Canadian Pacific Railway (CP)

Maeghan Albiston Vice President-Capital Markets
Keith Creel President and Chief Executive Officer
John Brooks Executive Vice President and Chief Marketing Officer
Nadeem Velani Executive Vice President and Chief Financial Officer
Pat Ottensmeyer Chief Executive Officer, Kansas City Southern
Mike Upchurch Chief Financial Officer, Kansas City Southern
Walter Spracklin RBC
Tom Wadewitz UBS
Fadi Chamoun BMO
Chris Wetherbee Citi
Jason Seidl Cowen
Steve Hansen Raymond James
Brandon Oglenski Barclays
Ken Hoexter Bank of America
Jon Chappell Evercore ISI
Scott Group Wolfe Research
Konark Gupta Scotia Bank
Benoit Poirier Desjardins
Call transcript
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Good afternoon. 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 Fourth 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 introduce would Vice the [Operator I to conference. Maeghan begin Instructions] And to like Albiston, Markets President, Capital

Maeghan Albiston

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

Brooks, begin, Executive KCS actual forward-looking President regarding and by answer risks, contains Marketing CP control Ottensmeyer; investors regulators. results non-GAAP on Nadeem our today contains be uncertainties are Also the Pat we happy this materially. in Chief Officer; call Vice trust, voting factors other which attending the X may MD&A Executive information with and I This and Officer. Executive CEO, to presentation approval you Slide release described actual behalf Southern aware remind U.S. and now Before that also to that presentation Creel, are Velani, and Upchurch, City John differ our of results on Chief here will press The Kansas pending by want CFO, the on STB. outlined President President could in Slide me and today measures Keith Canadian are filed With and and KCS, X. as who is Chief through a and Vice Financial is questions beneficially Mike are CP Officer; owned influence

STB KCS' overseen control of board CP’s is KCS and own directors. to KCS, approving officers independently managed business is During of the this by prior its period, trust and operate its by and and CP own

control, CP two operate prior to the During making independent this determination as STB, and KCS trust regarding a and arm's-length companies. period

in Ashley regarding reach has performance And please should only team. I feel to and highlight performance and their investor to about free KCS you addressed package result answer KCS’ position to today's that KCS website. KCS a out As that questions on their any have Mike, management aren't call, information results. would is an to posted truly the a questions

period. We now interest if and some time participants introduce one. to call pleasure question-and-answer and your you formal the my In President appreciate will CEO, a we our Mr. many limit and with is Creel. Keith could the of to remarks questions would possible, as It start to with as follow that allow

Keith Creel

Okay. Thank you, Maeghan.

I very a what From again Let deep certainly which in in tell eight took welcome. November. year breath I exceptionally carried well, those into thanks. the as days British family. of say call to Welcome then to challenging from close deserves to was sport, this was Pat that railroading get outdoor we're railroad to grit a miraculous in which call you conditions, me aware right special January. effort to the thank degree again, lot, and commitment, had quarter but is the incredible a and this determination tested truly I some team's CP overcome catastrophic I conditions today out, temperatures Columbia, we and can a an into result this think but XX flooding the proceed our under as They that all produce the occurred would step open

we and of XX.X% delivered an full $X sacrifice. fourth that again, operating year. your for of it, this you adjusted quarter for outcome, results billion, thank So Thank of you was ratio revenues yes, themselves, And know they winter, that. an the tell we for To the sport, EPS I'll $X.XX given outdoor of exceptionable you challenges yes, commitment, your the quarter faced. the

last revenue year's EPS record last total XX X% year. of were increase up of Our X%, is represents growth Adjusted operating $X.XX the basis points ratio versus revenues XX.X%, grow which OR. over

to well, face we In performance. the the lengths a family challenges train As improvements spite increase CP year of those with operating for we efficiency company. again, new outstanding Fuel to result. strong drive metrics spite in were record and and that said, of an of three these all X% think challenges the as still were and able an productivity finished I the improving weights lows respectively, as outstanding by result X%,

that We XXth technology did allows enjoy But a step-up to front. accidents record our and us to year industry. in On we're coming the with to in train people, have proud to area. personal proud year. front, to safety strong while said, to the this said, on to we testament grasp see the this year, the that team's improvements said, employees for an the company of. continue that's something the consecutive from you in of the commitment This That new XX% technology a Personal in down all six bit the that to progress we're safety low again, further never last all-time that know day. to it's safety injuries we safety a record that often, this the going and and front, culture is injury our we and don't area every I'd We certainly a extremely say we're all-time more were best home proud year-over-year marks injury where low. commitment do process there's of on CP that leverage XX,XXX improvements as of the drive we're arrive consecutive have safely journey. made

for year hydrogen future. in on more more as And we the proud demonstrate fueling significant continue enter to becoming ranked to say to into consecutive we've Alberta, the expand the as highest the continue front, setting able North another that stations as topical from Corporate actually to the into scope with this this the on our under the Knights Index. days road-trials. all Sustainability volition, Reduction front, to projects transportation the progress. is look own in to company commitment hydrogen the that our we of leadership XXX concept own forward happy progress, There we American to a two second grant Focusing sustainability the locomotive moved freight very are We're on its Global we it locomotive We the moved area make which last space, that Dow from to been named Jones Emissions well sustainable be hydrogen the switching named is the funding as and XXXX. to locomotives moving power. additional I'm from received reality, in to its quarter next phase Index in fourth And three

concept. very footprint freight of it's and industry. fact, not it's change it's to in a this way, the not So meaningful a emission a spin, in It's going locomotives

the New ability KCS passenger on shipping specifically with reasonable too, arise. but on agreement fourth is that process. CP we're with in head the that's itself, to groups reasonable headlines going related excited you rails Orleans area. CPKC to of into network Baton to to underway. with address commitment to service, find Amtrak, doubt, more to many – journey, The We're concerns our We're process. respect the seen December the might early concerns of in reach KCS regulatory the about quarter, On network the the on railroad. very to going regulatory Again, to have the to another likely not No process well trust transaction review other this Rogue the XX. milestone the the our excited, only solutions our an closing demonstrating and And work some extremely

been have We Our approved this Mexico we and quite the we'll STB. approved can enthusiastic service go think transnational in one elaborate, XX efficient for but to what American work, customers railroad U.S., North involved long single all and by be Q&A, transnational exist continent. in it it's are service contacts, railroad, markets – front opportunity will over is or about has I'm our And and only be time, about frankly, made will creating in rail possible. possible, but art customer we And that, assuming talking seamless customers. reliable Canada. believe when talking of about to the new only across the getting intimately the address the forever able I single-line of I the a John the and reaching new sure to been the never it's

bring let elaborate save the the on markets over balance will then to we'll and for me the of more numbers with Nadeem bit the color hand and it on So to Q&A. John that, a time

John Brooks

good Keith, Well, everyone. and thank afternoon, you, right. All

our grain So outdoor spoke an our quarter, worked close certainly about volumes. western was even stayed customers to to as marketplace team find sport. We the into Keith recover We solutions as a they the was pride hard more outage but going of do. is fourth to B.C. quarter the our comps, operating our they quarter. that team network always across our the our it challenging, other did as through pressure super given this customers certainly continued and to that part this our to My be and certainly knew reminder

QX challenging, XXXX revenue and record certainly a our for While our with performance freight full was total year revenue. all-in

quarter, and were positive to be decline Now in combined combined in an X% the and X%. specifically despite QX, looking tailwind Fuel be at FX X% revenues XX% RTMs. mix to up price a and

past transport the in many industry, very be from weeks over the few pricing continues heard, strong. to all you've the As environment

revenues down fourth a quarter, our a taking XX% were on performance, results were currency-adjusted quarter I'll basis. volumes at XX%. the the Now to down closer revenue while speak look Grain in

crop with for Canadian driving this RTM and an all-time is year As in crop decline expected, Canadian grain we've created in XX% record growth. and XX% year-over-year We the The grain decline news is franchise the good the in had the an reduction U.S. volumes. quarter our taken opportunity.

corn hard new of to the As into Canada U.S. team create example, shortage an of feed. domestic moving offset to and by a in Canadian to our the supplement challenges with the cattle chain some receivers worked shippers lots supply feed extremely

new challenges persist grain We QX. crop in expect until get in the the Canadian we to

to crop some start we of moisture. potential will in but see the visibility across the much the We providing are into ground to happy spring, on XXXX needed prairies, the certainly the get snow better

volume X% revenues flood with On we more by worked decrease outage volumes the moving in to closely were up while the the quarter where volume to B.C. front, lost were The minimize Canpotex XX%. potash down the in Portland. reflects trains

As new Canpotex. with have signing we of December, you long-term contract the in our would announced seen

see markets. as supply chain volume business, as mines the Ridley. trains out floods, reduced We the bulk in strong continues are this routing we to in see coal down while as XX%, and growth demand down single-digit its were and by challenged XXXX Canpotex to the resulting close in volumes from And we extend were the proud global revenues north volumes was XX% high expect more partnership to

with I'm chemicals, record in new excited to volumes. We revenue negative The customers of slightly and sulfur XX% partner. expected Moving energy, a facility ECP in and beginning Heartland. ECP is portfolio on the to operations new these plastics crude. to performance volumes CP preferred their QX, plastics rail despite the had ultra-low flat in on year be revenues two increased their opportunities see are independent merchandise. to proud new in in growth start saw energy full produce diesel inter-pipeline to Both rail commissioning Alberta

as XX,XXX year. of up, and we year, that we carloads run full last The liquidated In slightly rate rate initiative. this at unit to roll expected that of of X ramped per of to has Hardisty, expect XX,XXX about we a day moved barrels through Now at damages the XXXX, we the crude. successfully our and off Alberta DRU run contract are Phase decline

non-hazardous deliver from up Kansas City while a reminder, were to this the were product almost in XX%, growth business, up services the to XX% forest Forest continues business goes KCS. the a to products our business. revenues to movement that volumes and In MMC, interchange steel were As flat, revenues largely and a driven our in produces performance. our and frac volumes transload and QX for process strong CP increased record by due DRU team In price Hardisty, XX% Products, DRUbit sand exclusively double-digit

the quarter. carload our markets. and and were volumes to Our Automotive were challenge XX%, service XX% manifest in the move vehicles Chevy single our unit OEMs. the train disruptions Oshawa The in GM under to related Despite half revenues continue chip into plant. both down these shortage were have latest business variant, winning particularly these XXXX of facility Omicron see shutdowns the on COVID-related down Silverado GM’s is vehicles. these product CP this outlook distribution second as new the year. last to we is partnered for looking excited the rail load on first of week at and We business better, while

revenue quarterly Now our X%. finally, X% of was up were side and down our on intermodal business, volumes

for intermodal quarters facility in enabling Transload new record containers Vancouver their now expense new we domestic our domestic the five had The in is opened have back We disruptions offering with spin our Maersk solutions, markets. distribution significant overseas intermodal to consecutive while with Maersk franchise Pacific even to customers BC. faster

solution in XXXX trucks roads the of transload thousands while growth to new franchise. take of at Our revenue same time the off will Vancouver, delivering our

of very Canadian We proud are with a contract new also Tire. multi-year

XXXX. demand quarter. customers I hard team to ongoing fluidity. regain the you, forward long-standing is team with anticipate But Tire with challenges with we partnership pent-up the Canada. see tell in look and finally, partners across collaboration volumes and we and to supply in deliver Our their the is to BC the growing can as Canadian our port chain working recovery supply strong stronger, international franchise, We through import our outage negatively chain continued impacted move our And now solutions

So demand see across many of lines of we’re ahead see our let saying looking, by Canadian at to grain overcome levels close headwind and business as I me of record us. the it opportunities

As on my team to win always, marketplace. value help their of are our the and is capacity, our we with their and laser closely customers pricing working to service in focused

met extremely the the in customers close approved the alternatives we STB, opportunity and to I longer network, educate QX by we’re XXX create. and with remains routes list to the referenced, will new feedback them combined on Keith growing you, once As can that almost the is tell customer positive. CP-KCS our competitive

turn and Nadeem. over stop to I’ll that, with So it

Nadeem Velani

of the resiliency. highlighted team’s challenges good and XXXX that year afternoon. was a John, Thanks,

As we the it’s XXXX, us, not look without opportunity of but some are we about excited ahead noise. to

we control. create that we false it release. not guidance guidance notice will to pieces, our as think did more that With decision usual don’t are we in You than provide formal variables many press provide would there so moving

expected did operations XXXX not guidance to For and its example, as on do control we’ll KCS we create not their have earnings. so their front, the providing and their impact our on be plan, of not performance

the With with as not uncertainty, to well some the process guidance. the in presenting provide was we felt Omicron timing factors it regulatory formal STB conclusion and macro the of of hands and other near-term prudent as

and as to much transparency to provide We modeling appropriate. my are where providing we data key as committed are in able points remarks I’ll

year, higher items Equipment I us basis, million you a locomotive from of increase points million XXX the basis last transaction. operating Materials fuel Depreciation Tunnel full that to year asset closer as $X at of variances Taking the on down or we result for result volumes included to as Detroit a a at looking volume the XX.X%. and fuel lower a ratio an XXX This FX-adjusted prices. to moving $XX overall, lower speak increased XX.X%, quarter. primarily remind XX% a again in lower the expense million, will higher now or of X% On So as an was XX% rents our QX were River adjusted a as once step efficiency $XXX few a targets. the primary $X or an is Fuel result equipment. record QX a I was emissions operating XXXX. X% of ratio of result lower a reduction expense or XX%, benefits basis down a basis expense was increased expense prices million expense of pooled XXXX X% paid driver quarter. base. achieved increase million point Comp in year. QX down the and side, was will a $XX versus the point XXX basis. closer impact volume the look decrease on The from

Tunnel standalone, total XXXX costs. in a Detroit CP Purchase increase we to adjusted is similar as QX million the XX% of asset when million an of increase River main $XX $XX was services our $XXX driver XXXX. in gain lapping acquisition million, grows. or acquisition For million increase base $XX a expect The the related for our the of for of

diluted the the pickup expect periodic incurred which $XXX which of Moving expense reflecting Net In of XX weighted million, as million for XXXX. recognizing a of and recovery our with denominated to adjusted billion XXXX, of up included Financing total below flat interest benefit of from the since increased components deliver costs at us $XX accordance are a of we debt line, this flexibility equity to our coupon end billion attractive million very we rates quarter. we’ve we transaction while issued days KCS, We to excluded net Other average billion during the EPS. CADX.X rates. in be to $XX at is with discount debt across result relatively lower higher finance in loads maintaining debt the multiple X.X%. a also financial allowed plans. issued of $XX.X US$X.X tenors acquisition year,

For be expense to the decreased primarily adjusted of result X% as statement, or tax Income Rounding diluted tax out a XXXX, a $X.XX CP approximately income EPS standalone quarter. should rate. lower $XX interest expense effective XX%, the million $XXX million. in decreased

to on the fourth the slide. performance quarter a challenging next on year caps, CP full Moving results family. year The for

and Adjusted was point Our basis a adjusted ratio operating full XX.X%, grew increase diluted increased record EPS year year-over-year. X%. our income X%, adjusted XX

we XX% to model the expect be to XXX count corporate to you out CP’s for would average million in share approximately XX.X% be As tax shares XXXX, rate range. and the

on balance currently our issued transformational at of is actions and acquisition dividend this KCS. work pause our all our the of with Leverage peak to taken with its program have buyback prudent year as growth are We opportunity debt. we we sheet as the with merger

coming our we target. until times and pay remain as dividend down paused debt-to-EBITDA will return months. leverage will to X.X You our over down acquisition the buyback increases we see The come XX rapidly debt

KCS January cash from to flow are that debt. be will already a starting dividend We this with see to month applied in outstanding

to up, a KCS wrapping Before pickup. want little the I around context equity provide accounting

expect income our income, for of pickup, XXX% includes loss net not below financial XX reflecting of have recognizing control. costs, you $XXX their line up the be statements will in XX depreciation creating taxes owned are allocation. in In in increase the and in transaction partially the pickup of for interest those depreciation we US$XXX preliminary the will depreciation million, which days. equity purchase days, the We XXXX, shares step amortization be up operating step XXXX, credits only QX equity price that see in days see approximately we XX you we expense. Embedded million the offsetting from to and be as one do In so a deferred

equity our So is the to opportunity, as as without be and forward noise. but railroaders be from we team it will accomplish XXXX and to the can of year pickup of We’ll as at not a will every the occasion rose income. we million turn. XXXX XXXX. our US$XXX move tested equity hard the regulatory in net process. I’m look metal what impact reduction of transparent work through be to XXXX some KCS’ a proud team possible to of the

that, things to with before So over wrap Q&A. to me up pass things let Keith

Keith Creel

Okay. Nadeem, Thanks, and John.

of some close strong. as environment is remarks disruptions, of saying by me about uncertainty the demand of that and the my move super ahead lie us opportunities we looking we’re excited Let the in XXXX, back forward, sort

in and that – capabilities our and our initiatives XXXX service unique couple beyond. You succeed with

extremely, the You without extremely bright. Difficulty] is [Technical future this combine CPKC network, our combined standalone opportunities


standby while Keith’s we Please reconnect line.

Nadeem Velani

hear Keith, can’t you. we


Please host gentlemen, site. to please standby the reconnect we continue everyone. Ladies standby while and

Keith Creel



sir. ahead, go Please

reconnected. been You’ve

Keith Creel


said, that the that’s made minute heard. everything not So I’m remarks that quite I assume going were a that think I I ago frankly, to

apologize I technology for difficulties. the So

Nadeem, just my the of and So to we we say I’m color, and XXXX, disruptions. past me forward by close let going look and up you, and that to remarks as John thank saying the get for back uncertainty some

demand with and We We’re extremely our ahead. initiatives excited capabilities. strong. about unique that the This service opportunities that couple our lie environment is

Difficulty] to [Technical well-positioned succeed. extremely We’re


to while ladies standby Please standby, and ladies reconnect. gentlemen. please and continue Once we again gentlemen,

Nadeem Velani

Operator, Nadeem – it’s Velani. I think

and We have myself Keith Creel.


ahead. Please go

Nadeem Velani

Q&A. We can for open up


be will Please Walter [Operator at your first question Instructions] RBC. ahead. Spracklin from And go

Walter Spracklin

Good everyone. much. afternoon, Yes. Thanks very

Keith Creel

Hey, Walter.

Walter Spracklin


in just concessions. get from a you perhaps a a of There’s – If what there’s question we lot start been on of get we know a lot So of Keith, those. hear I those the filings. lot could noise with I can me. investors.

of You that the areas request mentioned what’s of for And outcome you may material received from that see? deem continue be that of – what’s are reasonable. that part and continue concessions reasonable as you unlikely this what you do that be view reasonable the you’re not review? separating might to you you Can we highlight to

Keith Creel

about Walter, Often, offset to and start made. me I’ll can that proposed concessions competition. service let me transaction, required this we confirming this points are about processing Significant for hopefully overlap, none – transaction. you true with Well, have just this. the okay. think statement of Network those hear you regulatory losses

been far, So a not that’s point. have so the The starting requests made that obviously. surprise,

We But the at on expected at come asking to to two-week pro-competitive certain very as network. Again, outcome is the freight fact conversation, for obviously. for going for leads the beginning, we the negotiate the we’re me, customer, to time, a a reasonable same reasonable for the things. and said country, good everybody to terms from table

a can to the it. encouraged they have see reasonable ruling. expectation support best can we was come to competition. say you, They’re for facts I So significant good tell stable you not STB way concessions, I and very That’s recent Walter, I anyone probably all when with. the

I is – it’s me, and I to what think think that fair open about says a process. this

which a the an commitment and think this of demonstrates our all the transaction, to well pro-competitive for it review proposed very efficient combination. I of to positive fact timely and commitment bodes the of procedural schedule

Walter Spracklin

Thank you, always. as Keith. Appreciate the time

Keith Creel

Walter. you, Thank


you. Thank

from Next ahead. go UBS. at Wadewitz question Please will Tom be

Tom Wadewitz

Keith, afternoon. on you’re the obviously operating is constrained my understanding that Good Yes. side.

of or a Do conjunction a perspective, I lot. to XXXX with you KCS that touch guess, business of of able but things would obviously, combination go You in XXX that KCS meetings kind any you’re that? with said, new you together management, to I be But KSU I type from new sites you’ll network. customers, like we the can related customer talking to contracts, is ag the was think auto win reach know you it in announcements serving, calls expect can’t don’t mean, if

Keith Creel

by to myself CP, are handling going handle our business, team a handling obviously, the we Pat There’s from that. interested start me be in that saying assuming this nothing have that single KCS’ benefit that line transaction, us Let and customer singular his approves very team this fashion. ours. new could and make the a to from we STB might might or service, from proposed prevents any upon discussion contingent

answer is discuss So team we possible. CP that’s tell in at what the line opportunities our I the we’ve that you point, the this the But CP might participated like. And their talking yes, share customers. obviously, future I with can then look had, about meetings

customer a combination make, transaction. we’re from opportunities groundwork key obviously, so the customers nature best uniquely the through the to choosing can laid, being of the it’s pro-competitive this benefit to benefit To this options that – out So they into and opportunity you with going to educate me, is but our that them lock of to point and that the long-term we is create. get decision benefits contracts in not doing our

the talk about customer, mean what like and Tom. control the not what stand-alone. future So KCS we looks answers to the might together very can that assuming hopefully, for to careful be STB over approves or will We influence exert exert that your But not again, the our transaction. question, and got two

Tom Wadewitz

maybe keep to So the expectations year it stage come the probably and for sounds low this approval. more after for like the setting

Keith Creel


certainly or We’re a wins not transaction. of business result in the taking any as customer

are groundwork the as for what’s and preparing just come, We’re they for possible. laying to

Tom Wadewitz

Keith. Great. you, Thank

Keith Creel

you, Thank Tom.


you. Thank

from be will BMO. Fadi question at Chamoun ahead. go Next Please

Fadi Chamoun

short Thank key can this A of statement, Are addresses you to everyone. support this kind potentially afternoon, up the firm mean, other ahead try Amtrak you I by along concern which go question you. there of other Good there lines, things regulators. the if that clearly same I that address hearing have to this line railroads? like later things parties – other regulatory this even just bit a process maybe with if the transaction, potentially key on. wonder or before you little process, in we are can

Keith Creel

and Fadi, we the individual an yes. on the suggest prefer question, line, Yes. come be, if can great reasonable it’s the for between is reach with short is agreement I to with part terms association, And the ourselves, that the whatever whether item whether answer the might would line, whether that. the I would it’s think it’s for whether customer, STB it’s main absolutely

We’ve had discussions So are discussions We’ve lines. those than obviously, some discussions, Class all in being all the others, those X. short had areas. more with had with

discussions with We’re having shipping organization.

to So of between and we’re prepared I alongside, to to guess, listen come solutions reasonable, parallel to concerns to the to prior making those hopefully ourselves process. available have discussions, reasonable in acceptable parties all with merger application

Fadi Chamoun

the where the you when other different some these of carriers. Are views Class between go? like things where and address they you are see to X views of things the things with And kind want widely

Keith Creel

I’ve the the lot got you listen backdrop the we because old I got going to, history of I’m this review what one, can compare at Well, over it that obviously, forward precedents, a moving I’ve of lot way ask to But rules. number look a it, is. I is

So deals obviously, made there’s with have a have that concessions that been that filed STB. been different catalog been the of and have in agreements done

and benefit in obviously, precedence interchanges on have those and terms So before the that these open certain commitments, us. We’ve terms. the keep benefit reasonable to physical have made waters of we – navigated

bottleneck to going pricing. We’re new create not

settlement discussions into reasonable shipping to arbitrated groups in enter with We’re individual willing some our process and/or our customers.

the that laws have position to the come reasonable will with the the solutions. us backdrop. payable, end, reasonable a but ultimately STB there’s understand have if what on again, this at to being someone seeks. Look, pro-competitive table, out. represent unreasonable, are. what because And that are if and not that up a then the always – we we STB to to to of options I what terms, if we strong be we when they’re find is So discussions pro-competition puts And that’s on have to facts before, menu is the We resolve very that understand will it can’t in understand these

Fadi Chamoun

Appreciate great. it. Okay, Thanks.

Keith Creel

Thank you, Fadi.


you. Thank

be Please Wetherbee will Citi. go question ahead. from at Chris Next

Chris Wetherbee

Good of thoughts afternoon, maybe control a there’s through in year, thanks. little talk you’ve about XXXX? ramp the some help bit go the I maybe get CP that I maybe basis, overall want parts got gave fronts, within could sense out? And dynamic Hey, then a guys. of know certainly. of around about that two hoping I just least on challenges But your to but this you appreciate moving thinking cost, a of individual playing outside as us XXXX? XXXX, may we how see ratio. lot volume how Obviously, there’s to some I you’re that on some been was at you of stand-alone but volume terms operating have we I items you a the for line in maybe guess, any thoughts

Keith Creel

way and obviously might is Let explain that a give this without high year. into see to But want comps. he pretty is level We TeleX color, it, some have to. Nadeem I let me story guidance, – this the getting tough This I’ll I’ll Chris.

last That’s in history last Canadian grain grain had year. January year. a have railroad my I’ve compared experienced in First to year. half, had case don’t January, condition we the year. as not the weather unicorn the this best We this that in We railroading

half. pressures headwinds volumes compare won’t that that are from in fluidity, obvious we from first from a there are conditions operating on benefit from standpoint some So and the

the we’re again, we can anticipate to down in grain comes more falling, you tailwind harvest weather hope turns to going that costs. to half, our what’s going favorable in a normalize first the I that’s We’ve when side. grain shortages some first to expect move on got that with the stabilize. and very and second. think all RTMs a the that The So got but you’re see half. to We’ve in. to and in the second And in be chip starts We start still new see autos, normal true quarter fourth

these rate to all grains these gives initiatives wins RTM other that valley from run with that with us half So spoken that again, to, the you demand environment, on growth. if a second with with in double-digit go that contract and John

us on the growth for improvement leads year the year. positive year, reaches margin basis. that a growth to for leads to stand-alone that the to That So positive for all RTM EPS us being

Chris Wetherbee

Okay. super helpful. Appreciate that. That’s


Thank you.

Cowen. will be from at Seidl question Jason Next ahead. Please go

Jason Seidl

trucking Thank it, make sure a as more and little a Also, I wanted given talk the for just bit Keith story guys be like for are you I any reading the guys you that to to call. operator, seen intermodal taking about vaccine It congestion seems of I team, if traffic thanks see I’m in inquiries there sector. it mandate want industry. of right. you couching the wanted half to have back eases. way might cross-border the my sort

John Brooks

Jason, this is John. there. I’ll jump in

grind think if it’s intermodal for about intermodal expect – I I to us. so little the The think, a I there, of import side think of through environment of you business, nowhere Vancouver to strong. out certainly, pent-up our good news representative But volumes on the the of continue time on a execute. lot do only bit international Domestically, franchise going water. got international we’ve domestic is are demand the take to we’ve the that not to demand hummed that. in

strong for expecting that another we’re as think QX. I domestic think our year QX, said, I And you’ll record space. I in franchise see intermodal a

international. different I on But a in between more our So expect the maybe year franchise. a two. domestic second it’s Yes, strong of story would a probably little half full

Jason Seidl

the And cross-border? Okay. regarding

John Brooks

front. looking we of on I lot going in a of a can our amount with you variability discussion sort that of know there’s at on seen our that And a morning. train few on we’re I customers of pairs fair we say You in earlier volume right our now yet. But a were haven’t wait-and-see mode this tell would what, of cross-border. kind

Jason Seidl

as Okay. I appreciate time gentlemen. this always


you. Thank

question Please Next Steve Raymond will at James. be go from Hansen ahead.

Steve Hansen

on wanted I on John, the talked for and both opportunity. the think back of sulfur your where diesel side Yes, time. it circle plastics was the about pet-chem one – on comments to thanks guys opportunity ultra-low I the you

ramp opportunity concept that might has and to present peer this talking that line some around renewable big on us over broader the time? starting years. up up see context as something coming also been the also step just about you it give diesel And in that Is of Your your well?

John Brooks

on Steve, thanks opportunities definitely our certainly at on for additional those our for the franchise soybean close with oils, crush as working other we’re it for whether input is. across franchise as only Not but U.S. we’re feedstock looking the as question. It oil Canada – with the side opportunities. be also canola or

in is, get origin got we think gulf And with the the to think opportunity it’s as the single-line the yes, as answer STB of as future the I and we’ve into feedstock customers relative potentially to grain spot control this tremendous grants see down a the franchise. right planted the market. a easier the sort and I refineries for the the in if we franchise frankly, CP-KC, the to long-term So, and haul opportunity to look

story CP-KC pretty in future, So, a could I think, stand-alone, it’s CP. provide good a opportunity And for good the also.

Steve Hansen

color. the Appreciate Thanks.


Thank you.

question at Oglenski Please be Brandon from Next ahead. Barclays. go will

Brandon Oglenski

afternoon everyone taking thanks good my question. Hey, for and

putting Just for clarification.

I that KSU? of call. think it ask earlier on I a who if Is on Mike were them and the I Ottensmeyer question Upchurch okay heard Pat

Keith Creel

Of course, absolutely.

Brandon Oglenski

opportunities network? you that Appreciate the be, little it. XXXX earnings see maybe it I until with guess guys, and challenges thought Yes, so some approaching talk I looks ahead. multitasking, a can in where hey came put for would I release your line we in I’m what maybe it about much like and didn’t here bit this great realize margins of that things apologize, your you call, not in at you out pretty but

Mike Upchurch

quick overview is a this just give here. I’ll Yes, Mike. you

of volume discussed would We side, all refined I I nice to the the the that and expect grow. issue, to think and in on our the has to chemical believe product that been should think we revenue continue due of well really past, growth. see segments, exception with

of business. side the in of steel new lot the facilities particularly on line, our a have We

in We have strong Mittal, bounce down Ternium, Steel think, in should Lázaro, Dynamics, a Grain, looks all in with Pesquería really with back and shipments. cross-border major the auto. facilities built I in at the grain growth see significant or U.S. little Mexico Gulf Coast

also of Port The growth. facility expansion green add renewable the an Arthur should are diesel growth. in some diamond We excited some that’s down going really about DRU add to facility

lead excited we’re the and pretty volume should So, opportunities, good to about growth that and revenue growth.

from thanks us. three On operating and the to releases them. John’s team. fuel really continuing XXXX that’s XXXX, cost behind very to in a efficiently side, first and our going around leverage Those we as challenges. entire productivity the better to cost equipment quarterly and know, are generate We running our leadership to had have continuing Really network very, to side Many on franchise. we had earnings be now our some and right is and efficiency labor about all the you

So, in we’re pretty XXXX. excited about those here opportunities

John Brooks

that. I to Brandon, add would just Yes,

our If statistics you look operating at package that that in fleet. put the the and metrics we look the that at on grain including our some of included of we website, package, performance

because mentioned. had refined lag Mexico. improved continues But year. So, cross-border fuels regulatory The Mike since service a changes in of last couple in substantially areas that of our weakness has just we definitely middle some the of to the some

performing opportunities good of in think back. our well So, to great we of is back, to extremely advantage these they And some take shape visibility come growth think and positioned. well. coming we’re network when We those and we’ve got see are I opportunities

Brandon Oglenski

Thank you.


you. Thank

Bank be America. Ken from of go at next will Your question ahead. Hoexter Please

Ken Hoexter

Keith, on can it’s Pat, know you bit costs, in for early KCS, the acquisition. too back don’t year maybe anything you’re terms I you this what cost your and great. just here. coming what KCS that thoughts at costs? this talk And that the about lot Pat, a impacts to on Keith, for closing talk a through on Maybe congrats obviously, about ongoing on should or then any walk expect spend? little the restructuring thoughts us Hey costs there just to if outlook plan impact we time? of of providing the

Nadeem Velani


Nadeem. So Ken, it’s

clarify, clarify costs, impact of I want when So to can say that? just you you just

Ken Hoexter

So it’s talk any aware there the guess be mathematical Is just XXXX. companies, of costs right? we just is it’s stand-alone in costs. One a guess it’s of M&A two kind I be early about And too are there example. should and would ownership XXXX? into of I the guess blend restructuring other early here on restructuring operating, the in phases. structure Yes. too a you terms second any to until I

Nadeem Velani

we’ve would growth I too this about No, Yes. you’re being say It’s right. talked early XXXX. on But a story.

– net but some XXX be be our have about KCS will up through equity that their depreciation – as IS we we’d and synergies, step-up, headcount net there as on cost our income, would the of there an would also in City. about, we and networks of Kansas additive billion credit then time going and million. credit shifting and deferred savings for about USD we talked for through and some about to income the two that’s pickup, And from headcount, to synergies we of talked million about the some But be to of fair offset over an be talked from taxes. about finance million I So XX in apart grow add $XX XXXX, a and offset that debt the Southern’s value USD that, Kansas little increase to bit the $X come

income I’d that’s So highlight. statement the impact that

from apart as So cost that, far nothing as restructuring. or

Ken Hoexter

any outlook, in provide talking terms Pat, forecast? an you did any And different in outlook, your is what then, about of CP thoughts than

Pat Ottensmeyer

going products. that and the time, in auto business have and We auto-related and affecting not, many chip we’re COVID issues uncertainties so and then shy on congestion at supply about just away trend the from and refined workforce future to impact this and chain

at Mike occur. when recoveries nice stay away with from I our this we on We’re gains guidance opportunities some as point. think volume covered specific productivity to see pretty and touched I But going for service,

Ken Hoexter

the for Thanks Great. time.


Thank you.

Evercore at Please Next ahead. question go be ISI. Chappell will Jon from

Jon Chappell

spoke Good guidance, giving administration for on about some you’re new couple either not such to years. or relates deceleration but should there, refined and you Mexican last a oil since Thank know briefly you big huge over even should that the we views I afternoon. has touched dependency on how or say. in and silo October refined just a you. been products. I administration’s Obviously, oil the really growth of timing we products Refined the maybe on independency, rail growth and products your there? has to think how for Good Mexican made announcement you’ve last Pat, follow-up.

Mike Upchurch

government number step shippers were up I’ll this product of one. Mexico. this that And to inspecting receiving regulations, the some the avoid go terrific rail tax. is has Mike. least XXXX. next and excise a product ahead and been in market terminals was midyear refined this Then took Yes, shut Obviously, really legally take labeling were the a for product that at inspect us, stepped the down cars through because government opportunity to

production easy that’s XXXX to overall and in PEMEX stabilization to is Mexico. here see but above did us you beginning in the think over not about news. here, We’re in where that business, good comps that’s in the predict But XXXX. so macro take XXXX to going demand XXXX still really in Hard environment exactly relatively XXXX, increased if levels. weak

to what's we'll hurt have the every because beginning They've production So pretty and our clearly their continue shifted be in terminals is of terminal inspected of but truck, to for from are news rail closure get rail is receiving approval in Mexico. see open. to business kind – to imports much XXXX these of The Mexico. what that's companies good

market third that macro stabilize So even PEMEX grow will is because environment, the producing a demand in only hopefully here of optimistic we're overall about and the Mexico.

two-thirds fuel from refined are And is final X they're a very see Mexico. just to PEMEX other shift then And then a fuel, ship rail, to back from and refinery which we truck oil, maybe lot more has come of really the point heavy into into the Park looking Deer product facility announced and down acquisition of that's to imports. back that that economical. recently much So hopeful we'll where

with ultra on a both be products successful, shipments finding on the to going them focused we're way make to and to So back. refined the work PEMEX north

opportunity that long this believe still, a term, good on is hopefully, bit color little And gives a growth of you this for we market. So us.

Jon Chappell

Thanks that Mike. detail for does. Definitely


you. Thank

Wolfe Group Scott from be will at question Research. Next Please go ahead.

Scott Group

thanks. afternoon guys. Hey, Good

you lot we this is last that more Keith, talked challenges XX of of recovery? for year? grain XXXX get Or there about of the year, we a last OR And potential stand-alone. think there were there's year. when So a getting do possible obviously, a

Keith Creel

the giving to we're And we achievable. guidance. benefit normal Yes. more become Not path things those challenging. Obviously, see obviously, and Scott, to going not again, Realistically, to of in two tell a be with grain XXXX. And XXXX it’s me if to crop. improvement. get that Obviously, more a that stories outcomes I into level, get meaningful normalize, volume

Scott Group

And Okay. question. I can then ask just John just one

bigger, there's the revenue I'm that with in synergy lumpier sure targets, of have some you kinds So mind. contracts

a Just bigger there directionally, do in mind? are those in the XXXX, opportunities lot contracts – terms of those in of late XXXX

John Brooks

so, Scott. Yes, I think

examples you give lumpier those marketplace. two a to we've whole you've grant and have status. new of if you of so works does need STB think the contracts Scott, received talk well. some got might bunch as for contract As bucket opportunity are competitive got don't it undertaken that that But And opens new you've think product, probably I'll those this. there that well. had for aggressive the timing a option been I opportunities And most why customers the of just those that regardless contract to saw they example, opportunities. you to out And the recently, pretty in this And of to create up them we their in an a control and miss they've the recently for made that one areas outreach beyond, get these Keith at this to more some it's about about into of what And customers And earlier, said markets, today Richardson to combination excited North and or sort are the able the base American opportunity in in major being International one some Canadian to create. believe we the North what they're two And customers with share this we creates presents indicative that those most and and combination, that companies and big companies global help look you but for being of Viterra. invest powerful. of if that totally synergies this American go those those States just desire the be combination CP of announced acquisitions about create opportunities, are United where this can and above is are approval, the new them. those very routes other

Scott Group

you Thank Appreciated. guys. Helpful.

Keith Creel

Scott. you, Thank


you. Thank

Next Bank. Please question at be will ahead. Scotia Gupta Konark from go

Konark Gupta

afternoon everyone. good and Thanks

perhaps Keith, the potentially the that to back, address will that reasonable come far you you remaining I shortly. any from divest see When sections reasonable competitors let from demand considering your demands. all synergy some address receive your your any so from guys to you actually, targets, demands impact have know anticipate in lanes. case, be and go on of you acquired wanted some to stated Just do may If mentioned you received kind competitors, or you will or

little about potentially talk impact As from bit can on a you the synergy demands? targets are those

Keith Creel

take speculating, back. facts concessions, be When for it. always I'd the best significant me Think comes don't me. it it works but support let it to

on Kansas that were I if fact. there’s the Springfield suggested Specifically made they'd that proposed are to us main errors, divestiture, there get best along in the railroad know factual that the to fact was assumptions that love our of that misstatement. to There's City. request But you competitor based some see or one requests particular

line our track. what not grow. into go understand an calls the If plan It's and not to overlapping It will doesn't to get filing It's Chicago. truly that our of shrink. being you specific details for,

that's that So again, that, are is, not can heard request, certainly when vehemently company this would I a to opposed you the compete say facts with that about as when and facts and don't think expect think the be reasonable I I to and ruled that events, viable is competition transaction line, network. going argument going to brings table for the that upon, That's a of and of are uniquely part single introduced. our carry It's our part the that one to to moment. this

is based concerned would very that. I on unreasonable, again, So that and that, say, I'm not on

which asking not an the currently you frankly, Fairway, concentrated If you other agreement internet, the associated rights is the was and in get KCS they're additional what about in to Meridian agreement. synapse back think between JV the one, for of That XXXX. if for BNSF the

So that. rules attractive There gain better that. make drive There Savannah. that. that again, if of South are precedence, of or Laredo it position benefit facts that before, there's has wouldn't these Franklinton how change to can't BNSF then around transaction you North and around what’s advantage gain that think presence don't or as did about to sense, a around been new I and create you otherwise as now. the are The laws might if And Again, from, make fact. understand from sense it

the going we'll if unreasonable, reach settlement, the there. can outcomes reasonable for talk get and it's in So about longest then of to to ask there. both reasonable the reasonable in parties not in again, and reasonable context But it's position terms we're be a we

need competitive full Our to. that facts indicate don't we

Konark Gupta

time. Thank Great. Appreciate the you.


be Next at Desjardins. Please question Benoit Poirier from go ahead. will

Benoit Poirier

the given congestion ports, for West with the Gentlemen, afternoon you good maybe Thank for And Yes. ports? do Keith, see interest for an much see interest do increased Coast everyone. you East Cárdenas? very and you increased an Lázaro Coast

Keith Creel

while at things discussing What a our transaction. route. solution my about of And will The Beach route Port obviously, John never markets. it amount the KCS capacity, CP But that be our bring diligence tremendous all from certain John. we a business Long considering CPKC outcomes same about know Port in nearshoring a this all they're all those traffic stages discussion with key know to looking uniquely are potential St. at lines. future, from a case KCS complement approves for to of can to benefit deepwater to on the there's assuming much going the access. to what's it. the less today, today's made It is Lázaros, it's cases should speak direct But viable Port board those built replace talking shortest can we're a future. is with the support miles things that. ton and of steamship those of The that the different what St. capacity in what But said going of La of it is has I STB that's tidewater be franchise. The for

and you this solution our better something capacity that's have exciting So the expedition in now our can customers extremely that as the growth the through enabler the And approves the to as day, in long beauty about assuming future, of is we're port, discussions, our what continue costs And we they the it selling. and for handle have exactly all supply product, those we've the and a with powerful we when it's excited again, to triangle best and in efficiently in possible these those our got now customers, art too. for enabler, a – transaction, be to chain messages that's of stakeholders. three STB

why perfect jobs, those. – get for this employees transaction, more our better for I it So exactly we're growth, There's and pro everyone something in coming see pursuing here. growth, that's a exactly that's why Pro paying excited. and competition, we're

will be solution would table today. challenges, that serve beautiful the the of what CP combination either brings to continent to where the KCS not us and be need North believe in transaction and three that last merger of that in from customers a an otherwise customers, we those world I because chain of uniquely countries this. customers possible, at customers, American supply a opportunity Our unique all a might All all like time connect tomorrow major transaction, major of to benefit have the

history. it's all extremely perfect in sense are makes and So conversations just too a that much narrative. time compelling following at those It

Benoit Poirier

Thanks great. That’s Keith.


you. Thank

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

Keith Creel

with for running integration by number let we we'll planning as we've to process your so benefits on and for these two talking create Throughout great we'll of with completing I favorable as parallel hit stakeholders be process, outcome get one, look about. running and can been hope ground our close possible me afternoon. time for we when which all customers. efficiently, to you obviously railroad in merger anticipate, all of Well, a Okay. for running day so start tell you, that unique application STB, participating, we the more the seamlessly the companies these the for this safely that forward, do prepared as proudly received our and be thanking this

we'd you. our first So results quarter call. Thank and focused be the on XXXX that's what about to look results we on next forward quarter second or sharing


conference. today's sir. does conclude Thank This you,

disconnect. may You now