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Canadian Pacific Railway (CP)

Participants
Maeghan Albiston AVP, Investor Relations and Pensions
Keith Creel President and Chief Executive Officer
John Brooks EVP and Chief Marketing Officer
Nadeem Velani EVP and Chief Financial Officer
Tom Wadewitz UBS
Walter Spracklin RBC Capital Markets
Fadi Chamoun BMO Capital Markets
Chris Wetherbee Citigroup
David Vernon Sanford C. Bernstein
Ken Hoexter Bank of America
Brandon Oglenski Barclays
Justin Long Stephens Inc.
Konark Gupta Scotiabank
Jason Seidl Cowen and Company
Scott Group Wolfe Research
Brian Ossenbeck JPMorgan
Steven Hansen Raymond James
Benoit Poirier Desjardins
Call transcript
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Operator

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific's Third Quarter 2021 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 [Operator Instructions]. like And the Albiston, to AVP, would conference. Investor begin Maeghan to introduce I Pensions, Relations and

Maeghan Albiston

Thank for and you, morning, today. us thanks Sylvie. Good joining everyone,

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

Keith Creel

All right. Maeghan, back. welcome Thank you, and

XX,XXX me start results by CP So the let obviously thanking strong to today. that drive the continue family that presenting we're

the EPS release, customers with in those managing of excellent press efforts, the guidance pretty challenges which third value reflect double-digit elements in creates their service a our volume in an results our to focused we of all-time Happy decade, fuel resources quarter train driving over our XXXX. growth CP’s spite experienced operating updated at in ratio as been $X.X Pacific, the productive to proposition earnings can guidance efficiency we improvement unique all X% more customers as reaffirmed improved we're of that, on themselves, lockstep environment. and for never makes some The growth control, industry shareholders. and team business, you've an we've than year-over-year, for the compelling of our collective But obviously in the remains delivering continue or billion, As seen and our our The X%, has become aware, efficiency the our ESG for more challenges. quarter, in XX% we've to last we've even the revenues, in that lengths quarter. to the by our increase in time and just the records Canadian continued which more than XX.X%, to value more more say compelling weights fuel to customers important volume has

something about. excited we're is to speak going So certainly it. to that's John

domestic customers our in standpoint combination service, standpoint. value the the for shareholders. with an KCS extremely an what provide for We're today's a for excited compelling market. holds extremely creating, well from Pacific, as of share building had truck. network. replicate larger obviously, on in looking Another capacity in with scale, our converting record terminals, same to that intermodal, quarter We're X success tremendous record with We We reliable standpoint, and especially environmental That's both years. We've a in in particular, Canadian our as got a our financial on the amount KCS. certainly capacity operational consecutive success in from truck-like much combination our future a and

the for but outcome. the we things a the a about ages, So been Obviously, pleased that think, been extremely and proud X battle, a said, it's journey. an epic let couple to me X great I of KCS. with extremely were say participate journey, It's in with

STB filing our the XX, pleased on end We with a certainly as forward, of by decision. we we're month. trust aware, the speaking reaffirmed were September that approval, So this the all path to before merger plan the application STB which

We We're quarter. fourth with potential some That's to a still COFECE, close progress the very outcome. expect real the continue making in actually which transaction to is encouraging.

our So our as intend continues comments have from F-X. back got assuming is to December it our We the that now. SEC on We've to proceed X. shareholder well meeting

From overlap, create time first We our shippers a an And base take over which positive, we're that fourth been needed in historic to support facts say very significant those Issues first I'll options combination have to the losses to that railroad spoken which we Obviously, issues competition, quarter, poor lose unlock service, going part but rolls compelling to STB months. pricing and to I know combination. predatory this it's case, we is this that to service see merger, as now, in required but focused and of have will create of said, concessions, combination that again, uniquely zero combination. which the of support some honor, not on U.S. of begin in expect the We've all concessions offset going questions, does of there, solid commitments in the it zero this new new are at their application this With facts those review never We're option. network Mexico get from got are the closed represent extremely support of things capacity competition. make XX The happy I'm to of the combination more. path to do to we shippers, for fourth. overlap, Canadian any perhaps or XX of are worst the concerns. our we'll shareholder the the expect to a process take the quarter. unique.

our for combined We've of we for opportunity macro environment CPKC and shareholders. some ahead experiencing, for smaller set employees, for got about The customers to ahead which growing, to that entity drive excitement got and a crop. is look increase grain is for the leads continues as the extremely strong. our We've So challenges our Canadian our what chain our but there's our challenges the base forward also issues, are certainly supply industry business. balance

So markets. numbers, a to Nadeem the turn it of with and on elaborate into then color the I'm that said, on step some we'll to to John will bring bit going over questions. a bit

John Brooks

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

So it said, out the supply and we temporary focused remain wasn't controlling these we as just its quarter as that maybe I what faced the industry frankly, are But issues control. without certainly in would many said, in certainly a I faced, believe flat Keith we challenges. characterize frustrating Keith chain areas. of as few on nature. can

that in markets, many at through down and favorable. still go . commodities of been, it's Our as remains strong pipeline frankly, the remain that of our I ever as look demand initiatives fundamentals overall they

combined were to this looking X% Price quarter, Now a specifically it down and but environment RTMs strong. combined the the at continues up mix QX, pricing and to Fuel tailwind. about positive some X% to X%. be in be X%. morning, be talk revenues were We'll FX

challenges metric expected around lower record a crop volumes third crop last results quarter, down Now revenues The XX% XX%. look these basis. size or were have quarter XX% on speak currency-adjusted in well down our million taking crop. closer I'll the tons the documented with Grain been at year's than Canadian a about XX to be revenue grain in performance, the to while were

the On the looking less side, U.S. definitely challenged. is crop

corn Although we're Canadian and and shortfall given markets. the and expect Canadian a seeing high the grain demand harvest Despite definitely I'm crop, demand, robust is smaller, the high excited. grain soybean export fairly we challenging

to customers, build our our X,XXX-foot continue our out with product. We franchise high-efficiency to expanding

into to We XXXX. in many have and X more elevator upgrades QX come complete in and QX alone

closure and down maintenance were was volumes Colonsay be Despite see wildfires strong. into front, demand XX% disruptions fundamentals quarter. we decrease in ongoing potash due a close are potash the the tell to fires. We in supply the rebounded ahead. future. bulk coal continuing upgrades volumes renewing Neptune and near as up of move as about and that, And to we supply to chain I of the September Portland We And years port the into of also XX%, terminals. for and the the XXXX the and at prospects The further, with were in and very the volume you the business, to Canpotex while upside August extension on were beyond. X% down long-term can saw following for revenues contract see we On on announce of excited QX expect reflection the with Canpotex mine. chain we Mosaic's partnership early a our the well

merchant a record the side increase chemicals, merchandise to on The QX. Moving plastics to business. of saw the portfolio energy, XX% -- revenues side

QX were to growth trains our in crude, products recovery shipping more strength up and DRUbit started per up as XX XX% and and and month. see to volumes ramped ECP continue plastics. we refined quickly than in Excluding

and the business viability are product. this about the long-term competitive excited stable of of this We nature pipeline new

XX%. frankly, continue and our sequentially In on a the other Globus levels this from automotive be lumber capacity We and increased revenues and metals Steel Forest on We frac volume in franchise. in as see the week. drive like it's saw and record chip up down from lapped by X%, contract recovery to were impacts the the products up were ongoing will we all while were to sand. see driven for volumes fell were quarter. XX%, shortage MMC, QX up the X% decline in volatile volumes roads, XX% revenues steel shortage. to and and as demand largely steel continuing, volumes September, off were down our X% QX. prices Automotive growth in revenues utilization chip and the choppy prices continue week front

be XXXX. low, for good Looking demand business remain continues the though, automotive strong, inventories see in specs to develop into XXXX, and dealer we opportunity

QX Finally, while the up revenue were and on quarterly record. business, was X% the of up XX%, side volumes another intermodal

a partnership to space, our and you, consecutive that our moves Express, Transload product our tell had approximately reliable to I customer already September XXX,XXX X retail will transload domestic Maersk. talking opened support expansion. perform me well the with we by facility truck intermodal. facility service domestic can transload take With our in capacity on Direct we're port particular We have continue now X in excite growth, The roads. X things X, year anchored strong, Vancouver Pacific front: On for and in quarters Vancouver The this rail really is off per and we record franchise. to facility been intermodal new strong in in Vancouver extremely of has about kind this

in with our Secondly, service. sequential growth I'm intermodal the domestic Canada Atlantic we've excited about seen new our

in versus volume driven increase have John XX% Domestic Intermodal We through a Saint 'XX. QX

the front, we quarter volumes COSCO the performed we continue the as in grow. to Maersk OOCL onboarded international extremely well On and

working and We our closely chain congestion. supply ongoing strong the with to manage demand, continue we to see are customers

intermodal We expect space the XXXX. in challenges into persist international to

supply temporary these crop, is close saying, issues marketplace. And the me improving by around and on chain team in things closely luck experience. the CP this to for we to service focused same continue own grain let battle of quality make control We work we monitor Canadian the So delivering committed we remain and well, challenges. some our certainly, our time, customers, and customer while at overall our the in

With feedback over and further partners these pass enhancing the to and The competition it together across combination and service grow. opportunities will overwhelming look a Nadeem. CP of I from between for to and network route list short that, North transloaders, customers, set America. of KCS out, has while networks As new line positive X bringing options the create customers continue been I'll

Nadeem Velani

will team am proud in team. persist the produced business morning. from the in headwinds of those some Thanks, will of mentioned. come the some we some Great. while good on the to We transitory this faced the manage John given near results of segments. quarter, certain on I And challenges John, this them we especially way same term, and expect

On was operating point is XXXX. increase the basis a from which XX.X%, quarter, XXX QX adjusted ratio

on higher partially and environment operating the pressure John ratio, volume put by environment offset Softer strong the fuel pricing spoke to. prices

expense increase we expense. rate KCS I'll results, a the services Looking interest note transaction, that hedges. $XX the related pertaining last training The line and side, morning. $XX the was X% Depreciation with Taking long-term improvement of result partially adjusted pay increase base. million, or higher purchased on XX% from down incentives. increased currency adjusted driver speak million X%. other an equipment $XX $X a of other, This to costs along basis million $XXX additional look was Fuel was at Equipment main in acquisition $XXX $X from a per and million of some results result pre-issuance a as for higher costs million the XX%, is a of at X% services on a higher Columbia benefits despite or as expense closer versus quarter a accruals in expense headcount increase few below casualty lower and expense million, was as total asset the pooled spend to largely adjusted the to you'll increase have of or result efficiency. $XX primary on IMS $XX million the million volumes. and the primarily driver rent a year. by adjusted fuel comp was of up a this fuel higher in Purchased in British offset X% The million items wildfires. of of price the prices, was costs, an and incremental or increased

line. the below Moving

primarily Income XX%, periodic tax as X% to effective the Rounding the and out recovery in result of income rate. to decreased statement, the components $X net EPS Kansas of grew tax related discount million recoveries a City lower other tax benefit a $XX quarter. reflecting was up diluted or expected, expense adjusted $X.XX rates. million, As transaction lower

Moving in to on increase. free have flow billion generated. to Year-to-date, $X.X cash in wrap free an strong things cash operations from We we generated the the XX% with quarter up. over cash

to $X.XX our disciplined remain the adjusted invest railroad for the in We of with and industry-leading on guided of capital spend our track CapEx meet are continue XX.X%. We to ROIC year. stewards billion

well adjusted of EBITDA, well our Our balance positioned to net targeted range. with liquidity sheet debt remain within and leverage adjusted very X.Xx

paused. share Our remains buyback program

BBB+ our and reduce rating will we increase targeted will to leverage range months. remain to XX the KCS committed approximately leverage over back credit While our transaction, pending with

EPS while QX on challenges, running deliver is and So growth. well network some had track double-digit remain guidance on the to we of our

in and a of transformational opportunity place front have team We us. a strong in

So over things with the to that, I'll Keith. back turn

Keith Creel

in team certainly but we controlling and unlock It's but John. not we actually challenges, Nadeem, certainly what no employees value grow long-term customers, our guess can is control. to where realize in rain, to stay questions. cost, make shortage this for there and of summarize, control shape, I This those With the demand shareholders. We going to outcome can't our allow overall, transaction. can said, Thanks, provide service, best-in-class and just game it for to better a excuses. it for our is until up marketplace prepare let's that for customers compelling transformational and open our a

Operator

be [Operator Wadewitz from Instructions] And at your first UBS. question will Tom

Tom Wadewitz

does with made I railroads? some wanted other that both resistance comments some the and you discussions Keith, is ask going wonder, and with there how in the and been of railroads to on -- that shippers. interest in from of on Has I deal you, with spent later? Or terms And something you with timeframe. discussions those anything come the are other things that say would the or on? you've well conversations there shippers going time

Keith Creel

have great have place. that We're Obviously, we've a reasonable come Obviously, we We've to shipping to we expectations with I KCS. get when we'll actually from the approach to going record those to and an get think it so and initially it's are a to compelling so and we'll issues, to track They're integrate We'll we progressive, of completely progressively the and anything to Tom. very and for reasonable. things will facts. rail a thing to being we've past the they that our you facts, railways moves. their that. the We're given continue opportunity we're experienced good great a supply large team create industry our part well, good And concerns. our encouraging for for industry, where but met the stay a a some something this. we've question, worked depth We all reasonable in just we facts we're place Great speak those long progressing with the with same be competition. interchanging far and I not concerns entity us. that by rekindled But to to those discussions. to very combined reasonable going become approached we U.S. a as can expectations discussions since to quite matter. industry. and for customers, railway We're going and railways benefit expect reengaged touchpoint going again, be The to I other going humble, this our as outcomes are very overall would have again, in and And of we're partners comes had very well from with take to with or rail have discussions get started reasonable. great discussions, some be in we'll Same not the will us. from this, run organizations. partners, unlike well. that's not because, anything facts this. unlike do they've for that's the threatened stay tell waits Obviously, to in again, come past go that reasonable And to couple into the they've simply end, in-depth address, And the customers exist. railways, these to Obviously, chain having very with spoken in haven't with experienced

Operator

Next at be from question Walter will Spracklin Capital. RBC

Walter Spracklin

had at this revenue XX%, looking being know changes, on some volume significant XX% XX% down pretty grain and Canadian particular of Canadian I roughly your you've moves the So grain, year.

think been have enough and Looking that question had the that gain grain you John, possibility out there, there's John? a can achieve growth volume of next you've forth in -- the the reopening success next realm share guess economy you I for and so and those decline such gain opportunities of you in year? year to think Do for offset that's some to that do on share

Keith Creel

Yes.

John I'll definitely Let Absolutely, color. RTM margin growth, Walter, high see we take me the a into -- and we I'll let to a the to path improvement. positive see level, get path

our the challenge business produce of think improvement, to positive in and margin his that John this those that, still able been capacity. quantify of growth when quantum RTM headwinds, overcome the you volume value positive growth, and represents work our the and compelling So with and and that you that team actually service have of you spite that to marketplace about grain in in book the convert tells

John are of to by and color dissipates grain that, it's muted a bit that transitions let I'll strengths provide challenging out, those So extremely exciting. this quite that frankly, being story once extremely,

John Brooks

Walter. Yes.

and despite So what volumes frustrated. you as we're in on And over still a as grain opportunities see going means this new Keith some much the open grain it's XXXX franchise. years, then that an up our and the that good Canada headwinds. fully this point. said, And path know as had markets a we're We've may we provide in realize of more positive of the we educating in all to grain for ourselves do new what, Canadian frankly, sort ride to of to at U.S. challenges offset

Beyond stronger is will Maersk that, the lot I than got us -- customers that, just that in think we our that about for solutions tailwind. provide XX%, starting only year we'll adding OOCL share gains, not customers, think, inter transload. work, year. good on there's got business this anticipated of been do volume of but full get market that I a frankly, We've up creating next terms COSCO a We've pipeline new

more business We could in future. The John want more meat we into to already fuels. of we're CMQ out franchise expansion of Canadian as to the Saint CMQ. and opportunity And crush when fair there's a move on already those the more facility, there of opportunity. the significant said, an We've trying a we squeeze from -- and I how that acquired still As amount be doubled there's bone. that oils renewable the business out crush, grain can that figure in

ramping is DRU So up.

all amount I the Canadian can of the challenges I list. upside and and Despite see headwinds, other So just commodity down a areas, opportunity. fair about the grain go the

Operator

will Next BMO. from Chamoun Fadi be question at

Fadi Chamoun

on So side. I ask to wanted pricing the

in in a quarters So perspective? can momentum last that you little couple business and touch help understand you've experienced us the bit pure maybe the pricing the XXXX from to of opportunity the a maybe price

Keith Creel

is Fadi, number always really, initiative -- CP. the team I at guess, an pricing one,

that to lower team our plus price. X% of we challenging sell the in and that's the inflation service, more times, slightly on pricing disciplined. good end. is We in value about We've environment being the and how long Our maybe talked plus times

We range. the to through We've roughly renewing again, about pricing of here that accelerated upper be has got year. expect XX% seeing of QX. the our And on end book, are I in

changing markets, discipline service. with least they're As don't know valuing I in of, I at look their of truck you of the in the think, how now to XXXX, and a growing about I capacity terms don’t terms sort in carriers ongoing of I right but see rail terms lot other

we've So very to seen to I'm what shape 'XX. looking similar -- to XXXX in up, to be maybe

Maeghan Albiston

that did your question? answer Fadi,

Fadi Chamoun

Yes, thank you.

Operator

Chris question from Citi. be will at Next Wetherbee

Chris Wetherbee

up the as bid? still leading anything what during in so some of it whole was you the opportunity could of about Has sort some wondering, in business sort you of changed? pertains diligence relative to the some specifics, the the it seeing combined Keith, or KSU last out Mexican particularly in to bit initial if stuff as little so, necessarily the thoughts quarter of mind? a Is maybe of teacher which sort year talk we're an picture, to good going on that for you maybe into regulation refined a around and deep thought still you of or been see opportunity strike, Mexico? some what that slowdown in some had last the related not so sort Can be which I now on might to think put there. bigger how dynamics Maybe the has you process the for of do your but I running, they're products, and the company off view

Keith Creel

on that's believe noise issue politics into refined can't challenges that Yes. very we out. they're cargo the displace your with dealing or that I the once some there's on get they itself that see we reliable transitory compelling is West some point, deny to The a obviously, here with which strike, Chris, is has port. there can't they with, Ultimately, that working fuels, control. interiors port at and there's getting we the of the that to challenges a U.S. Lazaro’s, will, opportunity resolved, Coast service coming U.S. teachers

So X a But Chris, -- certainly, we've today. not it's and certainly intend the positives if even compelling future that's pain convert. it's made the this, but offshoring ago maybe now, more having, all opportunity other you North has for us to undeniable. the with mean meantime, that about we're it said the caused and in all discussions we in that months and If American but I suffering sense customers, think

are can't you succeed components source, more issues on there's and Canadian business, So stabilize things to that, chain art of compelling Coast to able happening we're in the different had near major able exposed parts possible allow be retailer, in the Toronto last that many to and moving to of in near the the or and supply be control shore discussion. to with business your in compete you, control that an in week their undeniable it's so West some the of to supply a discussions to source having, these be X take be to and that we not I I'll tell able chains,

It's with, concerns done do the to opportunities that issues noise it's not phenomenal job dealing present that KCS, certainly develop to at themselves. opportunity do in continue chain, challenges. all a continue they're have the by So it's -- noise but and and that those muted they those other me navigating so themselves and they the

and just to not us life were than at we and when So make we world, as more into those take going the market bullish, this, the it. to we're given in with lemons were has lemonade stepped if we the

Operator

at David be Next question will Bernstein. from Vernon

David Vernon

of of here the income of up you an trust? rolling bought think asset in what What thought you up Burlington? while to ask any the they about as then be other a to of be line, in had held write-ups standpoint. sort sort wanted sort or accounting, you from to I marking into done sort asset to the have we in accounting net And of terms put transition into of percentage the the thinking Nadeem, the of doing should way Berkshire about it's started merger about value when KCS similar

Nadeem Velani

Yes.

So I'll take question your second first.

we’re yes, of process work a internally right So, the through and working PPA lot being now. done

Certainly, write-up to what ongoing. lots be, update in the you'll be paid January. that as for that work it, in that's So of that there'll value of we and will that will asset depreciation, given and we our QX see -- through

me. don't while income, trust, necessarily front As have exactly in percentage net far I like. get as have of the we'll in to back you to looks that what that

will consolidate be year for full And an a -- equity get we below then them, I’d we pickup consolidated from say the there fully when once they'll be approval. again, initially. So line now,

that work. David. accounting look right But the will how what that's you So now, have like, don't I equity as as for pickup will that far

Operator

be will of Bank Hoexler question America. Next at Ken from

Ken Hoexter

Good process. outlook. through And on on the maybe Nadeem, congrats morning. going your some margin thoughts

you and to just about say pure network. early excluding very of talking were John the where confidence sub-XX in You head terms on thoughts looking your given achieve through the 'XX, pricing, at on maybe in of year thoughts into kind was initial that what your just case,

Nadeem Velani

Sure.

margin improvement So we'll year. have confident still going to we're this we're --

facing of good that a of we’re gives it in So course, mind, what's rails, of the impact keep higher the And QX. I fuel we're you in left prices. think all sense all all --

at margin get anticipated margin think as a the had we it's So certainly, given around performance of year, improvement I that improvement. the pretty -- big it's not But surcharge. still as fuel a to beginning the strong of noise some

sight mentioned, far so As see John the increased for similar terms et fuel FX, as assuming think we ratio. in of still and mentioned, as have macro, cetera, the RTMs. we positive Keith And good path I operating of looks in the towards year XXXX, line this improvement XXXX to

XXXX in our be and point, that. we'll improvement this confident margin very to feel view able at So achieve we is

Ken Hoexter

scale given a flow-through the XXX Any or target Is it natural that? another on pricing? there or...? basis Is points levels just

Nadeem Velani

You'll have to wait X Ken. answer months for that there,

Operator

Your next from will Oglenski at Barclays. be Brandon question

Brandon Oglenski

much on West are talk John, especially. how seen congestion so we've heard in situation Can about ports, and guys U.S. you the situation is how approaching maybe the and you Coast Vancouver? differently about

John Brooks

Yes.

I the but international maybe expert morning were in and future lemonade. tell with to robust just that was with to books. of Coast, We've to the seeing, railroad, customers coming is in are coast They our diversity their team are thoughts in East X X to that think my back -- QX. Pacific can you ports well couple And given early. port diversity essentially Canadian having now ability that acquisition, then and a CMQ, each We that on added will we and -- talking also going with on we had loaders front. a We've I the of Coast I will like Brandon, I And and lemons access, this port So tell those of through matter. -- ago, Keith X Atlantic the U.S. we year can on the Mexico. you diversify have got on kind discussions today, Vancouver. what Gulf a the

the Coast to either shippers or opportunities look revenue area we to get drive I capacity we've areas. in Canadian that not out we into capacity chartered LA to would vessels, congestion to the can working ports. which to some but team move our you ways also the find to alleviate got X East have and in So West with the Beach have at in try utilize Long congestion, we only that's tell of with the X smaller ports or those bring them

I bottom our they're with to think and going that optimistic longer-term think lines, this a decouple quickly of these to all least presents at the be steamship network it's we it's line, facing. hard, ports, touch the drive we're will opportunity future. new the for But for change, the tremendous what to hard ability

Maeghan Albiston

next to to the want you do Sylvie, progress question?

Keith Creel

Yes please.

Operator

Justin. go Please ahead,

next. You're

Justin Long

for think of KCS? integration costs X-year thoughts the opportunity operating margin And of incremental curious should the flow? year synergy mindful I those synergies those and be period? we we think the about that as on how cadence if about should on there we diligence have as was synergies, incremental are more preparing done you you over any next Have and for updated any

John Brooks

Well, I'll piece. touch to the revenue synergy

there… As Keith said, [Technical Difficulty]

Operator

we Please to stand while reconnect. appears by. disconnected. moment try It has One Chris that

Keith Creel

We’re okay with that, Chris.

back our get Let's callers. to

Operator

sir, continue. Certainly, please

John Brooks

Okay, Justin.

that. about Sorry

front-end you we've with we've the a next the opportunities say look, described. go coming news week of CP more what can we there. together good lot There's revenue The through just exactly and becoming of a team team, the are initial you of loaded. to I these customers a think, speak. we're done actively and work of opportunity got So tell is, synergies, timing meeting lot I'd quantifying as I lot

capital years $X we'll X Nadeem pretty As line through equally those work as we the products will hit And sure timing the to at to their the to to synergies and opportunities, in line in then that team and work with customers revenue. operating that spread up running. the about we top place these day, have probably make be the obviously think able of for billion to end the with you it try

Nadeem Velani

Yes.

railway into side get side. this operating KCS, continue that the team, as day I'll now their I've job the and in true doing little on every they I the better very -- further PSR Orr involved of John provide team, his to a I'll me running a been railway. they're of color integration and can a you be. Let the on cost and tell capital

merger So in to of which we be same that. at do an standpoint, as we're the through we're uncovered obviously, which vice the make that standpoint, our capacity team, will lockstep, interline application, can of from versa, working plan, a to And time Mark continue part to operating them our in several opportunities more help any the planning, as become our take service our that. to improve, advantage work from that will going through fluid we to do to is able their continue increases we've and to and costs and expect well Their would agency improve. network sure joint that partner in closely

place. and serves now. do that it it we'll those some a of good So puts us started to already things, We've implement -- in us

once pro spending, So reliable, it a approval, nothing very Once lockstep over with in capacity to got surprising operating forma a that margins, a with as get a get we prescriptive. is period X value STB period, of in very grow X-year similar the integrate but be a the CPKC will in allow our customers a there's lot -- capital very similar companies, a into we short experience we've environment, It's It's proposition. train the lengths. obviously, in that will and at with we that's CP-like, X-year for. it plan period compelling all, business. It's planned what

we're convert STB resting execute synergies. we We're continue our review process on and about through in and that be forma as actively engaged as pro So we to excited and We're not we'll then go it. those the and process, laurels. exceed

Operator

Konark will question Scotiabank. from Next be at Gupta

Konark Gupta

discussions into wanted congestion dig to the just have can lines Vancouver other how to your kind comment say, they are West CMQ, had speak supply any seeing maybe any South kind constraints to opportunities? John, or you of chain are the you increased chain let's and of you you lanes steamship -- about seeing using at any Like supply Saint from business. incremental or Johns of interest West discussions So and how due to or perhaps an or shipping East in having to shippers, shift sort

John Brooks

we are. Konark, Yes,

would think to of in that make short term this of terms to I attempt nature. -- initially, flows, the their changes many massive hoping were make be lines steamship in apprehensive or fairly

I think I on, say bleed Now are and that discussions most into continued expect those will accelerating. XXXX. this would has

the lines I've come or overseas, and back that load cycle we've -- drop XX where to vessel Vancouver turn. of cases, eliminate to XX to look head what the opportunities might with then Seattle-Tacoma some that maybe worked take days into out of the steamship quicker are make down a maybe to that they to of and in vessel in typically maybe then terms a Seattle-Tacoma As it of boats stop because would said, and reconfigure some how these

to terms issues options. all going some, QX. we're those into would as of And you we're said, in say, as I starting see as better see those move And persist. these at opportunities. I accelerates that looking We're of So I some momentum in to XXXX think that

Operator

Seidl next will Your be question from of Jason Cowen.

Jason Seidl

talk you've bit of your intermodal freight of off wanted the keeping year, long-term most I the railroad? of keep some and seen. the over I've that let's the highway you've right say, to the about a congested be to taken clearly, probably little opportunities you because we're domestic to X in of ever you're going do think truck that What the percentage that X.X taken, on markets years, last this business now, able

John Brooks

thing interesting about the the intermodal front. here's domestic Jason,

into about our for believe we extensively growing management the that trucks. this in got spoke truck, routes. with to Day, we've -- on frankly, traffic terminals supply a program the We've And Investor share and can the We've chains a our not maybe We when the tell a but the we actually centers. that's base existed. you, our customers think of sticky we've how has that turn I allowed that to -- on wallet shortest got the allows opportunity product their cheaper get really it's and premium rate allowed implemented demand or is directly retail quick that also capacity running best think rail created convert since our they help customers control service. this rate to I our train at we've their our business they us opportunity manage depending back really pay it's that but to potentially want term. to long out makes flow distribution lengths And their I smooth traffic converted,

Jason Seidl

it's chain from shift more of supply a So customers? think your you

John Brooks

experiencing fruits freight. and And I Yes, yes. this that a we years. relative continue think seen it enjoy nice much is last been an loads building And given stays some thing. This we've do to as overnight I again, isn't incremental maybe of X, this and the X pop of believe our as to labor. CP, sticky the again, And we're there has to that sort enjoying environment,

Keith Creel

just me that's that -- grow, so become of meaningful their competitors, of Let some share and formula. gets with with -- enabler grow their baked way of retailers, it's especially some recent in space. this. you And little key a we've enjoyed approached from bit It's can a part They've market that But I've the key say recipe when I'll add color discussions you to the service, can you your them. had Canadian we’re customer Jason, a so and of in our then their of our because that, taking that they're help part you're growth, partnership, in.

to reliable paying way They the that as especially, commodity, value of key customers key from in this given capacities distribution treat centers, a Canada, like these land up you and as that metropolis, used So don't given we as haul, rate well for integral of is from to that fair the long terminal with that part you you provide to we've node node, all as our shy from reliably proposition, service, become don't these of and distribution lengths urban a their increase. superior up from away they to you're match formula. set like unique baked distribution again, recipe treat success. running you long again, that as and our have center, centers you capacity, formula that because, partner and part town, part the service in the network And a town are of

to thing. So magic the that's this

way of business. fundamental. the the transitory. grow It's it's book the way we So of book and to built It's foundational. have it's It's business, again, we'll not continue the

Operator

Scott will question Research. from Next Wolfe be at Group

Scott Group

you you can trust, Keith, just then are expedited merger? any customers maybe of allowed had and ground you're for KCS can or of running timeline while remind STB so own to the either you conversations operations things sort And interchanges with hit the kinds So the you've do regarding us, with the post merger? what just or the

Keith Creel

Yes.

when the run companies in start So is you independently. me with can you're let a What do question trust the second first.

that. the run or will Like can on KCS, we we marriage, run opportunities, CP. could and continue to to the So interline we'll CP KCS has discuss combination do before,

done you're you looking business, an the book ahead, have to of looking as can't. as you're participate move you that looking can Obviously, exercising control, discussions customers if in as have at, X that. We table, those planning. as seat far far you're of want of you're to kind interline at those diversify I your do and But

and a will not. As do violate thing ourselves STB. And the far the ire to ourselves to where or regulate. is we unnatural, position in doing what can't, as we're we're we're draw to The you justification put The or irritate put anything to position reason any is going going last going to going STB to take give exception not to them a we're in they're and/or the regulator, doing.

application. timeline. timing we we've being very that STB not with filed as we're of this We But get the once file point we'll could have have we've and what asked requested back about replied, have discussions point. yet. the at what On that this far something we soon today, month, we on at merger we application and perhaps not our cognizant not as but we they we We to updates. point, had would So at expect comments filed end that the hear the like the on after that that. expect of hopefully any It merger file application. commented to be, timing, within They

Scott Group

I understand. so Just

interline if to service customer -- using they interline, not has year. using service a using obviously can next So they today, is still be start can but interline it start

Keith Creel

us their Absolutely. can't the piece as fit the stops if best has thing. they railway business It's see same Yes. people obviously. There's and see to of giving from for X we're we do customer the act KCS as business. that their negotiate nothing more just company,

Operator

question next is JPMorgan. Your from Ossenbeck at Brian

Brian Ossenbeck

maybe that Canadian the offset could back the John, of I want year. on coal some market, things for to next come the grain you to

So coal strong this supply really and of some despite the has share been the market for chain shift. challenges

challenges some possibly you of upside are earlier? what's were come Canadian you offset expected to going maybe see Is foreseeable and a into future, given the volume running here back fourth down quarter that And again, to about 'XX as the where some and you into you going driving back for look just those do life? there be talk list grain prices to to mines think that? So can you're to

John Brooks

Yes.

-- beyond fires, So they're year-over-year. Teck, out strong as of which we've I said, to coming turn in going had, the pretty growth quickly rebounded a

XX over metric million I tons. think

plans the I As we environment pricing work be you to continues described, amount you of had Neptune. as the -- closely opportunity growth a of opportunity this in a We see net for strong. right as has and on business And to look modeled play with there. at initially more them with fair we running Teck role think XXXX, We Westshore to expect XXXX.

U.S. In addition good to a our that, bump volumes. in coal we've seen

don't we'll not Teck next see they it competitor. are that’s mines dissimilar have the as more see. our organic about offset opportunity an to I know maybe talked or growth that up, being with U.S. year. whether side. any imminent to I in this opening We that in sustainable, Now as

And that's our you team, as focus our get them take the grain of example, are other just give created the we've lot other How you thing as discussions that comfort a XXXX. could ongoing, look into the possible offset that to that The units these we've a that where them again, are is potash, facilities as We described play X%. is XXXX, look opportunities. if up with how in others gives running delivered Frankly, really and opportunities opportunities to our I And get at QX, self-help to I that over do as fast work me things have I all sort as and be offset. we all longer-term to other we'll just again, were headwind? Those at have opportunity those that worked that business customers. presenting on those pipeline, an of and could up that ramped be and Riverdale a of number few as see these mine out. biggest RTMs with my normalized grain

Operator

Raymond Your James. Hansen next will Steve at question from be

Steven Hansen

potash We're currently here. going your there decade comment just ahead I'm front. on on the last pushing John, pricing to dovetail

X Brazil. I and per Western on now this production have volumes Hemisphere, both handle a [XXX] Yet even held issues side think a on in in year. we've of the remarks, got the number terminal prepared back there's front that been the your

can any holding And you for whether us environment to So little volumes flow you just that on more color a of perhaps back the potash shaking us of year you how aggressively? those next give see allow have been impediments guys? up will bit

John Brooks

Yes.

a their in last and is I I with think, few team Steve, were, meeting speak frankly, I'm strong here good growth diversification to And at actually to days see that just not a Canpotex talking news the but story. the this was projections. their pretty for have the them, upgrades Portland. of Part play as they challenges a going We we Neptune. saw trajectory. about

X is trains Now land the in ability essentially going for Portland to the to big a make difference Canpotex.

their you, Canpotex growth grain ability very and fuel their remain fundamentals can nutrients, domestic growth in not expectations, world also and So but for whether terms need those around similarly up strong all opportunities. positive. to think projections, I only has it's their of export tell the feed their capabilities, and and I [K+S],

and XXXX So I Steve, as a potash, do growth into story XXXX for see and good also us in beyond.

Operator

Poirier Benoit at Markets. Capital from is Desjardin question Next

Benoit Poirier

in land issues? light either the the chain talk deployment leverage about you accelerate of opportunities Could supply excess to the overall or

John Brooks

Our Benoit? land opportunities,

Benoit Poirier

excess accelerate the chain exactly acres these see deployment leverage this of the there issues across to light Yes, days. overall is to whether we your you in supply an have this network, opportunity

John Brooks

is. definitely there think I No,

spoke think to I it Keith earlier.

have development sort that product we As of product as terms in than to the gives see land of automakers, well the create a hall KCS, other the to something spot international spot. the carriers but this the only at Gulf in volume of ports the to also of new landing not is as capacity to think it new attack of U.S. bode I the through we think all capacity, different the we see due with opportunity that we solutions compounds, inland to in extend runs improve those I that our our North-South found and the of with lot in new footprint. includes not that's look automotive at have terminals the this our a over-the-road Mexico land the a X the We the us domestic but landing industry. future introduction capacity only And

So our about years think Benoit, our a story last few you forward. differentiator story the think it's and I looking as

Keith Creel

Yes.

to chain I think lost the create credibility that for KCS and strategy, be point customers, other we've you when can't additional we've very ability matching our execute up up very with success to other it scale story capacity combined don't Benoit to we are integration combine exciting the going the go as to scale that that X CP as this the when combination land to -- had, -- these well with and assets our with not the planning land created value to very actually at take supply that what success much larger CPKC. strategic their railroads, expect part done that of and at be we're they that's property contiguous thinking we've a created have

Operator

you. Thank

Please now out go are over Creel. call back We will of the Mr. ahead, sir. to I Keith turn time.

Keith Creel

future STB long-term This was out creating focused remains American way a the as morning. humble, for close rail have remain as never a we thank U.S. you come We're that can driven, going the this to review going team margin forward fourth without quarter. industry North I competition. the and All right. and companies year strong. you through We're disciplined your team that compelling for a get time again to forma X this will uniquely of tell this Well, to focused. pro these We'll up railroads we to unique X this in RTM on improvement. have same ground to running the at prepared the We're for networking company. and the XXXX what time, this we integrate successful allows possible going same, unique hungry, growth, well go into these with to and the combination some value replicate way, we're hit set to when as in going ourselves supports a commerce

we said, next everyone our care. quarter. that reporting in with to and So speaking forward future results events to Take look

Operator

Thank and you, this sir. gentlemen, conference. concludes Ladies today's

now disconnect your You may lines.