretty I as really think we've good outlook grain and we're for to, a Elk the a -- got also strong look I strong

that On improvement to color a nice front. give little the prove continues the is John be in a synergy to to be bump space. excited really for us. to or front, on just international really front, We're initiatives the for on you going St. that, busy

was some that. The do, area, call continues facility automotive you sector got shine. course, we there. John. I'm there. think at irregardless there's growth what Vancouver, feel, around up And We're St. know services that we announced going know out at new that with of pretty Lazaro we about of Of set honestly, lot new from Americold's combined uncertainty a what, Gemini to to Fort And positive and But swirling in we're maybe I well. I done that,

only and is of to potentially business system with parts. dividends. And And we and I'd finished that point to Not there auto we're CSX. But new in going is loop compound lot use refrigerated super specifically about closed route. GM. we in in vehicles, help and of in in and our going other our spoke a Our route relative can partners on the dry some provide intermodal our XXXX what opportunity coming going see that new out van Dallas to service to Mexico pay they're of excited do that as to that last, of business our maybe to results, out it's Keith terms even for on producing

bit particularly base consider split what level initiatives. of and sort of high around a synergies you of sort between gives the little So I hope that flavor, I

Operator

Fadi to with Markets. Chamoun BMO go to going Capital we're Next,

Fadi Chamoun

a question. follow-up on maybe Chris' Just

I and required, range lower higher would that versus should volume X%, at to I versus X% band of think just guess, trying to range what the volume think guess, range how of end the the volume we be S potential feel maybe about question with So on these highlighted. for the end kind of customers band this the wonder some be kind that Is kind of of this is, of of provide kind or policies behavior, affecting is to my I that the front? happens changes can you've the this range, it's trade you volume quite maybe perspective independent anything from your and really, on mid-single-digit kind not. And the growth the of year that do Keith conversations from

Keith Creel

not customer, expansions a line railroad was a This back, ever, for down. Let part strategic commitment stab it's pulling has single and -- provide me concerns new not -- about commitments that's if that this a long-term many transaction, at of a I've John of then is And the all investment these doubling let to a of particular color. John may and perhaps to result I his count months. that to me what as we of can, tremendous commitment sense understand XX or the we railroad that built we let enabled made facilities built spite and a for may that trying market and he's I'll some bottom me in line a we know do don't a to take shall not and this volatile, this is But it's is happen that announced play. we uncertain question, have merger know. spent is product the your perhaps what outcome, service of where latter the learn of as team only one got tariffs. customer, time amount have created

exist not tell between close these and that's my Ally to the believe security our chains. Now not Trade have had to that pandemic. not say don't supply that of amplified to finalized hard but have drove only before, we're not was when be pandemic in I chain, I President this. a issue became customers, Trump, that but can in an occur. renegotiating in has nations shoring the the central been, in true bargain X really of never [ATA] states. and didn't And U.S. our Supply the the they critical. to navigate XXXX, we integration expansion back beginning to a more say of at near to going has you shoring, accelerated that, assessment, all

comes You can engines how transmissions U.S., back U.S. that so line, by if talk they on can is into the and because in the somewhere from commodity the that's got the built the commodity, Mexico, and fact production XX% to XX% they about you in, going to mean U.S. market of an consumer basis. consume go else really are the the automotive. what got I vehicle come by to to goes details produce based in capacity line we've we many on that annual

in the some going If as going involved business communities far end, type as at Canada. responsible. I'm was and do The they this the responsibility the the bakes that our to need risk. to to as feel that going interdependence, our us we was So the going understand be of us going it's not the number. heads and is, We're not to to the I'm the in government working our at engaged, we're sidelines. on to so be of sand. We're have type to is be XX, do that in going I'm think That's as we expect in at in think with sitting in it to don't Mexico. it conservatism. responsible expect be the the U.S. in We table. to be ensure range We're be volatile moving into table involved. so investors economy. don't And range I the

our I Christmas, resonate. too uniquely. same very entails very help the and can about a I've in are a take significant the had her you our it's sense this, immigration is hear say going But the of shareholders, much impose to X to take thing, of It about up bring drug down I right Mexico's what what take America, responsible representative. to and about things I And end, see, I'm seen all tend a vested to what what X the think think seen seen Trump's President there's are between And at network between But that out [indiscernible] And nations to how that then just to and personally lot action trade, Canada sure a balance that and on to I've to seriously think, action. a desires growth going unsaid. in business will align time, to I other our that when you City, Mexico a America, that extreme we're don't, address build nations. make that very was We Mexico people discussion think, and take interest exceptional is with achieve that about and what not have week I her that productive accomplished. he that, the And before President that. that the a concerned I I action. And occurring illegal a went number. people if our and resonates. Mexico said say. stronger I borders. And the customers, trade our concerns be on the and concerns very in ambitions. concerned But Mr. makes to is I we I've trade since Canada thing get I'm wrapped jobs what know to interest listen travel and since I partnership a to said very

not because day heads certain volatility will it's at we a again, some their represent the and that's pragmatic So -- lower the put come surprised extremely just we're see I end would at that. to We the there's people don't sand don't I I the that high the on the carry stick I responsible be unless and in just if range occurring. anyone's the side. exactly. know to think is of the out best versus end, the pin higher the crazy where some think end not going a way side, And on interest in don't low day, think to approach that

John Brooks

John. is this Fadi,

change. a add be last line I the have over that and these spoken spoke and back chains railroad that. growth customer hard by to I it's very It's focused the to that opportunities. And just or month delivering think is be the It's our those of bit these reality dozens mean I'd in I initiatives of going to dozens whether we by lane commodity, it change be what maybe tariffs, It's to going platform aren't look demand bulk to during here what unique, lane. ultimately by you a or is the lot complex. are saw commodity of frankly, to customers the little the the of synergies franchise reality so. customer I've going think XXXX I really So sight on set We're to be we impacted. supply fostering base if to last wasn't think I that complexities we was there XXXX to. And and are and base happens. And overnight.

laser-focused on stay to going us. the of ahead we're opportunities So

Just that one volatile going in does laser-focused environment, If adapt we will otherwise, sort material And delivering or just spoke growth demand any and something the direction, ready like change this on to react. we're be to. the of be to team other.

Operator

question with And our JPMorgan. comes from Brian Ossenbeck next

Brian Ossenbeck

should up And that for the pace for some the maybe and into on we next one environment and you some time? commentary your of looking assumptions what Maybe you what disinflationary here hopefully the think or visibility at maybe us on how Can of starting bigger items? the line some expectations and Nadeem, into environment year. or also inflationary say about buyback give at

Nadeem Velani

Sure. Thanks, Brian.

fair fully costs last inflation, I able a far the not and absorbing come X something as as the being the is bit that's and years to reprice inflation. industry price think, So above impacted contracts as up

so and prices, been on of a on lot markets. on materials, labor we've with steel course, prices, the purchased And side labor, on absorbed services, we've of -- expense in that tightness commodity

opposed then particularly PAB, to to nonlabor, areas, And we something X% some kind of faced it's down as the X%, a past start come et We've to which the So moderate inflation the that labor we've is being closer closer said, cetera. much like in X.X% X%. in with to more normalized. on with what side, moderated inflation seen Canada, seen, year, in

normalized more environment much from with side. cost So inflationary an

I the think we anticipate range year. X.X% getting pricing in for that X%,

see as from X.X%. improvements to your opportunity down transaction second question, as an debt X will we end said on accomplished post lot. a X%, of improvement, be of we leverage billion deal. below XXXX margin support back certainly, there your of close the far post It our our inflation. And and week. to this yes, we pricing to So see CAD our in announced above to back We've part the We've closer by paid buyback, get wanted

dollar that a the are to our we've So and hurt number. has and at depreciating X.X, dollar, average Canadian low, in delevering. The sheet of a Canadian points X.X us on hurt been long-term you But levels. more being a successful certainly that leverage for hurt our balance little currency we bit, very closer normalize kind XX-week

we're the excited that about being means to yes, all market. So is, -- returning

back to invest year, network can us about $X.X the this You expect into continue to billion.

we think an to the I to dividend want extent. address

or yield level. is, at I lower think, X.X% this Our even

do we're rest significant to see to spits out something shareholders. balanced we return buy then of we'll we'll So a cash going shares. model the you in but the use cash And can to back that and there, amount how be

splits and our kind closer getting look to is more of range talked X% X% in dividend buyback our when some factor you And Investor when CapEx long Day, term, about approach dividend the XX%, what come. We've that you at XX% of our payout. to to and out

expect So us. what from should of that's kind you

Operator

from comes with And next Raymond Steve question Hansen James. your

Steven Hansen

think stick the at the mean, were and of you 'XX, go can things we into the on workers all I I guess disruptions here. the feel types how across whole back forward, about normalization going I those hit if host that and don't of on themselves network. you about predict you do 'XX? won't it's events wildfires do a repeatability ports, to strikes you I the the issue terminals, how obviously by railroad? whether feel through But the of effect if of diversions the for need to Look, like them aside But a tariff minute, that.

Keith Creel

I way look episodic. they're it, at think the I Well,

those reliable We that think I ports, the that say had and that. I can fatigue [Canada] year was week, couple good as allowing I've jeopardy. that's and at reputation especially have encouraged good XXXX an customers, been Canada, And agreement an especially, good next and stage with time labor I that agreement to tell agreement professionalism, be employees put things has this our with an with labor events that union think reoccurring. Canada's encouraged with multiple same week, the a on we it leaders assuredly, USW. come world that. leadership. don't most much the and publicly supply I because was us because we for will that episodic XXXX, union the understand I in strikes, negotiated extremely challenged wisdom there's literally in said of to for you, see -- They're very our and that our the of understand And encouraging fatigue just negotiated with are strike in partner just being strikes developed. We challenging, for employees our a I'm this been reliability recently occurring Unifor, BMWE. applaud in so chain the I I'm that

the pending part that with on those our an place I agreements. positive customers. TCRC. with to votes those well, going ratification paid as well growth in a And a prosperity and well of work capital We're outcome the from now award XXXX a ratification see a have from no be to stoppages. want treated employees of enables their Our we're as be for success story families and

refreshing saying, enabler, It's And this it's refreshing. win them. only way time. their go good labor going I'll win to markets customer. It's this able be you That's to board a the for a pretty some John, a say to be, to Mark. them He's a the business thing to help bet to not so fluid reliability, with across in be with success hasn't place to honesty, it been We can Steve. we But have sell railroad.

X I'll a thing last from liability the agreements terms, of about that year they're terms. shorter so the terms And standpoint, those say not are

So a we're stability positive think that's XXXX. a talking to about slate growth. and be nothing and place of light of X for clean but I great in And railroading platform with years labor especially

Operator

Your Stephens comes next from Daniel with question Imbro Inc.

Daniel Imbro

follow up Maybe topic. to on an earlier

the synergy well in on ahead script, mentioned you're capture. So you

line into have You sight opportunities. of more some

initially you X% may synergies then on or not X% process? do and mentioned growth we outlook, while than expand see cost where and formal growth I better And you line extra these year we 'XX to synergies this more be thought? finding just opportunities running expect continue Or a But are from can think than synergies. that planned, into just providing the beyond? the there's Should earlier top what's these in you increasing? more you

John Brooks

this John. Daniel, is Yes,

about So the Day really right. that. hence, feel at what's I up. you're all, let we I'd you've us seen identified of pipeline I on first deliver good opportunity say, Investor out think, hasn't there. And And

we thought at were be ahead in going this journey. point of where we are We the to

million run out I closing in were and I'm think we rate, a and delivered we've excess pleased pretty of open bit XXXX that. type beyond little around super $XXX

our number to I the exist lot the kind about, I'm to And success routes in mid-innings The about But that. only on As that side unique facility it's Americold makes $XXX business. by reason of the what already on and XXXX, recall, out to that's top at the that because some with market I teed Day just trucks. in parts that. lines City, service surface tell I out I going we've really haven't business. got us still in as a as yet not our significant see that on all waiting capacity have fully also continue. been frankly, of dominated Schneider another teed Investor think growth on you our that's that have no deliver franchise, and up the the to OEMs of Kansas of business, expect we're that. targeted in we We've we we that auto new talked but we're you up has seen team million there. of I that And I of see a develop across our MMX there in laid automotive just able the that's a scratched of out really and And And opportunity there. I is opportunities reefer but a about at fun. I'm can't thinking with early added, we've said, really what leveraging

middle with about tremendous new this only of of and Mississippi going also there both opportunities in sort Aluminum and in these down surface in in remarks, they and route on you not and take that to reefer now that in production but because That sort is opportunity talked of piece the out that for. worth So the in Dynamics are -- open about and think really Canada in facility that synergies also linking are our in my facility future of the for say create route or on in Atlanta, that those Columbus, I side in going Port year and the U.S. our of of XXXX end the facility our yet. And with lend that with the combination into long our our facility railroad we've business the also us, combined of aluminum an the to the I Mexico. space to St. mentioning, Mexico, this again, work are Americold in scratched the into new opportunities of that, in John up then base of you QX maybe will steel itself City, with present I and this up new some Kansas other ecosystem of it haven't to we spoke that how helps talked production Mexico that

market. come that. And and I area. that worked team customers has the number But facilities And develop continue team in a ourselves relationships expand in with opportunity transload our last, got think about market to maybe So the the then there. of I'm and that we've footprint but our in this, Dallas more excited to to hard to on currently the the

in this more lends that second into more a Again, be the one, out half the So but delivering will United U.S. I'm and X linking goods of these franchises I States. of and in countries city year's itself that fastest-growing think, excited in story, that. about really of

So hope little provides I color, that or a more color.

Operator

UBS. And Wadewitz from your with question comes Tom next

Thomas Wadewitz

think, a Nadeem, I about bit easing you a inflation So talked bit.

I X% XX%. you if guess kind to like that's the do a bit you of of kind sets there that is down pace keeps to there's pricing don't year think XX%, to points of if basis pretty you OR think similar for that? of get improvement? up XXX And going when last or further you the XX%. constructive. say also then And a to 'XX about I do like Or I XX%, are beyond similar mentioned me of that know getting outlook runway think slows is kind well, you X% that something year. How to kind we a

really So for you're I guess some looking your comments. of

Nadeem Velani

Sure.

in north, especially coming you've got compensation up QX, and XX% as course, capital is you off and you've as know, mean, seasonality, much then accruals of available I incentive of we're you work So QX. -- have some some in in compensation, don't QX obviously, and there got

a it's much quarter year there around So really sensitivity first conducive more a said, we had is that. But a environment. and operating that being challenging ago

year. snow this in more think I had Calgary we've So than in Florida there's

think to overall, supportive some as year-over-year QX. seeing in it's the OR benefits far continued So I as

all cuts the ago outages death and year one-offs by think a and cetera. X,XXX a described, you as someone stoppages et the all if costs, we with had about think I casualty

planning So not those going on to to not that always extent. but We're something, occurring. we're have

I So that there's front. opportunities some think on

velocity inflation, in above operating the getting volume and your supportive That's see, the the of be across continually So network, bringing we're about, team execution. Mexico, bottom going Mark start improving all point running talking to productivity certainly leverage. network and to and that I We pricing particular. on that to just operating the line.

sub-XX as talked about type again, Keith just, you can again. And that's to how I in taught going effectively, And has improvement if organization. point basis see this operating cornerstone we a of improvement Investor ratio that's forward, continuous operating factor think of of part lead our more that of always then we in us XXX Day. kind

so time, goal, I'll you. of from And there. as should that be then I leave And first, be let's basis and sub-XX% long-term the the a get and far as It's over go and XXX we'll goal each year running for points mean, of efficiently should safely. product outcome a

Operator

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

Walter Spracklin

I automotive. to want to come

growth You've component in XXXX. your automotive seen really strong in

any forward, impacting with your do curious perspectives And potential Do Just been Norfolk in on going has that the see Wylie the growth terminal? purchase have you is part know you now can a Wylie option share tariffs Southern automotive. you of there? your big in I as us business

Keith Creel

view on Wylie Walter. Right. I'll side, on my take the is I'll a the automotive maybe shot -- tariff at what the John the option, on and touch let

that perspective, I and about. think closes -- into LLC Dallas 'XX at in this just year. place conceptualized in KCS talking a a that X-year It's terminal, agreement. a an and to when Meridian which just That onetime, Intermodal was MMS, there Back for the of the April baked was kind XXXX, partnership opened Junction. purchase option was that was purchase the time in one-and-done that Zacha to terminal. window in was called we're of It thing what everyone up understands with created

important to it's that understand just that Now terminal. it's

So It's XXX-acre our that's terminal. you automotive got about we XXX. of about of up the terminal, have new to adjacent intermodal opened main some off XX-some-odd terminal where a It's to Essentially, our acres the Wiley been of We many the it. footprint. line.

we option, So the if They're They is operate their agent. a be term, slip pay treat exercise way rates with a it were purchased, to we money. to make to the out in they If island. Today, we were price customer, pay better become buy, essentially, if lack we and it. of the agreement. they that's it got they it, all They've and and redeploy way, the us kind treated an equitable it money same and customer. their fair a worked in were We them capital the fair own the today. take can of for

value truly that it facts think the for So nothing things, you how it because be the to value is that's create stand-alone, to are me, historically, at I big engine how for you Because true total it's is the the customer. NS this you look at all about a way package of KCS. if and was about the and growth concerned not

I and go of from and one, Number For to whatever far is business reason, XX% went originates at the outside terminates origins. terminal back of NS you that look as coming that back the XXXX. data, as

essentially the So terminal, terminal NS have always NS an standpoint. with as far as with destination been

if that it interstate. there's true that. we Now bit standalone, look at and been But little the of runway competitor no lane [I-XX], because changed a growth the in that for is it's terminal, you

rates rates go it's up, go supply other oversupply capacity, to trucking go ebb flows going flow. and down, ebbs the as So and

So can the ship automotive do when that's where when role not And it when now move start you those that an have that's the racks that value, go ecosystem our saying that been around it network, the you the system you to that package you the I'm with the an that automotive than complements operating true loop strongest auto needle. production of value is have entire but you created doesn't those play finished system. closed compound. And in closed-loop automotive possibility automotive a create in industry, in parts to to network this vehicles some

there's going guess from the to their NS's of with this some unlock on lot we of route. sabre is that our views those shareholders some the hope We I heard dispatch that or rail which track to Quite unlock can is, rattling, lost that and case is a with again, value they with us challenges have a growth they go this share to grow been know is perhaps and their for It's in So and can reality strong the I both us to goes I've in The it. it. island, my time, going over recent not doing untapped come to and in. I've I shareholders, there. control and railroads. serve same to they built hope railroad that long that frankly, and because

their going the to East going to markets Mexican -- with the to markets grow We're So as triangle from we're Dallas NS into the as work that hard in markets. in compete island. with down competitor to well the the Southeast to

to trucks with a John's We're player into it be to to wants that that that grow part to closely it the it I closely that them. utilize bet So do team, to be what, they the this going of hope these the grow. traffic road I entrepreneurial Walter, We're they they into we have the in work the guess trial. We're going be they're with don't, at to money grow into past all work or unique network Dallas. bring Mexico Southeast you CSX, because, are very take do any off haven't time, your that Mexico. table in be and going same and and hope unique to on. marketing won't grow way. leverage This other team to whether what can it Schneider, that hunters partners, that get they thing done strategic if want they motivated buy one going to And do in we they to to

return grow. pay We it the still if in going of So we'll to against with hand, that beautiful we'll nothing great amount redeploy we're again, net-net to do them and money We'll I'll take to -- out, shapes us have of out. We however, shake compete buy it. sizable still partner do. we'll with position them, money changes. they still strength, and If their they a we'll they their a know if soon do, they're make

John Brooks

sold over Keith's route railroad. big in of just being against the against part of right and couple trucks compete speedway and looking part Mexico. it customers would that is comments those with day for comments. marketed seat that going on both And amount to but a into I the also the the every just of it's that our is out and the railroad an emphasizing vehicles also so maybe untapped lane question, in real can a growth of that and way. The by and your carriers short when start first maybe are Walter, solutions And across that Speedway of of which growth out be Mexico is Southeast

in matters. that folks this fact of The can they they because is it's close we the you with we're matter focused on product and that, lot car very not the and on supply, product laser If think world-class relative of the those about very and I'm had much looking giving delivering solutions. again, tariff staying the and at and and routes, these have we're uptake customers XXXX now frankly, have to talk opportunities XXXX we've the isolation a significant to a count OEMs. from enjoyed tariffs, in other the right

to conviction and for solution, And million day, provide be we and end the to markets, somewhere. of projects. going the laser-focused the going fulfill XX They're have on. markets, to need it's the million and that's that. to the American the a Mexican to Canadian be States vehicles there United We're opportunities here vehicles markets. they has come whether I sales that these demand So XX million, are The the of has as a European North got of continue in at And we're XX to what sit to from is year. the we'll continue The U.S. deliver look, are. what a production today lot maybe capability reality

Operator

from Scott question Wolfe next Your Research. Group comes with

Scott Group

low RTM big 'XX, in we to that we Or think Is wrong can the we people go still were about Really journey, operating things. cards? we this totally you maybe, year? And go. be mid-XXs, where are thinking thinking on of let's Nadeem's the spread how sub-XX% get Keith, of couple point, may sort to time still and time? when the where out about over we'll XXs is way A ratio. just I this thinking then on even then get some longer carload over OR. that started But somewhat in that figure term

Nadeem Velani

had take part of the the let Well, I'll me low ratio XXs the number. I outcome. Scott. as Again, an -- envisioned operating first that,

So is the if but something real. a certainly railroad, way, we this that grow continue talking we that of to of network it is low the is. revenues about right guidelines I'm it, is and XXXX not over to Sure, nickel path as the time realm get XXs frame, yes, it's that to for time far within potential that as run possibility. But beyond a the that you're fluid planning double possibility? the other

industry network. we've the our this produce in really low-cost and thing Now way continue lot gel there's industry execute we But efficiently, got earnings but then, This with in not do we job, customers strong and to best, -- don't We run industry-leading not a now again, of network unless it the if volatility do to is OR. built strategically. very sustainable we a at crazy, a the growth, only way best oversubscribe things marketplace. uncertainty grow good between we're executing

Unknown Executive

I just as it comment on If make a well. could

do If we about in operating. you things think

costs. we the things millions sign to meeting are -- that year think once we add fourth and certain we the dollars about a pull trains. of Nadeem's bringing it locomotives now quarter to to exceptional of the satisfaction, ratio deploying deployed if drop end at and that for the fuel out with have of double-digit Those switch things we of I trains, this down. board We to reduce our up that but mean quarter Mexico. with it. And to operating locals operating the stop. And within right fuel with fuel when department to year. it's just the at bottleneck we're this are down be areas efficient. fuel the on some talk all new And happening mainline, the savings increases, deploying tell those We bring in right everything in the capital, have, with cash that's efficiency main, we deploying capital heavier of on with over I'll we'll so you of get it capital, getting. the locomotives travel of satisfied I what the because is look the day we can our customer, have speed what the of is we're on with trains brings don't longer doing customer you, again, Mexico also the double-digit the metrics can get the we to need efficiency dwell Very start can some that And excellence locomotives about just then of things we're when in team we're these we

Keith Creel

Yes.

you're share speed horsepower like network almost just kind operating I'll legacy peek think improved X%. per being If network here. dwell year-over-year, that of just productivity XX%, of I executed the have car sneak miles per I XX% modest, and GTMs the call, CPKC came XX%, you car to we rail full look infrastructure at Scott. with benefit what day, literally XXXX of in the the almost end year. that's projects X, without towards I that online KCS,

art So things becoming driving of improvements. got are diamond say the untapped evolving better. evolving. railroaders day It's better possible such an The culture I day. We're those that rough tremendous every and We're moving of more every in capacity. is Mexico. to We've better And become fluidly. is amount all in a pride. The

want GTMs If number go legacy horsepower, you at we XX% still CP, like to for the That is XXX, operating standard look to XX. our improvement close an is with number.

get the locomotives, just from ever But about And the increasingly because continue Mexico. if work, to we'll in different. Mexico. of we'll to XXX to of same. The of there's as mix XX use we length in we of XXX, the it and lot number [fronts] improve it think the a use no, the locomotives is grow we aren't number industrial Now

pulling bottom impressive that, they're again, to control it's of earnings and and modest. done, outcomes. line being right it's investments on but right it the get the when growth And want -- measure the you to operating these right side the hard the right your costs side. to the you and And making strategically. It's And it's it, do the work driving ratio you culture, Mark's So however lot exciting. pretty it are bring you a on levers,

Operator

Oglenski question from with next Brandon comes Your Barclays.

Brandon Oglenski

through there mean, longer-term Maybe some for you I productivity agreements these contracts? towards that here Mexico, achieve goals harmonization between of like and seeking any Keith Mark, longer labor And working U.S. or to you're now. a those are the guys lot have on Is term you Canada? gone of

Mark Redd

months. we looking the the engineering, I U.S., gains be throughout at deploy forces reduce winter we would the say how for in to would can year of instead capital having

those space. Obviously, to just negotiating be still property. just going there agreements I touched the us think in it, in can't on type start mean back week. of it's change change that some to to time incremental we're things that look We'll some And on sure. the of Canada, we of we sure. then coming that I Keith obviously, -- of upside help KCS There's that going stuff, doing it's that through conversations TCRC, all for down for is side and overnight. will take work hourly it But year the over still we're back But actually optimization, that going train, at and space. When next we're the in the with that So fuel have each earlier, certainly year. locomotive Mexico I forth with

Operator

Kevin Your next CIBC. question comes with Chiang from

Jonathan Chappell

you tariffs think I is, means widening in a result could I and guess I that the here for Canada, think what the that patch was just maybe of energy wondering, when of in view differentials.

crude-by-rail as we weekend? franchise potentially get out think your might for if tariffs that you do out this widen plays how those wondering Just

John Brooks

I our looking And is we've bit created alternatives. Well, has narrowing. looking a some what a Kevin, seen U.S. far, uncertainty little in customers of think at of so more the the for

Now think back see differently. settle it sort and we'll market about or to of certainty allows some opportunity maybe some out bring the

a other shipments the interesting more from area the [ United the we've looking Now or Canada way more spur all alternative ] potential seen type than at inbound to and separate thing is Mexico growth down opportunities as States. folks it

from I and the the bit. how space. that for a hurt numbers adapt adjust end We'll has right market the So up looking the and there uncertainty now, what see little certainly tariffs think and

Operator

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

Ken Hoexter

winter strike -- quarter of weather at ports, harsh to which I OR. at the include end But on Congrats guess, XX see great impacted. the the and industry-leading it did really

already growth short I Or a as this seasonality? And XX% to Nadeem, the the but XQ a we in think -- thoughts sounded there? So that we already have that to transition then this might is impact you've on on target about is does touched XQ little target? minor or the quarter there earlier, guess go for can term removed what question, you XX% a incremental normal beyond cost the include versus it sequential normalization to buyback

Nadeem Velani

Yes.

will that say I'd giving Ken, of So on target just timing an an a a obviously, less you in in the of is when the guide. part later -- have in 'XX. of impact It to that the get impact was is range, will it in because, the have in year, depending factor buyback, that buyback 'XX. in is the more the It buyback the of

the a going before effectively we you on not have shares be So of I'll necessarily number in that say of benefit, guidance. and somewhat embedded the with this, for have buyback going July meaningful to do get And we just can do dependent to It's rates a impact. forth. X especially a obviously, it's so interest

Whether could So costs that. some the it XX.X%, the we're had have strike. It modest XX% impacted a to been benefit the some yes, of in better, associated with northern didn't impact -- the XX%. We absolutely. We railroad.

and near-term deal able Mark to and we challenges. were So do overcome team weather with

sequential comp we're with about is So basis points I and then stock-based basis that timing. save going for what tomorrow, there's make to weather, It's excuses far say guess. I'd on typically and in some as is puts as not I'd XXX what factor And XXX takes points, OR.

for QX benefit in stock-based comp. had we a So

headwind tailwind And have this a quarter. so was us, probably a that to

So factor in think that quarterly as the well when ORs. about you

Operator

Ari with from And question comes Rosa next Citi. your

Ariel Rosa

and provide receptivity, customer go XXXX you've could could several the in of wanted MME competition depressed So I in kind levels to pricing intermodal what support it terms the where rollout growth? that you of kind volume levels get and of maybe just guys times. a of of that offering mentioned the seen sense for of from the is where truck that to

John Brooks

think of XX% lapping we the when right, market, well, where today. that really To I pleased a backdrop XX% perspective, sit Ari, significant you're pretty it's there. right part we I we tough against But story. tough QX it's super a of a about QX. that market Yes, I'm of to short-haul out of grew out business actually you with back give you about some think up kind are Year-over-year, now. are some been

marketplace the that So corridor. I'm spoke we in it narrative opportunity a been to up, surface pleased high and begin to product. that in to excited can with of brings you to fastest day train around opportunity Chicago that you to we've as finally lot into and CSX upside And route and the that. And fill a it saw how we've of Central of -- have on between a left beyond the about has to also. And train value then Southeast the Charlotte what but then candid not with super a the for we've when Atlanta it. over in team the the reefer a change down the sit the that we're relative table some new layer scratch also about, And Mexico, discussion grown look, and we in There's maximize again, the customers Keith route, even but in the started also only to really grade those that, just relative the business. then markets, how route and that

yet to lot a in So the opportunity MMX. of come

Operator

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

Keith Creel

for Well, our our us share me story. operator. Okay. the Thank results let to listen, again close of you, let time by taking thanking each you share and

I unique have industry-leading us, think in has can that team track We're one growth navigating reflect and the gives understand growth. is certain, shortage which importantly, with for something going thing company record control. leading industry-leading going certainly is industry and macro what and margins unique -- a highs managing there's of control track special, spite industry-leading unique to uncertainties world going that this undoubtedly earnings today. a a the We we're has we this network create most to what opportunities But we and lows. record we're to and those all very in those no of

So all. have forward a sharing you our safe results call. day. on See We to look our next

Operator

today's This call. concludes conference

disconnect. now may You

Canadian Pacific Railway Limited (CP) 29 Jan 252024 Q4 Earnings call transcript