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Canadian Pacific Railway (CP)

Participants
Maeghan Albiston Investor Relations
Keith Creel President & Chief Executive Officer
Nadeem Velani Executive Vice President & Chief Financial Officer
John Brooks Executive Vice President & Chief Marketing Officer
Fadi Chamoun BMO
Brandon Oglenski Barclays
Tom Wadewitz UBS
Chris Wetherbee Citi
Walter Spracklin RBC Capital Markets
Brian Ossenbeck JPMorgan
Steve Hansen Raymond James
Ken Hoexter Bank of America Merrill Lynch
Scott Group Wolfe Research
Jason Seidl Cowen & Company
Benoit Poirier Desjardins Capital Markets
Ravi Shanker Morgan Stanley
Call transcript
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Operator

Good afternoon. My name is Rob and I will be your conference operator today. At this time I would like to welcome everyone to the Canadian Pacific's First Quarter 2019 Conference Call. The slides accompanying today's call are available at www.cpr.ca. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After introduce now AVP, begin [Operator would to the Maeghan to Instructions] I Pensions like Albiston, and Investor conference. Relations

Maeghan Albiston

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

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

Keith Creel

Thank Sure. Welcome. you, Maeghan.

into delve appropriate take mine results, CP prayers moment I our think to family the our both members it's of and and sympathy to only express depreciation team's of the tragic support our quarterly after accident CP a members' call our this for we notes took Before many in our three expressions and February into that many on lives. of extend early that you family

to saw revenues notify quarters challenging network. winters family conditions. with as than at obviously, supply that family of receive sustainable perspective, received me the company's. affected our across work. specifically XX% remain year, closer have leader, safe specific this what beyond in led exceeded the a I've same my the team's one This resiliency had America to there career eight my grew been It's imagine been bearing coldest the operating has contributions remaining team loss the to shortly. growth the be Network remained That snowfall XX.X%, basis can very said, mid-March today, of to exceeded convicted these a dropped weights flat will railroad ratio is worse as it results our I made never some at trends versus for assured, But on And that increased the family the speed part more XX% GTMs Train and which years. that in To encouraging network, the ability rather North the opportunities me than of team. dwell of that the facts The the testament became in members, it points X%. the X%, recovered. manner. execute Nadeem we've all to I've spite century talent, life, even his [Indiscernible] call are that you very experienced freezing honored and or we're immediate makes to as company, this for tragic one that of a The temperatures talent as they've one real still operationally, doubt, these lowest down, the to just that material challenges, on both more comments at strong. more challenge train fluidity beyond in at put share sacrifices, busy XXX experience their team team, quarter. us be and us weather with. the the seen And tested you earnings quarter, last The and remembered share but stood members color a with in of to for time, But said efficient honored. a the accident. this that the as challenges the well in yes, into we the of just as our would year. lengths had level temperatures broken leader, stronger I what Volume our CP seen obviously X% recover challenges colder fluidity the well and not heartbreaking it Rest of in commitment, as I to make the up. about record CP metal last February's and The can agree it the As results we company our chains but the and forever well detail ahead of more to expectations, as while our were to these what X%. morning months about the period since in been sharing to members about of have excuses, as a happened incident toughest the convert quickly. the improved has The we that any by will work provide train the

in train year. improved year-to-date sequentially dwell year. increased time, speeds have our exceeding performance strengthen record. date, month-to-date pace encouraging. own to our has even Terminal have continued last And levels. Looking seen February month-to-date point XX% strongest versus record the same we've with RTMs per month-to-date, to Similarly, mobs GTMs with our car at the last of April the April day at performance to XX% improved April's very X% and performance facing on volumes

service as the express that restore depend it So gone through my they for company endure as debt their to that team patience appreciation I'd appreciation, for. our remiss to as they and to well, that not for operating a gratitude of be the both what said, took the and deserve us well as customers upon to we've

the the know that critical critical is each not exceeded and elect to these critical North CP we been I the country, times John of certainly our the Canadian to recovery It inspired the pleased company of extremely have investigation color. over by the in questions that some comment to mention final or service turn expressed network, met, customers it -- to us in of with with provide well ahead encouraged as corridors. I report obligations momentum our today I'm some with to with the Vancouver though it's to this very service. the our about key in but the to our of record-breaking triggered as commerce its do Vancouver intend I'm that had to record in that service of recognize I'm was CTA obligations to one and that building toughest We And were issues CTA have encouraged Vancouver. is the we're CP want call at Canada make to this forward, has service concern call Pacific. only well we before that that network and that us. as business our that last the of expressions at with do that fulfilled service found lay on the reward CTA served opportunities network industry network America. concluded a well call it's Looking in in

year, our of double-digit to our results, beyond in As and direct achieve growth doubt. RTM operationally the we to remainder both and look confident of mid deliver forward the earnings single I'm financially ability to guidance growth

for turn the it any provide the I'll that for might provide asked over -- details today. to with Q&A to provide on color So, we'll to and other wait that John be numbers

John Brooks

quarter billion. strong tailwind And expected to were are of FX that environment finishing network same-store X%, RTMs Thank while good to at X% and Keith $X.X as price end Keith targeted demand everyone. All this upper X%, X% weighed spoke to just Total was range. of was fuel right. operating about. by challenges our you, the strong, X% flat. revenues down down as was the afternoon be continues the the up

basis. quarter performance I'll our to closer on at next look adjusted a the results Now the fourth currency taking speak on a revenue slide,

delivered quarter. of So, CP look, team for in records spite the this several our challenges,

with commodities, weakness in volumes, grain, to well U.S. volumes X%. continued declined grain our Canadian as certainly bulk as challenges the On hindering network

Canadian However, to summer. act help And opened Bay strong now for an Thunder the solid expect of into pricing spoke that grain. early volumes with right as port network revenue Keith grain offset, momentum in to remain record to, strong QX resulting and

throughout of have grain first allowing digits. double up also and asset now three hoppers quarter drive both note we have us high the U.S. utilization service, grain grain, weeks our Canadian to that chain. with of improved efficiency new been very this supply The trending I’d capacity and XXX encouraging

this by We of X,XXX year. more expect the in to approximately have service end

moving potash. to and on So coal

a the and collaborative Canadian coal we produced As revenue. of result record ports, mines of the efforts a first both quarter

Additionally we June; in positive potash a ramp forward expect to in up volume continuing XXXX. sold looking of and And volumes to potash the to with end up were K+S through continue quarter. out be the X% Canpotex driver

of record refined volumes now from plastic energy to revenue incremental So Vancouver. driven and our plastics, merchandise saw growth The train by growth portfolio onto on the energy chemical of mixed XX%. and was space it this as volumes The products quarter. was Edmonton LPG,

plastics private service cars. long-term offers the Inter the agreement on for continue I'm very to and Petrochemical exclusive to Further, customers Heartland the announce of of that pleased executed Pipeline’s adjacent Heartland. being these their their from cycle today built Pipeline Alberta, shipment new As in have to Canadian take service to this to Pacific Complex time advantage CP a that's velocity, Inter

this to in Alberta, and in and team key chemical direct brand-new new plastic sales the utilize Inter get sum IPL's rail tough curtailments up sequentially plants. operating start line solidifying energy Inner and in direct a way crude the rail a by of position the develop capacity a this we'll marketing with With and the of markets our access conditions. place to agreement volumes production right XXXX, leverage's Pipeline's to to CP's of win, Heartland CP's in late the Pipeline. end strong delivered the XX,XXX result taking future service and the Last growth as with space carloads The facility

current highly While remains rail by circumstances, crude under variable. the

gradually that We and are contracts optimistic resume ramp start-up customers shipping. up our volumes existing as will new

expect volume up ramp and QX for demand we the increased seeing to definitely XXXX. as to continue move are through We

moving Now on.

on in Auto driven up beams January. and were reliability forest service the products to drive Globus, center by as were as X%, products markets up our for X% key CP largely Wolverton our greater to revenues offering continue Compound asset completed of we start-up Forest we utilization Automotive boxcars, our customers.

Globus Toyota Cambridge Vancouver last as plant. of and our strategic schedule compound. And auto Ford additional following our QX continue auto the anchor to tailwinds demand despite continue from the ahead RavXs early ramps a And Corolla Xth, we opened I'll make exchange production our overall. space March to We Wolverton compound weaker new their up to expect of And stage partners, drive as producing with are over in auto with move on as the growth the at in environment tenant. ramp-up we that utilize note into

annually As has facility, a it to about a XXXX for be and will driver reminder meaningful this a years to wins growth in and for come. capacity accommodate further XXX,XXX

both moving did and for up job X%. domestic, in as Overall, CP Dollarama revenues onboarding we to the and were QX, of a on So the side team the result, revenues finally, record volumes. intermodal tremendous business. hit March a In

in momentum strong have heading QX. to continue intermodal domestic into We

XX% we this has volumes On side, the with RTMs carried XX% QX see quarter-to-date. up steady and international to growth with into momentum continue up

not the customers operating our note in also the look, So, team drive despite mentioned time this grown CP partner share XX% at has today. Vancouver period, and now long CP I'll tiredly down Port GCT our the approximately tough of Keith during same dwell XX% with ago at as terminals worked at to the too Rail Vancouver to with Deltaport time, while challenges, from

and deliver I was look for extremely the the over entire encouraged the we we've volume on family, diligently few I So, the growth. at while forward. remain that, deliver in spoke Nadeem. we to remain to that CP playbooks as The that with remains team the with and the I'll mid execute to Investor I to about profitable environments confident certainly momentum a in continues period time single-digit continue and will pricing highly will growth XXXX. it weeks, demand last Day, challenging The sustainable And team QX built pass we confident

Nadeem Velani

back as a up John, from good XXXX. half X% Keith year John Thanks of both we afternoon. started this volumes January We of and and strong XXXX noted with challenging momentum was the carried the quarter. into

entered interrupted. they noted, that was As February also we momentum

muted XX.X%. purchased line to notably in XXX in the incurred, the side. we faced, fall increase few have Had look significant expenses ratio it not higher As OR QX were predominately. single-digit the the and basis a a for costs, a most and a of we volume would under an items closer on challenges was which to resulted casualty through result, at operating similar growth revenue This points growth services expected mid-XXs. been mid expense January Taking

This the Fuel partially from weather fuel Depreciation result million, be increase speaking was lower million decrease depreciation and and $XX of expense a lower I'll incentive on basis, shown the and disruptions. of increased up $XXX $XX last a usual, offset reduction was X% benefits reflecting million network in is a compensation by benefits $XX the As the partially far-right slide. primary resulting or drivers column exchange X% was offset of in reduction productivity. a which year. X%, one-time expense to in was of the of prices, down versus as results adjustment. adjusted stock-based fuel The million Compensation efficiency, by of were a labor and compensation. studies

this bit of $XX Primary the of increase $XXX into behind We a level was $XX average to figure was an which million, typically that XX%. million. million driver to year. year-over-year increase was or services our remainder $XX perspective, normalize million. quarter. on year a Purchased the The the little $XXX put was expect for the in over casualty, million, $XX basis million is increase To around full casualty figure the

additional dispute headwind. snow settlement million million, third-party quarter, a increased In removal in an to $XX which approximately as protection booked pertaining expenses addition, flood and was there contractual the $X well was

had year-to-date. material year, land For so sales far been the there no

grew later sale up approximately by share and Lower program weeks However, opportunities trends April. encouraged we X% and do is in operating we've million over statement, now quick our there year. this land interest the the expense $XX income recovery I'm EPS and that tailwinds. believe increased of few Rounding first earnings income the provided in buyback seen volume adjusted by the X%.

the back half see in where the confident operating we remainder the you in saw our we reason mid-XX's year. Similar As we ratios. with operating Keith starting are delivered year can't why full five of mentioned, guidance an of and deliver ratio we no the to XXXX, trends level throughout the of

to slide. Turning free the cash

free We operations Cash continue generate strong increased cash to free cash flow. flow from increased by X%, the XX%.

the was While lower flow performance contributor the to in CapEx a cash quarter.

the interest significant to Starting refinance to $XXX million the as generate debt for you guidance issued of XX-year at since million will serve of In first year down capital which Canadian of $XXX was maturity Our savings. coupon in our million and X.XX%, a notes main remains unchanged. second well offering US$XXX our XXXX level. the as March, half, we expect can quarterly to interest step expense

we of average of program. than are half $XXX completed our lower per cost of repurchase have At we the share, today. As roughly $XX an end current of share trading approximately where QX,

our We capital. remain of opportunistic deployment will and in disciplined

about Finally, to we have balancing our of shareholders. return talked cash

our to But typically closer As the over despite has time. we past, in to the John weeks lead lot growth, faced stated review EPS all extreme tracking one-time industry ratio our first we this of to the QX and can strongest the ability growth start industry our confidence generate – the we've of of difficult getting operating to expect in the the so a of first dividend with the to A second with positives difficult you payout double-digit goals are highlighted, deliver we in and the April. ratio quarter XX% have frankly of nature, policy in quarter, do volume done three we're have in in that the costs performance. year

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

Keith Creel

comments and your John you for Thank Nadeem. Okay.

questions. for up it open Let's

Operator

[Operator from from you go ahead. Please Thank Fadi Your question Instructions] comes Chamoun BMO. first

Fadi Chamoun

evening. Good Yes.

Keith. maybe first you The question for

to strong going tend of bit challenges So, forward? first different in some capacity of can Coast, also unexpected I'm the these quarter in resources are going hindsight, you this, terms on was during terms issues the and first to this to that of the And where now kind quarter experience especially seasonality you in that have kind do and there demand in but these and a would kind like I of the these is in same something more mean, manage of that especially I of and Vancouver capacity time? you see see what anything West of in little wondering, if resources from do different kind do things just you

Keith Creel

a can keep up and realist. think always adjustments, first say that something There's point in were do me weeks we're always I'm perspective. us February, be in tweaks we let it's that Listen making this especially the continually Fadi. happened To What going to making to March I though, that two back important of in we your and extraordinary. but

So create that year. of level be go balance able to a the to extraordinary these for try experiences of absorb out capacity us into the business invest to we'd we'd

well We're to and we bit quarter investing Saint into of We're experienced bit that are strategically our with as some two absorb going a the suggest the us that the today So We're hours through as already some not looking investments We're subto that. in ago. in as we're allow create the some going a late Calgary winter. capacities states. invest continuing that about investing in to said, we better very the do I'm we'll in to lag looked surgical surge, strategic situations But to strategically have investments additional rifle-shot that Paul. terminal. at to

to strategic our think would circumstances to surgical extraordinary at some it respond capacity me we'll looking that perspective be to and could continue to ever existing things respond, but to investments say those our again for keeping make ability to all that. So in enhance properly we remiss

to testing well I Dr. locomotives, track we that to as locomotives well we have predictive but mine analytics capacity of benefit of think the all him at investments, is Mulligan with fleet, were another well. in more have as for the back specialist you suspect to a so created us us of our of strong wheels, look additional in all many data as reliability cars, identify using we designed team surgical during key who exposed first, improve our suspect engineer suspect to a mind have which data the reliability help for the and Day, one give opportunities Calgary point conditions number to productivity benefit can are and immaterial as methods direct safety Investor

will can So I'll things There's that those we're key the looking where we started. do. more at be Fadi, always but that I finish

your future history. face something again that tragic and in tested opportunities I February never not part laurels excellence, hope you rest precision with We get improve railroading convert to circumstance analyze. a we've the And in As we this stress in should this the company's assured way assuming or occur. But pursuit get us to for times our help scheduled a of execute. faced that we did, again, which tweak miss We resting We when never we in we gotten continual like on we extraordinary measure. do there. like and operational mettle to pray you tested

Fadi Chamoun

have to color. some the -- detail size this contract? kind get you've sounded the prepare. Can CapEx maybe the Thanks mentioned, the more go in on Maybe scope The And there's that of more upfront in, order one and IPL of to like little contract we bit it question. Okay. for a John. may that

well? If quantify you that can as

Keith Creel

speak CapEx me Let I'll about of capital the John There's the CP. price. size the take not from a let point. requirement

customer opportunity that Our as to to for capital the allows the both the Heartland track is -- well investment property we as that our Canadian Pacific. for be realize in own the built this for

John Brooks

strategic only on the little gives some -- had about, but now more plants has us IPL, just which that. a it not Heartland. CP excited property into for and Yes. really maybe It's we're a also time that us And a certainty in deep quite Alberta

that So the I is front. just story starting really on think

what contract, roughly, term. to And $XX this as $XX it's said, it call let's long million Specifically, annually. I would I very to consider million

So about. something it's we're excited

both to of facility put the start in plant spur the We this us freight expect, and again, the moving to into rail some end the our construction be position of of XXXX.

Nadeem Velani

little a additional And I think to there. add color

for say, that of it rail dollars are that the John I plastic shipments are well. direct Edmonton being be we'll product now better benefit There operation. specific into by external once coming facility or as term, out to, would a spoke that in that of it additional goes shipped Edmonton Beyond lack would speed for the out of coming from the plant stock has realize in exported the a into area, certainly the process

Fadi Chamoun

Great. Thank you.

Operator

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

Brandon Oglenski

the Hey. my about everyone. from three said, OR quarter, of Nadeem, question. but throughout could a I taking quarters. a for And you the you handle also through this, as Thanks five think I look reverse impacts think Good but next you sorry we out year. mentioned on the potentially afternoon, went lot for

-- where help of think be you about, cost especially why And at could on if and us confirm items? trending other, the you services then that? So these we should purchased just maybe some think

Nadeem Velani

Sure.

think I increase casualty. biggest $XX the million headwind that have is in the of we So

to And cost for million so, was something full been as million I that's our mentioned, in $XX alone. has the $XX average years year, about last our the three that QX

you typically million as about a have range of we quarter, what to per to opposed realized. $XX so million And $XX

casualty well, services. the purchased to of that in So in and majority it benefits some as but that's is There's had headwinds. the biggest also cost comp we tied

a strong we then in being to $XX million. performance big the year-to-date. just stock have, comp based in of of good recovery the problems headwind and of We about the had And with also settlement -- the QX, a one-time had obviously, of stock a category that was magnitude

that's forward, that have that to-date, to we're not I'm to won't something of. mindful going we that already going Now, be seeing but to that QX say

inefficiency, the due of us something mean, I weather the when I talk us about think inefficiencies have were that fuel it's a challenges. that's just you from to weather, don't hear result overall direct that you heard and

reversing lines, so of And the etcetera, train the so course. that shorter trains, idling see we

the so and a mentioned, as started than the network post-flooding, volumes on anticipated post-winter, running very far We're network QX quarter. has a the of and move quickly. bulk strong to a moving better so off the some strong to I that et the and As April cetera, that the recover of deferred we we're recovery seeing QX we operating we're and very ability ability in of this some that our team didn't and of seeing being into capitalize revenue deferred result

to and one-time kind -- year, that of the OR to half year-over-year. And us were confidence in back is will be last So QX. costs level confidence know, volumes of a what of ratio you a have XX% in strong we certainly, as range. these half I combination we sub-XX% XX.X%, a of the have departing improve gives year And that back think, of operating

that So performance. if some pretty you're you talking strong improve over

helps So hopefully that Brandon?

Brandon Oglenski

through what that you the some year but business in this just economy Meeting, Nadeem. Analyst through is it can does. year, to the specifically talk of show guys at Appreciate doing? then remind contracts the company-specific John And automotive opportunities some went and us agnostic I your where you maybe about No, that this you hope know you

John Brooks

Yes.

speaking, is down, you're the begins -- ramp overall think maybe strong or I prime Brandon even we're growth we've automakers certainly across So are generally seen of where a automotive GLOVIS an flat most production fairly certainly up. And as think example to whereas rails. the I area the

mentioned, up As plant our specific got we've Wolverton for them was site built running. I that and

In addition, for is long-term going a us. Vancouver to opportunity be

that just there. Ford the I is a contract had well underway. So team

to these shot. think that that shippers attracting here there's other And -- opportunities foundationally quality later they about maybe think have some we fairly there's Honda close we've already VINs that at auto in Investor other of I'm of to the location. all on to for proud spoke we've then such partnered struggled to is that think, service. a and partners roost with a got I X,XXX we've -- I the growth I that our Toyota as come And were in great as have Canada. number this at say year companies And Day, basically

quite the done well. Corolla have the at from RAVX. look Toyota's And change I partners Our recent to

So hauling from but coming now also we're fastest-selling Cambridge now still class the the Corollas our producing SUV in at small we're Canada SUV, in plant. Alabama,

think just upside with plant. I million of in million change $XX $XX there's that to So that

So I think us. continues and that tailwind right QX into QX for

Brandon Oglenski

you John. Thank

John Brooks

Okay.

Operator

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

Tom Wadewitz

you Do starting in second I levels you for view to XX,XXX second see to to crude-by-rail for -- Yes. run some with and your way guess, contract Good spread what's province, that how and about said the quarter. specifically, talked in may we ask you the maybe afternoon. the more half get and you've got up on I and wanted that? how of ballpark I color just might you of guess, about you July the may ramp needed how thinking affect kind a things? guess, what have So rate? quarter I first we're

John Brooks

Yeah.

don't look a again. were consensus I I feeling widen it to come see so. back. ways little I this I or large think to call sort Tom. let's has We're before it really It's go on sets close has train is move this to the that wide. where think $XX.X customers think with our the a all has still frankly So the range super in of a it looked maybe get July, August coming And scale out morning of the – starts spreads spread we

can't of seeing to prep a all just we now we point. think customers knowing once bring on turn of I in it we're what to get number that on set is wanting that that

Looking at call let's for QX could to are potentially I our saying latest modeling and back think what it get the levels. QX we customers

maybe APMC low-XXs sort we'll and maybe pop QX ramping-up in with XX,XXX-ish into then as where stated XX,XXX QX, Cenovus in Suncor with can the goes even that and And it then contracts of we So all up in QX. you QX. back see

Tom Wadewitz

Okay. appreciate helpful. I That's it. Great.

per there revenue the and different car wondering we a were couple I'm Within just a there were effects. thinking from that what were were if temporary bit

So was up year. down was slightly last had – and running it been arc it potash

going So basis? about then to potash I if year-over-year that's think think how automotive just as well to or arc up that's on I back don't arc temporary a and and ramp

John Brooks

thinking in So the thinking to the I'm but be verify other volume sort had might And about we out in of the was Portland shining that. we share which just Tom given the and potash UP and commodity? what through, around it interchange Vancouver may can revenue issues outages the corridor that loud – Maeghan more

Tom Wadewitz

Automotive?

John Brooks

know we that's a GLOVIS – I – we're You been impacting are more seeing were sort business RTM per of basis know we cents what lot that. longer-haul

Tom Wadewitz

Okay.

So potash weather probably quarter? the trend some automotive impacting would the have maybe and continues noise from the

John Brooks

Fair enough, Tom.

Tom Wadewitz

Yeah.

time. Okay. for Thanks Appreciate it. the

Operator

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

Chris Wetherbee

guess ask taking yields. call. the for I I maybe the following wanted to Thanks on Hey. up

you had Obviously, about been How through coming what the point? year. pricing the Specifically, some get this looks has you of how the the pricing I today. to environment do a generally? strong yields momentum last think to like this think of And quite year at are wanted and end about you pricing sense of book much fixed nice

John Brooks

Yeah.

up somewhere think think Chris and book over of kind XX% of in unlike rolls as It's quarter. out. a range the not the I of got pretty So spaced we've you evenly can that XX% of years around prior that

fairly You strong. know what remained has pricing

look as see and anything into the I momentum. as commodities in I a is back year, pace driver So maintain I'm angst remains end on year. what capacity the and coming pleased down I believe tight. get we still, the issue the trucking we with into whole towards half the isn't And think, of whole log still or year Canadian big is next in mark impact the space lot fairly that we a the question the of has can't it. contracts that get and up that when have me don't of we this causing And I

frankly United think So, I States. was it in that underestimated the

out certainly tailwind -- the be half in little of year how of sort bit the also. Canada, plays You back but seen to that provide what have could that of towards

Chris Wetherbee

Okay.

that's might you need some really bigger about that thinking talking the that a or When recoverability anything period Okay like time it Nadeem the very the network be then or these specific we and CapEx CapEx in of longer conditions. of sort in what benefit about or what helpful. the of could about durability sort be terms Keith maybe And question and projections over a not things been specific so or investments smaller for of -- the might both. in Should network we've picture harsh in to think nature? rifle-shot it's very further of somewhat

Keith Creel

elaborate. is But let flexibility. It these I'll to investments it's speaking what flexibility Nadeem and additional make Tom, to the existing I'm that rifle-shot envelope certainly has to within not material. our provide

Nadeem Velani

opportunities available or capital of maintain to that able we add And arise. be to pipeline I'd Chris, the a keep the money to Yeah. some needs as they opportunities we of network respond and just

level to billion we've reprioritize to what of cetera. described Keith et guided within so, $X.X CapEx we can able what of kind be that accommodate has And and

see the next that And range, manage again, from something level. the year billion way we in manage for several us, over even so, down we throughout just And the not billion. around in spikes $X.X slightly maybe $X.X that it's can't CapEx years envelope, that the that we

Chris Wetherbee

Thanks Okay. That’s great. Nadeem. it. Appreciate

Nadeem Velani

Thanks, Chris.

Keith Creel

Chris. Thanks,

Operator

Capital from go Walter Please from Spracklin comes question next ahead. Your Markets. RBC

Walter Spracklin

Yeah. your that there, of all to regards we up with volatility given everyone. a how and activity year -- the the the weather you activity the Thanks weather headcount? kind headcount afternoon, the having end about and where that then through itself very Nadeem, evolves how then staff talk quarter-to-quarter the will out to might Could that change in much. might Good with how bit play

Nadeem Velani

Sure.

level workforce we as was -- So XXXX at. our the about same XX,XXX we ended

increase we the ramp relatively flat up mid so. pretty that It despite of digits flat. see that to expect So, volumes this And achieve to staying we of guiding single workforce year we're it up. didn't X% was maybe or much

changes number XX,XXX locations, So, -- that no level. headcount workforce, the Walter. is on you number change overall adjusted in at within but to demand Obviously, of as some there there's the material the specific workforce XX,XXX the that

Walter Spracklin

your for starting expenditures this Keith just investments And guess here, Okay. of stepping some little back -- into is rail. are looking I bit make competitors and and to a outside

your strategically on? focus of looking you curious and growth outside if opportunity thoughts on Just for rail investments as what will so areas

Keith Creel

mind years that and evolution different we're for. eyes from transition our We capacity this converted that Well, number our eye haven't But the a at opening we'll keep with to -- I several phase looking company. at an would said in created our always one, PSR that say still we've ago. our open

across We our invest on footprint streams. represents unique are have Walter, meaningful that eternity physical we in to very position, to capacity organically revenue our grow own where network opportunities a

have So, it's we'll those four if years presents the not it and next unless powder but if warranted, is opportunities protected with something But exhaust something to us consider, again of we the internally that planning balance over we for certainly invest. right is list outward. focused make sheet until to now, to our act be there is sense, able dry the to focus years we inward, it do itself, three are

unique that We continue especially this providing with real in they can't in today, marketplace our them customers Canada. in grow to something the space replicate

Walter Spracklin

Thank it. Got right. All you.

Operator

Your JPMorgan. Ossenbeck next comes question Brian from from go Please ahead.

Brian Ossenbeck

parts and most has fees of potentially that? you come you'd been understanding, you I guys amount for on good finalized impact the border potential opportunities you afternoon. network, think see probably -- U.S., trucking just John of the pretty more and sort to into some they to I the Do still been thoughts taking the impact. so already of would because rule understand the which my which across EODs running already. the impact to good think do And few have you question. do have as where EOD-compliant, have Yes, Thanks back your wanted yet

want late it's a is still see If biggest you get So, progressing? your this thoughts how opportunities on CP? for to I the just where XXXX, XXXX and impact

Keith Creel

line compliance I in good on kilometer still of providers sand. a seems has Like moving providers you drawn Yes. a sort freight in and in terms if there providers around bit. are our Brian, our of our the terms I know tell can sort feel where little been of be, trucking about level, full later outside I don't to of compliance.

somewhat you six-month like. be unique more out about I consider what And I went U.S. dynamics marketplace I market sort likes particularly through four disruptive in of trucking, Toronto that the looks and at opportunity thinking what the Vancouver that change I most the becomes certainly and across would think the the Canada with Chicago -- just capacity as least, that of in anticipated. than start a Montreal We period was to or what to of that it's of far and the in unknown the understood on to people long-haul are Canada could yet look with some would like. seen come think think

this to eye of something it's So, could get the keeping end provide an going we're is be as and year. point additional not the huge certainly we again, towards and a falling it's an on tailwind pricing to it's of a but issue, sky

Brian Ossenbeck

intermodal, the additional do on businesses to mostly some be you'd merchandise? able will think and convert be you transload that And

John Brooks

would its say opportunity, transloads of more would would be in that pretty the in A pretty it's focused. of intermodal. so Ontario or short haul around, long-haul between intermodal largely market, Toronto I in that be lot stuff. It

Brian Ossenbeck

Okay. Thanks, John.

if expended with real include gains quick the reflective assuming a million that. land from that I'm along guidance The charges could. other of for this didn't housekeeping original this is later now sale Nadeem, weather. I the Just all year, $XX

Nadeem Velani

been I I the our the sales And add that the some of all original beginning at guidance. just guidance would equal, think, year. and positive. incrementally our mean, incremental would else additional I be land I'd same being that's over Right. say, above, would to have

Brian Ossenbeck

for Thanks time. your Okay.

Nadeem Velani

Brian. We this can quarter difficult Thanks, still absorb and overachieve. first

Operator

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

Steve Hansen

Hi, Yes. guys.

coming record the your to a your some speed degree Just metrics that of of categories, basing surprised the noted a some the sense is I strong. some it just you're Thanks. up on recovery give you lot me at I fairly and week. the us how struck near-record volumes. your April the was wonder bulk consistent -- train think speed. Keith, that could see That's metric single one of in largely that every me where maybe me train speed you of with the as that X%. in, from is With if coming remarks traffic we levels. traffic for speed metrics some But achieving the given GTMs that earlier are

Keith Creel

way lack well. both We're bookends, working as bookends, of More term, through as of with are terminals. loading trains Okay. I spaced they're the extremely team, well well the specifically, the what Great down better out side moving slow Obviously, cycle in call with side bulk times a the question. the operating they've a The ports. unloading quicker terminals. the them executing, the got us on the the

-- of weekly set unloading last we matter a record on As the to continue fact, Shore, records. South week

Specifically last week it was was Viterra. The week before AGT. it

our surgically done strategic focus opportunity which give raw two do at speed, the is eliminating through turn Every a asset or executing our the productivity of train those year it capacity, what exactly train right when we've and things, they're in job operating workforce. day on we plan, what's our network at doing could -- an out, that solid scheduled into they And our maintaining So it's us enabled train of team, operating better a just very, transpiring. call very been getting and the day overall, meets, making through capacity do increase it's pipeline time, investments delays this, balance, executing, through I investments one to the with making. and same very maintaining

the curveballs of March, significant more you this it So once the of absence of part come. actually absence and in some first disruptions, There's we of. in to do capable that is network just the the shows, February in what of experienced network

be paid encouraging, much to and to yes, same I return very simply invested I it expect. within the a It's invest. for. with it's company. earn We've business the invested got it's surgical and that but intentional the what case. standard we It's we have time thought expect this with on So We our capital at

Steve Hansen

It's Thanks. very helpful.

Keith Creel

you, Steve. Thank

Operator

of Merrill Your Ken ahead. comes from Lynch. America next Bank question Please from go Hoexter

Ken Hoexter

Good Hey, afternoon. great.

you've if increased is sustaining maybe revenue as single grain, of from John, seen U.S. China brief Or just to growth upper there Nadeem following is understanding tariff guess up with market And cleaning grain or you reality. trying at digits some demand the overhang is of any quarter-to-date, different? wheat just Canadian really this just see totally up then up? where I exports? kind on I double-digit the looking Just kind impact a catch guess, that, volumes the you the to this for just of I'm with is backlog? X% do Or get

Nadeem Velani

John, and then you from no, can Let I But, is color. QX. me start some certainly off mean provide catch-up additional there

in described as last So had with a we parts move our RTM and there's I winter QX week-to-week. performance moving the steady we as in throughout network. April. terms QX, some in of beyond we're challenging in think increase pickup strikes point QX, an the see that of what will out well year a disruptions But -- early in some of you'll I couldn't I

a strong second expect quarter. we very So

are in this nature. XX% isn't that one-timer in quarter-to-date up I something that's think level, a revenues so

John maybe more a bit color? So

John Brooks

these I look down Yeah. we're that. I by one over these of about commodity-by-commodity, of on is When above January; Ken, well, and say -- pretty hitting I revenues every were XX% ebbs feel think there's flows, most certainly looking And rail but I up. around generally of some up, good top commodity some quarter-to-date XX% areas. and crude

territory a our of last P&W our out of the whole moved U.S. over good developments think tell thus I really the in that a XX exporting of is I cattle there quarters southern barley U.S. Alberta we're that feeding with change business. the territory. two trains out you Alberta, corn, offshoot into in market about been to which in relate that we've can of hasn't of As China lot and export trade

So elevator, the fit great a it's the car sleek, take in to It's typically car whole territory. it's And grain a in low and and expand we've it’s exported but in is opportunity a a U.S. unloaded opportunity new grain our reloaded business because out of we it’s utilization. Vancouver. -- gets been cars able gets market at the then plan fairly and this It's level, a a loaded that space. same Alberta

efficient normal. a And consider we've it's highly don't them So Canadian somewhat I move. grain lines. additional seen export the know of at would that was as volumes looking I U.S. result a I wheat here late other maybe fairly I to that's that's think with on going Canada. And year. been strong the the it's results and But some of as yet day be totally a that's canola of understood. in issues

Nadeem Velani

strengthen final And metals, coal I in it quarter-to-date. so Canadian one minerals fertilizers broad-based is just outside and revenue Its mean, Ken growth. note. is double-digit revenues, category consumer of it's Every and and products. other

Ken Hoexter

we’re very Yeah, now strong.

that appreciate insight. I So,

just quick So follow-up, Nadeem. a

the XX obviously, got difficulty the we've pretty second And, strike for was that as of year. quarter. mentioned strong last understand to Just comment you it

to costs there quarter? parts to put that don't traffic as of into is of that anything had locomotives that the perspective, some you first bring transportation into know quarter? that the second So move any continue such lease I in onboard just to trying or

Nadeem Velani

that's with with think cost. that our incremental QX costs continued No, nothing and the growing have out. But I growth with mean I associated railroad. and flood I'd but call the revenue low described other moving I flooding, of we profitably had obviously we mean of strategy I that or at the the our No. some sustainably strong it in combined pricing, just that -- in saw -- magnitude nothing

the of winter from our expenses the of behaved one-off lack I the and outside natures from productivity perspective. terms cost, casualty the described in that So of of very well kind

similarly to we to into It's leads So first of model half us of nothing back did was just month significantly. what by and there Keith the there January. running plan that the and that the the last need year alter and we

Ken Hoexter

Wonderful Thank stuff, you. the appreciate things.

Operator

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

Scott Group

guys. afternoon Good thanks. Hey

Nadeem Velani

Scott. Hey

Scott Group

was that but a was longer-term going the a best about of that you sort Nadeem, a So OR comment, about I'm comment starting Or comment? forward of of not full in and year having XXXX was quarter? sort second more made guessing thought that a

Keith Creel

It's versus you OR. what optimism with fruition we us year. strong made year opportunities could eye sub-XX% -- than second his year underestimating -- strong last to I obviously assuming we table. did showed gets the You're see second point still do second year half to our we the on a Scott. last performance quarter everything showing those We'll which a comes last again the to this Nadeem stronger that a have that mean we half And

Nadeem Velani

couldn't said I it myself. have better any

Scott Group

crude, I sort rhetoric -- sustainability if need in just on relates of then thoughts up know quarter you then think the elections the I follow wanted of I but just Alberta? campaign the was And think there how to to Thanks. Okay. to on any about in on the trail, liquidated going or if contracts any damages as there this it crude at about in we forward don't And Alberta. all. know

John Brooks

Yes.

that looking good today, at starting how expectation supply takeaway just we APMC this on it and fundamentals going being my aside was to contract levels you strong. begin That it. a do can we curtailment good tell crude-by-rail, would good I look, two for about preparations relates opportunity. to feel up view to still haul versus looks was with certainly the be we Keith faith to ramp July. we're like And come like negotiated here So production with with the coming we're this in crude-by-rail even to customer, earlier levels it three-year any as said, are in on And it Enbridge that on

than is be need I'll designed our infrastructure liquidated of capital are feel But the underway. to backstop and quarter get those. little to that last each structure investments of of damages how investments, other contracts ultimately about have just we whole contract call those make those quite fundamental differently those So we to good we cost and sort on those structured paid. say are we a contracts lot other our related the not about about or it talked I'm people a going in I bit know the -- to it a comment than whether just

Scott Group

Okay. time guys. Thanks for the

Operator

go from from Cowen & ahead. Company. Please next Seidl Your question comes Jason

Jason Seidl

Thanks for operator. guys in so late me you, Thank squeezing the in call.

going partners quick one PSR expect far undergoing interchange have And in Just your you what are question. that the implementation you What from forward? forms? do various seen thus

Keith Creel

in expected the to than gateways. the Oregon. through bit Portland, one railroad. PSR It with Canada back The I stayed whether encouraging. they Ag I'll the to of to to other spite Northwest fluid you my winter it drum it gateway challenges Pacific move gateway. challenging have a through up some that seen product quite Union I've all which that Chicago they've during very seen the of fluid would in had us bring has Pacific is I've speak recovered their allowed tunnel and share not, relate the where we since expectations. more of or we that exceeded from our to a product throughputs down with

about a know At given all when early city, this. railroads, all of get the game. railroads little direct bit moving the of connect impact day, getting do which those end seeing, we obviously it's better overall. see business for better is it I'm one in it I focus overall, creates And capacity. encouraged over a So by railroads, in and/or compete individual the or are the material but direction. the area the There's and a What mind I'm right all key metrics I

rhetoric prove standpoint. some the capacity win-win. a But from way they're a good as and from I standpoint, a from safety individually collectively them capacity, to from shareholder encourage both infrastructure able a this this standpoint, for is enjoy, evolves continue means. to railway capacity of what customers long-term so of invest away to facts course standpoint, the don't a and goes So, shrink run It because in capacity. to each truly be PSR a a back out monies one additional – productivity is stay far customer and cheerleader not grow biggest their for to going and standpoint, create and right understand and the to to is sustainability the so additional ultimately People truly be to

extremely I'm game. this point in at encouraged the So

Jason Seidl

more a for to think go So Keith, industry you was of this necessity would this the route?

Keith Creel

is I consolidation. I going ultimately to drive I'm said what a this that to which time mean, long industry capacity, going going ago if stand to I stand by run is of by out

certainly railroads, overall that felt from obviously, say it's individually it feel the I individual very necessity appears prolongs the industry. standpoint, outside can I a in but they have Because from So ask beneficial creating the capacity be very beneficial to discussion, to see you'd yes. it to you just the individual could that railway. if looking necessary. to And

Jason Seidl

time Appreciate as Okay. the Keith. always

Keith Creel

Thank you.

Operator

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

Benoit Poirier

Yes. pricing see Thank I wondering some for you there you was was these taking given over the duration see to the whether longer my pricing contracts that very John, strong days? much strong a environment opportunity locked-up an environment given question. you

John Brooks

that Yeah. choosy very in Benoit fair. We've think I been that's space.

to try our we nature been our fit like months inflationary done to plus pricing lock that by think could with number where be type have strategic network the sort customers last up but maintain environment of key not in we've and those partners, over and but this well we so. to only XX maybe also we greater I very flexibility, pricing some

Keith Creel

the or able have into done what bad a for As say economics to term. out we It's good good far three-year for I'm our in be Benoit, to as believes it's us the It of not plan. a customer lock one normal model would is has progressive. us cycle lock term economic good I is being railroad duration that what though changed. doesn't

alternative, and for the Some there's of three base the there's been recent railway. and the the there customer in auctioneers deals for we've have both done

it So in more going enables not extending deals, an that has as the what a guy. thesis certainly done, cycle agreement forward done just if the so existing But past. makes we've and my is sense, more makes the economic longer-term still it far I'm as changed in sense, than encourages, it three-year legwork

Benoit Poirier

from prices, looking far an great at up lag impact second on And enough OR Okay. or a any kind the was to if and impact it's question I slightly alike? of color is fuel needle Keith. or standpoint move fuel impact wondering is see That's of. January terms the not fuel so my in strong the February, versus OR you

Nadeem Velani

a it's move point, your say point that’s watching, nothing I'd I'd point an that right but bears bit Yes, it OR now, it's headwind. a that of Benoit to says creating

Benoit Poirier

you Thank for the time. very much Perfect.

Nadeem Velani

Benoit. Thanks,

Operator

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

Ravi Shanker

I'm last for Best sure. guys. Thanks

on a just crude-by-rail. So on follow-up the --

it understand and program widening properly. of maybe me potential you agnostic guaranteed let Just or out the dismantling dismantle the if of the keeping guys to they Alberta Are the keep province effect spreads or kind it it? just kind their if it, volumes damages they liquidity net given of

John Brooks

contract Let a spent Ravi time have amount with the And together. didn't Alberta of working putting fair me -- we this government ripped I it I say do up. say it we this would to be in

back we're As business. than Alberta I government. open-minded the more said to there's being or I handle want -- to happy we're concerns fundamentals day market the planning time support the I conditions with in that That for end it. work subject, what We've issues, At said to work that. reserved through call the what under normal the of If with sort I sort of capacity opened we the go crude-by-rail. the of to to up spend I'll

three government next it's years. two sort other to customer, a or I the over So, sort Alberta some of of these prolonged ultimately, if see path volumes of

Nadeem Velani

companies Ravi in are number in a chain beyond And keep that mind within this. the that railroads I'd the Canadian railroads a supply number there's add just involved of of

we're I'd produced also a that well. provide to that impactful to argue what's more can to and being as curtailments companies that's obviously, Canada lot say takes that's the this closely. economy And and create what that more to that and to chain whole. the I'd of to together it -- it's to to say supply value means Canada So, watching a Alberta come impactful -- but as Alberta

we're So, that's dynamic an important that closely. very watching

that addressed. and production the don't I curtailing in is regulation, something also winners picking should well you if losers So, be believe and mean

Ravi Shanker

just on some follow-up said Got things earlier. just And it, lastly Keith that's you to helpful.

that Is now, that Kind just which right looking along. technology right of list of what opportunity but opportunities? you focused M&A is opportunities of trucking the kind said potential internally on you are it understand companies? ports? of right to the You what you're kind would open Can at us comes or it help company? Is Is it non-rail you consider?

Keith Creel

Any to be transportation all. earnings makes specific consider. our at Nothing company and for we accreted would Ravi our that sense

Ravi Shanker

Understood. Thank you.

Keith Creel

you. Thank

quarter the resiliency the strong not that we only first created said, the XX the the recovering the strength I we've I'm allow a this it in second but for not endure, talented railroaders they this but leader. we being that quarter, business encouraging they have talent honored resiliency, went us displayed through convictions to Having The remainder quick we afternoon. to XXXX. commitment, appreciate not and displayed and that intended, seize wrap-up with weather company. their only I can been will started. pun that close time at the the your this fuels to no quarter, I continue want it's execute and to the network, to with our be this but through extremely is Listen second years this momentum of my shareholder only proud Okay, as storm call. where of result, that to a team

each to XXXX forward results the you of meet your of in second we our Thank July. exceed the you with will or for We time in sharing guidance afternoon. and look quarter this

Operator

concludes This call. today's conference

You may now disconnect.