Canadian Pacific Railway (CP) 18 Jan 182017 Q4 Earnings call transcript

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific’s Fourth Quarter 2017 Conference Call. The slides accompanying today’s call are available at investor.cpr.ca. All lines have been placed on mute to prevent any background noise. there'll question-and-answer remarks, [Operator speakers' the be session a Instructions]. After Maeghan now Investor like would Albiston, to conference. I the introduce EVP begin Relations to

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

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

Maeghan. Thanks,

adjusted for Canadian the appropriate team shareholders by I’d X% both I board earnings think what X% produced, in low of it's as customers. only CP time congratulating XX,XXX and operating this ratio points has operating well for growth. family. X% share income revenue and I'm which Pacific, proud extremely the our our start the enabled more XX per Year, all growth, for growth, for record New thanking commitment plus as dedication our It’s these results

But quarter with within we measure few these not well. quarter we around record was and The these the we revenues notables network They outdoor by in that about operating our this closed Canadian challenges, talked sport out solid. domestic fact battled But November, results Western about In our produce as weather this responded. as and challenges our across is said, team to winter were an intermodal. spite grain results. severe the of us nearly record every enabled Corridor

for or our encouraging fact consecutive commodities. low, for our achieved industry frequency levels well the year Potash strong as personal Canadian record train on at year the XXth injuries 'XX, key key full accidents we with accidents number levels, record for safety of record new XX% marking has a On performance the new And train coal lead minerals. metals CP intermodal, In equally an record down time metric. all in in basis, a this safety XX%, front the levels and down quarter. finished in domestic

XXXX, looking I company about progress. year CEO So as the think of note the excellent when some back the after first I

customers recently adding Day with we year company's our moment. we and a executives digit providing being well, in about number bit the productive of the gotten year labor the labor negotiating agreements a ratio service our and great at investment which We we've We our team a these this We've expiration, for disciplined operating look as Bullard our extremely two firm year the of shareholders, our we these disappointed. and to or started team which of success. a We've offerings; share great way. in growth into growing and our wonderful agreements solidified year. added optimism with where is key of when community earnings for and organizations finished most the to ahead Eilneen with step emphasis will elaborate market seasoned our time Stone, our we the as leads partner year but entered May that enhanced a with We marketing deals about to talented consider grow Eileen with in Coby sales and in thing these repatriated forward financial their the and forward best So the success labor a to John Coby exposed we've markets; Investor our ahead XX.X, thinking achieved share a individual growth. not represent double certainly had stability on for it's as in we I and long-term history what sign very deals progressive thing was with a an

XXXX in tell forward, And never the I year. in for CP XX our On the our another I've story. the XXXX, and company that into the to again that growth of targeting years the rail low remarkable growth looking digit customers we’re you EPS is confident front, guidance XXXX of more momentum in so poised mid-single as for next double-digits. we team’s can we’re we’ve this carrying momentum our for setting chapters and built write out employees revenue for and been road, deliver shareholders, fellow ability record

turn markets it said, to Nadeem to to over provide we going some John more elaborate before to it So the color hand to that am with on I over numbers. on the

benefit quarter headwind, to Keith Thank fuel RTMs was exchange the up offset foreign billion. were X% by X% a afternoon X% you, about surcharge. X% everyone. good on $X.X Total and year-over-year, up revenues were this

range. with it to strong was As of our fertilizer of on and potash, in Overall, offset to volume. renewals combined contract shipment front, automotive crude, by pricing move landing negative the direction, mix as weaker result the volumes right continue X.X% coal expected X% a in

work how a sell We where and with marketing for manner. Keith our our and team commodity are sales a work areas, about, giving in our intensely focused in This equipment to. specific We to sell, effort implementation transload and strategies to to we ease closely enhancements, our that furthest priorities and objectives. growth we customer. and increase the customers together to new our line on our teams we their want for who Lane, better want doing products led all we facilities menu and translodes and efficiency sell to strategic our our want information As momentum of understand business gained core and disciplined we playbook and provide short executing business of lot and our new Detroit of options XXXX on developing will partners needs including also how Ohio and our expanded spoke systems can of Valley

event. experience. of am I CP for discuss our and a to excited about week, in from cross as here detail are this customer Just we’ve enhanced advisory customers council looking section an excited how Calgary in what they hard that super host to this I'm we’re going our our line out to expand short strengthen came relationships And and reach, in new with and of work the our conference XXXX, to region continue to partners those to short opportunities line our expand the including regions.

bring team. as two is rail team. and of CP. us from and sales Eileen my experience joined in strategy. CP Eileen this of marketing And and With to Keith mentioned, BNSF, creating to appointed, years and strong background leaders complete, XX more Freight. focus and from Stone CR sales new recently Our leadership trucking quicker CP Coby execution bringing previously our road marketing UPS England Bullard joined

Keith performance the on So Jonathan joined said, is together sustainable focused team earlier high this in growth. opportunities in driving who year, and converting the with Wahba profitable as marketplace,

volumes. at performance. quarter with demand flat look speak from strong and K+S take expect as results -- with comments growth as year-over-year basis up into a well fourth adjusted both Heading offset to I'll and on our currency strength revenues provide partially was our potash, down on ramped let's Canpotex closer specifically X%, revenue slightly in bulk quarter. ongoing and a Potash grew Now, our domestically this outlook. were our side. also we The This the few K+S. a commodities XXXX, domestic export, with

XX% more prospective, stories. as front, On Canadian outlook Meanwhile, the an in X%. tougher against different weather conditions. two revenues mentioned I’ve grain December, grain however, headwind November XXXX. tough quarter, grain grain The to we Keith we crop exceptionally continues From market in record slightly XXXX. market, well and move on revenues. as merchandize Canadian expected, mid-year grew million we in through This came franchise, as tons. this U.S. Canadian actually delivered conditions the near Despite down and for growing a grain movement tough should move than the grain energy portfolio and U.S. into The opportunity comp got now XX derailments revenues performed our were prospect provide XX%. better metric grain chemical

demand loads. crude the areas rate many this all and this see of includes aggregates car This our as to products, exceeding XX,XXX approximately portfolio. carloads. field demand XX,XXX to we similar continues quarter, business, and strong at our delivered sand quarter refine CDP. a Frac our these chemicals, approximately growth And areas continue run last We against accelerated

and merchandize X% revenues stack both very infrastructure the overall outstanding So and quarter-on-quarter And quarter [indiscernible], we're another record energy the revenue strong it in brought outlook construction, continued finished portfolio, related energy spending, into new We revenue and higher, quarter we intermodal this with XX%. and on demand We growing saw finally, RTM. domestics excludes improvements. chemical hitting for up continue gains. segment market with share levels momentum to the up from XXXX in support looks XX%,

I fresh our for contract international with XXXX momentum. momentum. the and our demonstrating lows, team port lapsed our We [indiscernible] port operations total excellence and side, capacity our build docked record terminal, the the partners. are near is mentioned network CP's start well all on fully to now continues On with Vancouver At with we time commitment

selling in intermodal the truck tighter on expect economy, improving in the and With service momentum a force marketplace, our franchise. sales focused we capacity our continued

And pleased year heading our believe pleased. here. over mid are as revenue of the of about progression in me in ahead let we're momentum the We up marketplace. into XXXX. very expecting that, finish release, single us opportunities the With team. We digits Nadeem. I'm excited see solid strong. and noted press positioned with ended growth growth. well the to I'm I'm my quick we So

afternoon. good and John Thanks,

result another almost the record quarter comp of is thanks we an exchange operating management a The growth. cost Keith several X% disciplined and basis, remain XX.X%, executed Despite quarter improvement by Incremental was exceptional growth difficult and plan. considering every ratio fuel around prices, quarter, a on record. face archived resource operating operating based and and quarterly incentive new we X% and points supported measure. higher This margins by and higher headwinds, some an XX disruptions. to ratio network well As adjusted this revenue mentioned, basis XX%, RTM operating conditions stock an fourth outages in some of was

QX, didn’t expect when During our to last I I earnings XXs headwinds. all mid guided operating these to call, certainly ratio of

results. was efficiency. line team’s expenses X% X% Adjusted diluted quarter. of accrual, The performance cost of to results in CP by proves ability offset exchange largely and adaptable, result on This translated labor and higher specifics consistently this further as down So record proud Comp the in continued comp and few deliver. A resilient revenue benefits This and combination I and quarter. volume. comp, environment. I'm that partially increased bottom adjusted any of was control this the on EPS operating is basis, quite mentioned, higher stock delivers higher income into incentive strong pension expense a was an operating which inflation based model

by basis year flat primarily higher rose prices. Fuel point Obico comp the headwind fuel Rail a X% created in sharply of as million, recognized In previous in Purchased difficult or $XX expense quarter, in sale XX%, up higher Our gain workforce XXX prices services XX,XXX, QX. a XXXX, increased year of than QX since on was end result Fuel which the and was created but which a the million $XX the Yard our sale XXXX. conceded OR. we of XX%.

This quarter to year full Moving on slide. out next on record a for the CP. year rounds performance results record fourth

X%. adjusted grew and For year, X% grew the revenues operating income

XXXX. us the Yes price, impressive, full adjusted this than comp XX is income on one-time remove growth from pension adjusted offset control incentive but of by a ratio year, considering favorable had which and X%, basis operating improvement mostly headwinds was higher EPS from this hope growth share the points the even XX.X%, repurchase sales. of This we from year income in this from helped we benefits lower the fuel cost a noise, led XXXX. X items is all operating count land ratio year When leverage. Similar is more record operating our double-digit delivered set quarter, and X%. the and better Our of share a few you to over to in the lower improvement full OR program points achieve

ending year, range of our this X.X our targeted and of with to balance strengthened times to X also We EBITDA debt XXXX adjusted an sheet times. adjusted approaching net X.X

allocation. to to XXXX Let me capital take moment our speak a

noted the to modernized is substantial hopper being we full benefits investing range year and The We're to hoppers timing CXX grain as plan supported CP billion the fleet, is we this in a which possibility for capital. As If yet reason between on of mentioned final hopper billion $X.XX in changes our to determined. customers. we've but would positive in past. primary making goes upgrading That and have due a CapEx said, in later to of decision. investing in investing guidance, amount our planned, for $X.X the fleet spend both this outcome our awaiting the wide bill and all might in the be grain be are and

should we to we May. us repurchase, last expect share NCIB, of announced terms complete which our In

we half of mind so current program, This $XXX expect you in time, some refinanced have rate. average the actively a interest at retire program starting a new share. thing at we’ve XXXX, beyond future as in opportunities likely with this and far, as about lower advantage QX, of total future of which for high debt, be repurchased decisions same to our allow would So million cash But XXXX. pension. may One take lower of will under at generation cost align shareholder a to half coupon standard this first expense cash also the about of keep We to far in push reporting an we've as would the the per debt to $XXX share on de-lever should reminder, program return. repurchases us accounting free we our Also in maturing, QX.

have basis this earnings But reminder, A the comp impact income We ratio would $XXX standard month. XX.X% XXXX the zero. would XX.X%. of XXXX and reclassified income down to of XX-K details cash expenses comp is had to new broken our by impact a other in file pension our put simply invested. on is cost income the adjusted points service perspective, results, line. in $XXX have the the to geographic remained net impact would It from statement. operating benefits current in next been to have and will This applied change have increasing with below our we XXX we in the million to million

$XX basis been non-cash million U.S. on This is has result our XXXX. referenced, the earnings. in other assets. offset XXXX cost income just had liability the $XXX in $XXX service by an to be million. an excluded one-time million current tailwinds $XX net from the a and in above increase $XXX will of $XXX on of pensions a we With respect of tax million continued from results of million breakdown CP, of include the impact made CP's XXXX, tax deferred gain I million For under GAAP as reform strong planned adjusted on returns On the in this up apples-to-apples standards, an increase new recorded

expectations include XXXX and XX%, than to current a XX.X% XXXX points XXX basis our which tax is rate effective guidance of basis Our rate XX.X%. annualized XXX and a for between better point

have I us. in We benefit we tax $XX opportunities about the XXXX expect front million of to million. and the cash excited extremely $XX am also approximately of

disciplined growth momentum. growth We strategy digits continues the expect revenue as gain in mid-single our to

benefit thanks product operating continue high will margins. to drive and leverage, We continue we’ll to improvement incremental to from

may diluted of with to it risks, economy, EPS expect the delivering growth and you currency, rising geopolitical mention another double-digits factors to risk So year on of And not rates ongoing the that despite results. and potential over impacts such interest of another low record that in hand the year the we have that, number as Keith. I'll

said, thank Nadeem you for it That Q&A. comments. am and you. Thank for opening I thank John up you the your

Merrill Instructions] Lynch. [Operator Hoexter from Ken question You comes from first

growth to CapEx as you upside I your look and double-digit have could been maybe is, as get lack Have low at the you down outlook. the of you get where you if growth your leverage earnings, the the revenue that low not the Keith, really to at the need get giving just it point guess anticipate leverage where the but to it just coming getting back business, trying into on in is trying or double-digit to where I'm do you the buyback? given volumes board? see much

Relative to CapEx?

down in starting a Yes, bit, or down as coming from looks again. I ramping it so guess, up is guess mean, 'XX, as to inch have back up $X.X much starting would to billion, expected. that CapEx it's up your billion I the to $X.X I creep like

Number one, the the on heavily, tremendous CapEx, because marketplace. billion back pulled had back adjusted we surplus early of amount capacity back created we obviously $X.X have pulled and we to we

we’re we back So difference go capital the a for new strong of grow up we [indiscernible] streams so primary pulled look hopper would to stewards as project strict the shareholders’ with piece very It’s customers. return be match relative on our we but the revenue our to as and ability delta with bring would cars. main to forward, John’s essentially that the

there. of that’s those I it's driven, are our for It's none network that John big it's lion say, in and development the incremental levels with things, us. hoppers that’s to is some same share still play project it the on a out those revenue So items, tied transload bucket type just a in and play productivity reach strategy revenue of of would are

we’ve wasn’t mean, billion. recall, ago long bumped $X.X over too to it little to up it when just Ken, I

a in to we’re us, So a return advantage a proactively well. of those mentioned, we for as opportunities it’s pre-recession position as And taking of and strong the of early good available having matter of very hit. Keith lot back projects pulled

said, the internal. We’ve what and going cash get call than first we’re opportunity to to other share to that’s a buyback an invest return the grow company a money already term. that exactly is We long to integrate on returning do

volumes I I operating get maybe Nadeem And if force, starting you and that up you into what mentioned the the coming provide X% but the fought workforce I one expect or back versus year-over-year workforce job ups to we given on XXXX? against. ratio, on I thoughts But maybe weather see Can importantly, the work ratio phenomenal on creep guess the on more as the up my the sequentially. your follow can mean, other? Should Nadeem especially guess a relative given ramp-up

I'll No, I strategically We’ll think story. work just Vancouver, to the with I share progressive of We additions. productivity pretty productive, us bit deal. yards one more point and working that’s you a We’ll sidings do those casing talked change about extend signing more deal we continue to mix should investments overall done got to I’ve continue to helps headcount. you in little had in overall expect we or less. We we’ve U.S., offset flattish our as hourly the and the a excited about. convert am surgically got initiatives not get going collective

We the as engineers half. year year, Last have to for now inductors convert guess well. I able were a and year or the we

we get an employees more hourly border south utility, So of running the our roll out employees. trades of can which more productivity deal, the means

go what So is we we’re doing forward. essentially

operation around. our shifting We’re

we’ll go and there and down to go we we’ll us. we’re months, and vice essentially and change go change we’ll Harvey, a been on trains border used crew probably we’re to with crew St. Enderlin, And crews, to Paul, have there Chicago. St. St. two Paul Enderlin, Portage, to we’ll down this There and put border. point running now to crews, then go doing re-crew we’ll for we the could actually another Paul be doing shutting going really two we Paul We’re for it the from St. down to go versa, to the to about which we come Wisconsin

much that a in essentially, very from not we’re it's corridor but it. it's half So start us, for as crew key near basis, quite

have services improved, been more much and and dramatically is operation the cost improved it's reduced. the velocity our So costs

allow headcount. to it's to things continue So flattish the us on those that stay

Your from next Capital question Market. go comes BMO Chamoun with Fadi Please ahead.

So little on mentioned improve flattish. working things to want Can are you compared headcount back in some guidance a against to OR bit, or the circle there you last XXXX I you year?

to the see ratio, improvement definitely operating in We sight line of Fadi.

given you growth line see… magnitude the going that about talk potential top you're to Can

it right far I on be our say at but now, Looking uncertainty points. going as to it's somewhere and there as XXX is in XXX demand between some best basis guess -- would marketplace based the

line think continue you you their And going And outlook to or crude maybe that? XXXX, upside. provide you top not at assuming what build could are the into business into specifically, when potential look assuming surprises do the XXXX, you're to

but expect QX we tell run strategic could the demand bringing continue. think strong come that we're on to crude really you, it on has in on. rate certainly we I the I area, on how

to with think generally reliably opportunities the pieces going few materializes. as I see positive. across there Things may frankly, we’ll U.S. there. other commodities going all bits of and progresses But and year I the but crude be up with the to and exception that grain pick So how a is look be look other we're partners

chemicals we’ll what non-crude think pretty But I front. see upside the an the energy our guys refine markets been on and of coal And potash there do. products heck then tech in got also. solid has business You opportunity and is

got value in in day capacity enlarge I created we're we and with service this on today, and model out capacity. And in day progress one, And think that the by railway, and for in recognizing; Fadi. those the customers but capacity. environment, several this Number reliable number one, we’ve the need to faced over years the operating keep to-date the point its past mind, key

partner appreciate with that John's going that that to strategically those So we're capacity. we, to make point, sure

the that shareholder of short we going capital to well to in be we on and we’re with franchise, strength can of get of capacity to going the not minimal line, We’re order very a both too basis customer commoditized bring expense getting workforce. the at very have value allow our bottom the as this engaged ourselves the to as to very

Walter Spracklin RBC. Your ahead. Please open. Spracklin from next your comes question go line Walter from

at little revenue a color possible revenue you And price much to are guidance. going how and that whether guidance, XXXX? on mix bit to you affects your Looking is your hold us volume the is mix how could that line going outlook more your it impact give on for therefore

Well, I’ll the answer and for for you. the question definitely price holding line. We're John

got valuable make As commodity the and we're fair for I’ve said, to we’ve a John here price speak in capacity going extract And Walter. and let mix we that. a I’ll to service sure point,

I I going fully mix doubt, year, expect if year the XXXX. I’ve mentioned ongoing to continues I got some grow Walter, headwind a We’ve strong think I potash we're and at -- crude no front. also as the coal into point to that think have during

through On the XXXX a opportunities the automotive we not front, there's which high front. lot of move in future as automotive is typically a RTM, extent

I So on weaker that volumes expect fertilizers. also and

a to We'll price that plays continue have So terms it how out to of the spoke out I to bounces expect Keith mix it far be headwind. in how about. see

before think you a you Keith bit so, might if you And renewals And could become you for coming capacity on take upside? some gain be on more would that growth and How year assume Is much including capacity. up guidance in to with in take those your safe in or constrained? some XXXX. opportunities it revenue turn could both next growth you're not there're you mentioned contract share for of little mentioned volume that

relative bullet depends talking the answer to and is. about depends it of on best trains. on The lane we're starts additional, Obviously, addition capacity train of where

that's point we to look You stepped business. of six the timeframe obviously. But that increase match employees, try keep the huge it and to a potentially, capacity hiring locomotives It's time a enlarge a the that it's not a at although to concerned. pull in tied, against by headcount trigger, have storage, am employees. window locomotives a concern. I training month you We unless get we where not we try There's about control matter from business,

the only upside the So we think lever most with with with had that's issue the don't contract not there, chance right Walter. And assumption and question, said, the if that. we first would but be that on to I win pay a any really baking there have to in some I’ll you're to guidance. get your We're attention

Citigroup. Wetherbee comes Please ahead. go question next Your from from Chris

results when Wanted how to they on guess about from maybe both should -- perspective, land year, little as OR for a next from think the numbers? in it's seeing start about on Should well how we in maybe a think perspective, perspective. as free want guys cash acceleration are your operating the you run as those guidance? whether some guidance thinking I get Just you bit we to included a an opportunities, through touch EPS about sense sale it

that's we been expected close to XXXX. pushed quarter, we had we into last deal mentioned in XXXX, As one

see million magnitude assume we're cash. should I QX cash free say sale would up yes free a a about beyond. I'd to that assume lumpy of in million of in terms You but of ramp $XX to good $XX land and going

a number, billion that fair You billion probably $X.X magnitude. type of should $X expect plus,

XX is guide? the XX the EPS also to And in

Yes.

the and And opportunities Canada beyond? certainly lower Are XXXX opportunities than maybe the what us changes and present rate does which tax could some when for law opportunities you in U.S. target, following changes. -- range about you be mentioned of the then to your obviously opportunities, debt there some moving that in XXXX some remarks that tax out don't respect? you're the incremental drive giving the the I know to leverage the deleveraging you're some move But for from tax prepared from towards are you of law to look

the an through we're for that changes something now certainly sense looking opportunities. in you working of reform, of the tax it's we're that at. some various answer don't recent the have Yes, I

our the best advantage it's view We’re for going a as and cash debt capital we’ll outside and what's we look right, take your use from opportunities where as in at business we well, continue the Certainly, at line. to when of leverage can do to point best allocation at we can bottom of what's best of well. some where look in

don’t have you Chris. So for I right a firm now, answer

next Your ahead. from Please Scotiabank. comes with Turan go question Quettawala

to assume numbers I that it something just XXXX. year? the last fair talk of a from little it wanted Or specific bit guess, is could for the potential and the little lap just that at periods bit? I volume if might trajectory change growth you on a trajectory else to looking Is

And good terms look in green think I other I than I in No, I headwind. natural which in mean said, or get see there and rest of there the is pieces grains area of most out guess grain, as the commodities of my we marketplace continued new a into crops the good U.S. rebalance I the certainly got but opportunity uncertainty presents share I other as upside. We've a certainly think the a again Canadian eyes.

quarterly from do basis? maybe as didn’t volume lap lap bit that John I growth just then guess, a think perspectives more I it early Is I harder and quarterly properly, I easier but asked on an a QX a the of guess? about was of breakdown. I like How about bit talking more QX that

we progressively that. get got Yes, quarter-over-quarter as the year. I've that definitely, tougher move will through

if guess would And the rail. more just I crude on by one ask I

getting can about all Are us getting companies that the you’re to or extent little commitments helpful? some what I a trying that times oil here. color in would you you be if talked at can is to some interested some I give You guess Or with of term get? players. us the wondering of partnership there was longer that help strategic these

talking about commitments. not We’re longer term

strategic crew. than customers about realignment We’re with that do other talking ship

us falls book for long-term bottom well to understand and with with we along crew allow the a s here to going for time. business certain shares that line. be ours is business more have of period and value how bring stable We're can a looking rebalancing in strategic objective the that partners that line only of our to what franchise that we So

to their we cost to have while We move shareholders. our their value bring to transportation assets lower

ones. wether not those talking of only type So that do but in crude the are customers also that customers business about, we’re

could just that overall, bigger getting guess over… that to going means wallet for just of customer is share the I work a So the

we’re the with that's exactly about. correct overall That’s what book talking

comes next ahead. Oglenski Brandon Please from Barclays. Your question from go

analyst in called to it's apologize pension moving to [multiple I merely Nadeem. you that question be speakers] advance, the right? for you about you go up $XXX million think back this But income I a going can Is out And year.

Yes.

looking And about then are XXX heard if XXX improvement. points think guys of for I I you basis points core right, margin basis to Keith

revenue pension north nonetheless, are about I then the think earnings getting when do be out. of would single what digit and we digits. thinking mid mid that that XXXX So math moving growth probably growth, to I income But double

So, I how your guess do full forecast? that year reconcile earnings you

questions, I'm Brandon. I analyst the not answering sure

things, think than be for it's more now, you right the per to ask strengthening prices you strengthening, currency XXX be well. fuel can conservative a it that’s could are is -- OR couple you and we to are fall, basis call the a I seems There you say, of and to the conservative. Anything points us for guidance which You there be that XXX improvement. know, the -- little currency below range it's to dollar conservative, is right to guidance, headwind could seems certainly, can some as if Canadian challenge want up call in headwinds our can XXX

year. early have the of it’s than thing January it's digit better the right like What guidance we So, it's early low to in do think just achievable. is double just we we think -- prudent the year now would to absolutely. I think a guidance that still very in

being where I really line XXs say we still Do is or place business? even think maybe XXs to the higher change just a given do accounting. on market OR is real but for can opportunities this right OR with OR, slightly a guess at estate high the above fixated and okay? this look top pension get we Or Keith run

standard, to before high like mean we've it's XXs said points mid accounting XXs to capable so this the change basis a I with to XXX we or get always that I be operating a It's going are getting Brandon to about talked pension ratio. change XXs. mid of

to might back So not we year, not from little -- I to back years improve this get be a may of can the may be take still to low think price XXs that OR to couple something we do level. think

reinvest do business. on growth We on know focused are of we to earnings kind capital not fixated we a product are on return the or on the of mean OR, in what focused whole. I it's a invested as

I if areas very do OR. you get think a So typically good you all things the right those in also

magic. recipe magic so The is it's here not

it doing have decades couple I for been of a for it doing while. have now. a We been

earnings That’s natural outcome control is most You ratio a great cost, service. positive that, of want. shareholders but drives importantly deliver our growth. what your Operating or

leads I that we appreciate, think the certainly what and what going appreciate shareholder to that’s be right ultimately what us to that’s they decision. the

will take the I'm comments that we any shouldn’t predicting release way you industry, think in OR have probably you which to our have this could we the quarter. in strongest in think don’t OR that But this best

Your ahead. Wadewitz next go Tom UBS. comes from question with Please

versus wanted same some from is whether case -- or be look true what to how in market? outlook terrific Prague, for capacity this that you a Keith volume a your you the to more so the rail. broader price and bit to expect tight growth volume good it's really competitor price how get function I pretty that of just volume John, the I situation, some for in there on America acceleration maybe And seems and would terms in your on price little about fact tightness? Is but of the on guess things kind of seems North think transportation your thoughts does,

of comments. couple a just guess I Tom,

XXXX about seen quarter. an just certainly every I think we've uptick through

probably I opportunity. opportunity. want with team marketing and and it. and an that loud mean sales as my present I move continues try about and don’t capacity clear anything loud does of If is on We I've you been we capacity. actions tighter I that our terms expect a we our So move a Canadian to we amount certainly into anything our and has position of in spoke been that broader of But in through capitalize of get and fair our some cross more our XXXX U.S. market, to spread on truck fit. opportunity into of as may that of again think model be that think some that in seen to direct clear little to XXXX some little changed. the tightening a Keith I on present domestic North and and sort

in So X% And would X.X% of to guidance? that level how price? up may embedded guidance? say about but that of the kind Is also for that be be to think type potential and we price you the that the it your should above drive

So, you're right.

keep I X% think we're in that checking. X.X% to and

that to to there that believe do upside we some X.X% goes don't we think look into or that how plays just that see have to if is I I XXXX. X% as to out. will

what Okay, kind of any but that would be got you guidance. and earnings into upside revenue versus

comes Your from next Please Desjardins. question ahead. Poirier from go Benoit

about Nadeem, maybe you talk fuel assumption and Could little the assumed? what a for FX bit in XXXX, you

assumed We've the in fee currency XXX of fee XXX. storage for and that to $X range of

the growth about up a the talk opportunities at fleet? full K+S on any bit weather? at K+S is or ramp a you further little capacity whether on you’re update Could or There

actually of quarter. the they pretty up fourth Benoit, half so good the back ramped Yes,

is I that think tons. there ultimately to get to X million objective

sure in but range. not we certainly expect X be going to that that’s get them number and I'm think all, to million at I XXXX million a X.X

Please Ravi comes from Stanley. next Morgan go Your Shanker from question ahead.

that. in were are. how recent Yet promise if Is both going growing bullish good? about to for your range what pretty shipper low volumes picture going when on actually various am to that numbers the into where sound the like think just guidance you're of volume really of survey, XXXX the to XXXX at you're downside I much points low like that this to single-digits, Keith, some came looks really back of people bigger and of kind forward that things out excited of well, cycle? bigger like we rails the close kind popping points cycle maybe in off eye range back are going you or terms kind the side to most the are our volume trying growth, what's growth single-digit a but you're and Nadeem may of and this then certainly the a So figure and I said things it's question, question.

writing business GPD on actually tailwind exceeds guidance naturally. single-digit, our which about still business was based Our winning chapters give would repatriating mid This service company's you what about offering.

point, to is environment as large to in see macroeconomic specific there're micro the puts that, John's as again So, there's and takes by but and well the favorable.

that we're and but make it. We've operating We me going create We're our GDP opportunity got this lot I've customers expect model to of run couple a and in in our two got and We're every achieve is. to to I work hard franchise, meeting get I've that. guidance. for I to this got our there's next year day, of arrogant. to over value years So, to normal conservative for a customers this business term bit not growth create be humble to middle of company information what can points. There's to convert out three there to front the some gets opportunity them. got exceed

in views current current been its just kind be what exposure your out Canada and some and follow-up in with NAFTA a CP's on bull, what wondering maybe that? some concerns just form. what to that are NAFTA of to change scenarios, And then of And talk were am you there's that, recently about NAFTA? changed if bear coming of terms a off or base thinking there I

level, close we're the very close Affairs, myself, My level, between concerns Minister, Transportation a commerce on macro how American Foreign does minister, this us. exposure to exposure. it. it fairly do affect two economy, to as the attention potentially number the is micro well one commodity business paying number direct level, are of more countries micro that staying at this, topical our cross what We're this for Canada on stakes our that’s true to could but staying XX% North as Ambassador something does border, to is broader the U.S. a the to is But our modest,

business our piece to autos. economy. of and heavily the grain, for materials as has reality shipping of done huge it's of overall crude a these agricultural which auto cross the like support In products we're on about forest potash fertilizers, Our standard relies X% border south primarily chemicals, outside Again products is is book that U.S. stuff NAFTA. some raw

at to commodities of go agreement level if what worst day to close revert going feel it, they as certainly all. don't we'll case in we're repeal, So at much by we the is on to and an have worst the existed U.S. end any that NAFTA WTO creating concerns, macro before, between stay cares not and/or back free Canada fertilizers case which trade, steel, micro,

some between is end So pay in day, early Still commerce of am probably it. see to going Mr. starting lot game, these countries. we and the same to it's I at things that trade sense Trump see have whole a seeing, makes think attention signs to of to the we're the two the healthy that

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

the of on and just guess moving up follow earlier about I pieces I to some question wanted Brandon's guidance.

between real tax right and math So we're if expense, the doing estate. share rate interest pension,

also help are there XX% you headwinds that you for I got that Is what of sort headwinds out Nadeem, the way You that. couple headwinds. just that? laid I quantify somewhere can think know offset quantify you growth out fuel what and see are? else, laid earnings currency those you to and of a another just but XX% from maybe

to going alone that year just out happen if this an interest headwinds are any NAFTA and is there I and or both with ratio of rising never X% what are a while to risk. change you that played happen NAFTA, of better I question I but more that then that you downside mean or currency the I demand in could factor is with be with on rates, it and could an a pensions say could point pulling out the know uncertainty crop geopolitical and headwinds, economic tailwinds take what out what's headwind from more would that upside rate But if and point sort EPS really I fall about could than previous there Ravi you from well, know of mean what early operating to some just you just Fuel think more there Again, sort is I'd captured earnings mean any we what just from there environment. notional of than you change $X.XX the Yes, year, and look weather. overall just this rather the headwinds. going probably and it's never what's to and

You January, so could have weather a and challenging forth. February with

all lay the think just And right a to prudent the it's so I scenario. now low digit thing double EPS

pricing doesn't run John. growth sort headwind given where to are similar then on think directional why crude And mix any crude or differentials of expecting this these order where mix? just for you is are move and move further sizing for you the Can X% --that year about then along is so and just the talked topics to you maybe magnitude rate or explain coming? you doesn’t And of that more sized production of that that up mix, on relative

does to continue Keith mix crude and again we mix that it partners be, on, drive on that if your about mix bring that come could to comment it's point, more on issue. first find opportunities it in sort if those the to materialize, price Yes, those depends well flat, both of could can certainly spoke the and

other what think will the very We've opportunity we with be can been going it I opportunities, and So day sense We're no, we is I'd right and there will will you demand, say partners, we've all it We're swiftly as on make do look could some to now, railroads and If are win has get do move available, is weather and we sort but from if America. right prudent. to North got the going market. got But bounce see now move. of yes, into balancing said prudent doubt going other grain operating are the the capture that those to mobile upside. grain We've out. whether of got areas. to in we've grain to forward The And with we partners what's going or the we with one. doing cautious. crude to be resources right evolve so accelerated and operating and moving that move right thing a lot pick this those are in challenges

comes James. Steve Your Hansen next from question Raymond Please go ahead. from

one me. quick a Just for

to XXXX can you've it those? you or you new from be some new or your for services And to might you of what Keith, As perhaps relates in down offerings described? the with traction terms planning adding the been that some describe explain John seeing of or service

So, you been latest of in but widely our I volume me, I successful. tell don’t front have it's Detroit can

our has Hapag-Lloyd lane. very partner Our that been pleased in with performance

We that and the expected service in had that are we trains delivering lane.

still the that of the that investments we transload I towards again in We've Vancouver. Intermodal lanes of customers here, for an launch to our the about on, warehousing of DRP a Hamilton secrets. list optionality think call that be going export sort excited there and the the where to I recently again twin probably out non-hazmat trains brings tell and customers. the of maybe to of of is for reload our backhaul give sort some I those fair present little of are moral the my opportunities Toronto say the made think and I we cities on broader I'm a the area, opportunity it's transload attractive the opportunity. are next working XX month are Valley on, a cuffs service ag us see can I hazmat announcing would are pretty amount contract days. with you opportunity opportunity to but here going liquid excited Ohio And some we Hamilton deeper and working let's in tremendous in goes all a area. load we some in and say some us in of next give Intermodal service Again, and more with I back that’s new can't about

connecting and in the am a to team on Asia so America. with open to the I them John our table and Sunday week from hazmat about up material Shanghai, over important grand I in doing guess. up I we'll customers, the opening, there Asian about last to office located bringing think brings service educating and railroad North of may excited value offering this

pretty we are So that’s excited announcement about.

next ahead. Your Ossenbeck from JP Please from Brian go Morgan. question comes

done follow is So pricing bit looks easier couple in job you've clearly just a pivot. CP and volume, to value the not of revenue? chasing the what disciplined now of little of last the incentives getting revenue very quarters. And but sure not make the service, sort Dynamic probably quality the place there a staying of market controls the and supportive you for more in of good are

actually the of have quality part measured a compensation measure. We revenue our and with measurement of programs in the the there is

minimum make threshold for be could one just compensated before margin and receive to objectives your number the versus So the even account to for commission got qualify those counts. it profitability

to quality measures focused speak specifically surgical that’s some definitely So, very there revenue. are

We grow sure embedded going bottom our to marketing grow the are not or we our team. and we it are bring for to make sake are that can the comps to to going lines into

no thing revenue our quality call that significantly doubt. our, that Just our on, team, sales we for motivated area what to to drive for for are the on key that increased components we they XXXX build price compensation of actually and component

that manner. and right making I my people that sure in is on jury guess the are on judge that out paid team And that

the each lot check accountable to there to move and is tension that and keeps have all we So, constructive other that balance be effective.

exposed seen market so most and actually about of just could customers. existing it's we've rail help. the that onto would specifically book hear disciplined there and But can off we're to one quick loads that taking recent the good road? road, Canada of say holding you where that's talked both trucks much U.S. times, the and if converting is That’s in true off Okay, business share, how to the some truck growing quite competition you get

And to exposed frankly disciplined as chunk been actually, in and as CP that area. It's the into that of down and we're it's go last sort has It I domestic that say there as wallets, the a I rest that lot growth lesser pricing. the don’t about and out in sort growth, we opportunities book off has it. and the can you of year on there XX% the team but degree Certainly, fair in but -- missed, done The keenly a that come of seeking commodities. growth focused domestic its where that business exits carried there our and to total back road. is domestic what, the fail the of do still probably we is like got would is all converting of focus franchise is, is look there presence XXXX talking about the reason can I Intermodal service at of three Intermodal we a areas over of I I fair talks job, commodity XX% keep been the customer road deepening know total the heck years. to amount. still with there look we’re believe conversion and of believe we're XXXX. and headwinds, if mention we and another no it's that On I know Intermodal, or we is

comes question Allison from go ahead. from next Credit Suisse. The Landry Please

a deals, any curious longer types these And So just to you've GDP any or even reasonably starting relative partnerships growth telegraphed there looking and is been occurring? growth the about ones have for of in you of of more JV past Bluegrass peers? so plus up that identified your -- have you then key high outsized additional term, talked volume are probability additional to the guys there that

our focus. right of And areas wrong some that with in or reach sell We're we're prioritizing going in roads embark short frankly of we’re we opportunities. CP of be I line you in would spoke I carload whether or certainly, to, as short think I those with or sales for whether think XXXX. think for it'd customers. in as lost or answer with franchise with say this and I say be Intermodal do our Ohio we're as aggressively these bolt-on that and XXXX going would partners of line opportunities naturally partners back I some to had and our the in auto that franchise in I bringing extension And to little of Valley connecting mentioned, terms I some those our franchise. aggressively it'd our

to ones am up that and more we've opportunities fairly not say today, tee present are quite of I got does play the optimistic of am yet. I But that talk ready year, of about few think that for the book. the a I a new would first this lot I those half

follow-up puts $XX in PTC. just my you question about the think to And range. us previously maintenance the $XX we million million something related to think in mentioned should I XXXX? How

fully to about So, benefit it? through as And perhaps that more XXXX on and flow offset is do going the that from still rolls the think out you itself then the the right way XXXX? are to system think in can PTC productivity this? Or later those

clear all XX investing it is we're us million follows envelop got material non-material. the to through our XXXX about of elsewhere. the within I've some Company. we that get deploy it's to you're have at capital number speak and we've The for in which not going think capital absorb expense up. talking million the space I to the about going about to And impact existing same level expense our so 'XX productivity, to outlay looking then actually we'll operating We're is PTC, meaning to away. XX to expense the after submission, XX. operating confusion, With for operating We're The any XX to

by that benefits? saying planned, clear the you're offset that maintenance that going on is to will to be productivity be of just sort maintenance you've expense, so PTC the net So whatever

is initiatives. it. a bit its through No, can't we're higher and through it's absolutely. in headwind It other cost structure, not productivity. little say other overcome nothing our PTC We're from to it's we throughout but cost today, directly But over come else coming going that absorbing savings, and

from last Bank. Deutsche ahead. comes Please Seldon from Our question Clarke go

to and some talked the which way continue you do won't rehash, right don't need the XX% to Or math you both to some get inflation about of longer but like the still like the on kind like revenue cost the business mid railroad post-precision if world? somewhere this in side margin more lot there think about and items in Is So XXs. incremental we term cost higher a of quick you kind close like and guess XXXX are and I longer term? implied

mean cost exclude we but in how we that in that incremental want you that's point is in see so guidance inflation something about confident do we're well your increased stock one I where is factor, I our about of that of Certainly, thing one things have think and January material you I and so on something is stock-based continue feel so this to kind we margins was on to item. the perform XX% would an calc to there's factor year should unfolding. well, comp in talked mean assumption I But just it, terms that that's and being you we're going no, about. good nothing to embedded might and and an I be Well you a that's depending as mean will margin run, going incremental I forth, giving

QX incremental we actual a over let's look fulsome can your discussion then the talk actual So about of and come bit I'd margins say a to more and on as results through results.

sales. CapEx look think at takeout term? you if green just implying And rate to longer stuff, I and you about run close to XX% of that then the good Is are think a somewhere

that as really time forth. impacted and look a It a fuel by difficult even the at. surcharges number It's and to of sales things be of can something so percent currency, ratio not else a we of

think that a fair range number is gave I we you.

to to We the have pretty tided potentially significant offers. number cover

and years. billion a a of the say to I'd over number range So think about X.X to several X.X is utilize good next

we're CapEx there drove anything think anticipating. in higher I just quickly, just then that? there bit was a in than anything came QX in little QX, particular And particular Is

we a have put engineering put forward we on lumpy. QX, and some little that's that did we why we As some side the forward in got opportunities to so opportunities

we excluding why the green much that's stuff. wouldn’t Alright really see growth

Right.

And this question time, that please was our continue. last at

Okay. Well, today. that's going to wrap our comments

that that the do closing caution very of here to sharing With energized. team, we a We've and control forward marketplace energized the our positive a and valuable Thank expect very got instead our but the you the sustainable wrap quarter. up our We've in the end had XXXX, I call force. not we best-in-class saying, to our shareholders. said, we converting, We've up XXXX sales out work to On disappoint emphasis look first capacity certainly got very got some results growth. you. solid we're I had I'll and for they're

call. This concludes today's conference

You may now disconnect.