Canadian National Railway (CNI) 26 Jan 222021 Q4 Earnings call transcript

Good afternoon. My name is Sara and I will be your operator today. Welcome to CN 's Fourth Quarter and Full Year 2021 Financial and Operating Results Conference Call. All participants are now in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. turn Relations. over to Vice Paul like Investor President now the to call Butcher, I'd gentlemen, and Ladies Mr. Butcher.

quarter full afternoon, for to railroading to fourth for joining good make us XXXX So everyone, strategic century. today discuss and progress on the CN plan, we XXst results as year thank our you and continue and re-defining 's

Houle, new off President our They We will Rail Ghislain fourth year Product CEO. JJ words would and like who the President, CN Executive are joined Senior Consumer board turn quarter few Officer. will CFO; today Chain; we Ruest, Senior and Rob our Chief a Chain full by Strategy kick Senior Then, Mr. Cairns, Executive this things Vice Centric the Robert Helen about and to COO; in with Vice Vice Vice Vice Supply President President, our results the Pace, and President XXXX. and Quirke, Chair of over President Keith and talk James Reilly, Supply Reardon, afternoon to call CEO; the about outgoing of our

We to remind like question. limit you please answer hold yourself questions and to I to a will period then would one and

to like the forward-looking which your are Now beginning get started, available of additional legal before we we'd attention the at and to draw statements information, the presentation.

our are statements regarding our expressed law. statements fully forward-looking from the meaning cause materially implied forward-looking are within These statements of or in may results to reminder, a statements in other presentation. uncertainties to and certain presentation differ in statements today's Canadian US and As these described more actual risks those that Securities cautionary projections contains the and and subject

Pace Chair a we Mr. to Robert? would before say So, board like begin, words. few Robert

you, Paul. Thank

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on So I'll note, meeting JJ, the you. turn to over that

on everyone. and good and you, evening, excellent congratulations all Thank these of news Robert,

highlights produced diluted EPS of adjusted operating on $X.X September plan of fourth full adjusted is upper All the tangible flow free a and ratio cash results strategic and already the showing quarter business that in profitability. with start page in Let's demonstrated five, quarter QX. the year guidance. the growth XX% of and introduced CN in, we at the billion, for of resiliency The XX.X% end

time pricing OR margin best number performance on of costs labor injuries, for because all also the was in on all noteworthy personal CN. including efficiency, The an at of out wash both a quarter fourth achieve from came record fuel a and lower all an time growth line initiative. Incremental time and also productivities safety Canadian Volume were very We best mainly BC XXXX, softer, and best time performance all and and cost of grain. level EPS was solid, solid. an

day ROIC later. was spite sequentially and improving XX.X% from go this As the X. took team condition, towards of our a December our for normally November weeks, for running about investment to reminder, XX capital. of Ghislain given XX% our will of into XX% network the major segment CN BC but the to XX% wash total revenue on guidance these year any on Vancouver tracks over return sees mainline XXXX the This rail three out our in to out detail performed. of The

is provide evidence how upscaling, premium, weekly pricing, of will Regarding same-store and price demurrage that of storage. upscale, auctions, we and the pricing on continued priority momentum aspects segment an James all

this we the announced labor these headcount about the QX people fewer about action so Regarding will we call took from September benefit XXXX. we sequentially throughout we year of than last of that at XXXX right quarter the fewer We and plan, XX strategic after reduction costs, than year. ended end XXXX

And approved demonstrate these commitment allocation today CN's range is X, on balanced XX, that our of negotiations on we I returning January priority ability securing The program from review CN released sustainability XX Lakes for XXXX Sustainability confident a September, ESG CN shutdown the it back divestiture turn are with basically regarding very share in On of Globe place in industry-leading the Regarding Board the who was Jones term. a was first by the and dividend and World a business shareholders. List around for increase. February over strategy was of recognized cover yearly excess in dollars program deliver to strategic consecutive And in will CDP, Great completed, non-rail Canada climate discussion leadership buyback capital the our secured for the we a in increase return also progressing options approved XX% transacts our prestigious for The a Canadian tackling agenda, corporate of ongoing. new in capital long that our an strategic that, freight in Board The regarding to the am forwarding vessel, A to it's its are Rob business, to the change. Dow year Mail. I amount for governance The shareholders dividend will a recognized to announce place plan for billion Director of pleased a by the the Index. XXth also X actions puts for XXXX. to CN Together, in the Rob? over ranking well. row for board XXXX, operation.

and in dedicated the our November and safely network men CN tracks CN the of by The restoring of by the catastrophic to service efficiently rains. return customers in thanks again events clock and meeting to British Columbia. resiliency QX, worked to XX showed women In caused JJ. you, once credit over who needs December, the our goes Thank our after and weather and outages around Alright. significant the the restoring its

plan XX. to gains XXXX beyond. completed our results and ability and hold exceeded heading The those The we've additional As reduction the was out considerable September efforts sequential set the and take indicated, goals made we create set QX, in on confidence against in QX. in value shareholder JJ into our us XXXX September the began XXXX in in progress giving of and to momentum in of headcount target make strategic

service materials and in showed containment reductions cost efforts significant Our purchasing other and year-over-year.

as last operating in and improved page CN accidents exception by The fewest for eight, remains to safety mentioned, to CN length, our an in in standpoint, performance was opportunity million. the again despite well $XX JJ our year train the employee impacts XXXX of best versus XXXX. last every of a cost quarter, XXXX improved team was reducing nearly core flat XX% year-over-year the for the half us forward. metrics going which number and improved as all-time From Moving an injuries, in to metric operating weather the while

efficiency. and sustainability further enhanced Our our was best leadership in industry fuel all-time position record by

carbon million. saved reducing us also efforts $XX emissions Our additional an XXXX in

announced with and a new future we shape, On capitalize railroading, great our CN the we December on growth. prepared signed part XX, experiences, transform infrastructure technology Google nine, to cloud. Our page customer as in very railroad in to partnership strategic and to deliver scheduled is of chain digital as supply are modernize on well long-term

costs operations. is key cloud, infrastructure and us the to part operating support will of first the to partnership and of better IT the transition The This modernization. IT applications improve which involve allow will

more customers and chain and ultimately second which part by our The visibility. digital machine will the will tools, platform partnership an learning employ give innovation agenda AI Google of drive supply clouds’ intuitive powered partners will and

and plan scheduled our Google and pass Our leadership on is insights digital reinforces James to to or and to marketing to our of strategic it industry With the provide our some railroading on partnership Cloud efforts DSR. team. commitment that, I'll with central Keith

to been pricing cost terms consistently core of the ahead competence Thank industry inflation and timing pricing leader and many has been you, cost for We've railway years. approach Disciplined in CN inflation Rob. of for railway team scale. an and a

terminals capacity. balance X.X% pricing in approach rate all of order hot understand and carload demand in renewals support our discipline. continue sequentially automotive is Keith need is The we and premium a mix equipment exceeds and as team match QX. sequentially guaranteed trains market multifaceted our and the all Keith? such price capacity time continue that to for place. improvements CN This mile of scarce QX in and our capacity. the double-digit about annual of When existing contribution pricing the is allocate delivering intermodal initiatives maintain invest capacity. with our tools XXXX, to utilize more price productivity that, destination saw Threshold capacity XXXX delivered balanced tools we record The greatly focus with to of price in careful were to has for that on growth first CN yield coming yield value insight an Train when for versus use pre-pandemic XXXX. improvements. intermodal wait through year real at pricing, margin it auctions price discovery market to same-store test for don't when We effects improved margin I'll and expected the we strong, price and and story. to year. their pricing story line service, Capacity Throughout an needed, sales, in the With customers supply. packages, to We're to the incremental density, a This single over price our to contract continue to to contributed levels through additional to capacity always and for in of allows momentum to is is to talk and growth. in many business of turn pricing equipment again the CN used profitable enhancements, us allocate key real growth velocity seasonal to port market. and Our improvement train provides incremental We QX. value. and capacity the marketing, more are operations priority The we to

segments on revenue Thank quarter, carloads growth Coast the grain. XX% Canadian of while up West exception and with refined In Prince to in coal products saw new than both was Rupert, QX we XX% export XX% and you, XXXX. James. set QX, close all the better propane, the in up petroleum of finished back to Frac new and sand records. revenue capacity revenue in continued over was quarter year the the growing in

adversely BC business revenues international in affected flooding. St. New the intermodal While John, did Jersey, solid volumes, worldwide were supply Domestic and XXXX just intermodal Halifax, New all transload Mobile Orleans business, the to flooding QX chain and automotive The volumes, XX% after set best-ever versus the disruptions Philadelphia, XX%. BC posted an experience record. the time transacts our ports their all quarter, through and before New were our our growth wholesalers with along of York, business volumes our up Canadian and we which port retail and

We continue which for positions automotive segment, see well in our us sequential to XXXX. improvements

offset back is coal volumes to franchise Valley the restart tech as the well Canada. Coal Neptune, carload Our fuels expected adding to story have moved for in of the TN strong that expected HX This otherwise a the the refined unique, weak grain growth is and Greater on of Canadian on PL capacity in new as XXXX. Mines volumes Western for transload Area have we pipeline. Toronto the would as Rupert We're in CST

this for bitumen to business solidifying new barrels position last be decade XXXXs. unit facility training start undiluted day. ethanol of We our transformational carrier range demand XX,XXX year are was early heavy is the the a the in crude, per undiluted the as up to capable renewable The further increasing grain in in with as expected handling of late for a volumes as dominant fuels of Saskatchewan

new will on several We at crude by intermodal to business. facilities Operators served Gulf. ports, rail unlike coming import years. scale our market the but automotive, term, capacity partner peak, we and bringing see CN up Terminal emerging market. regard export this its long-term of in have This to With line be and ramping three could be business fuels continue our to crude next Ocean new from the renewable this over at in the Longer ratable CN hydrogen the we with drive served year carloads

we ports the to strong, continuing remain East XXXX Midwest continue The to now innovate their served US strings solutions to being perspective. customers markets. on growth and story franchise we I'll drive volumes is is well-positioned Coast, balanced. introduced with new CN and financial yield, see strong CN and the profitable industry's to to evolution. support the it for auto Ghislain as as for and pass Gulf CN’s reach the our for well growth On to pricing,

My rail volumes to the Yeah. yield, washout snap and fourth outstanding an of our RTM will being billion, inflation due sustained December. CN’s grain BC, delivered part $X.XX second down more Keith. delivered XX% above you, large on the quarter in Revenues basis volume Thank in page performance. pricing quarter lower the on precious half XX optimizing and up of to on during which Canadian provide presentation, will We start despite cold solid the were network. comments the for X% on visibility

adjusted Our basis last adjusted last XXX billion, We up with versus EPS $X.X slightly net exclude results adjusted shareholder of was operating over to was adjusted advisory costs year. matters. XX% ratio which related lower than delivered of a diluted $X.XX, points QX record year. QX income XX.X%,

the volumes and expense down services versus repairs expense. mostly last due and initiatives last by on average driven capital XX% material headcount was me Turning material Purchased offset higher currency XX% highlight Labor more by are material expense in a few was and gross mile. expense work and lower plan. partly our quarter. transload of constant expense of fringe benefit many -- credits from up maintenance, lower basis, by ton lower This a price, let XX%, to was lower to of in Fuel expressed and by categories mostly expense which driven our XX, over increase terms by versus key year. a by capital year, driven XX% the page trucking and in was strategic under a

versus with by expense. This driven a to car improvement lower also continued year, equipment decrease quarter, see rents, we last in XX% higher

a year, adjusted achieved very demonstrating full quickly over capacity to proud the our of on adapt this year. I growth of resiliency main versus our were of a These to of to Vancouver results in XX% for am weeks our changing five year EPS great XX, results page conditions. last Turning loss despite total line

the the high moving page guidance. Now free year generated our on to at cash billion flow for $X.X of we XX, end of cash

progress Finally in year I'm billion XX% growth, made that our QX, in cash we remain have our XX% XX, free ROIC of we back report the we in outlook confident update on a operating of ratio me on pleased flow, XXXX XX. an on XXXX introduced targets of EPS $X full provide to XX%. to around with financial solid delivering resulting page September let on

end for capital revenues. the growth XX% Our be of year will at

Excluding the impact grain of outlined remains the by positive, the crop, significantly weaker Keith. volume Canadian environment as

call now and will back the you to on are We cost management for continuing to JJ turn remarks. yield focus some I closing efficiencies.

we Thank close you, Q&A. to to just Ghislain. before it And go

our railroading And of track on year strategy that we be QX September the redefine to XXXX, the it will for are expect half return reminder, saw and we a strategic continue XX, be growth our story we during generation. mostly announced and the result, at of step volume next deliver a disrupted time. you a to to chain next on plan. QX second Entering as As grain on Canadian supply the of with

As our you to result, cost We in with demand when nimbleness resilient. our already price saw it and capacity and team a running to solid the is respond have is operate made we recently we with and since action huge materialize network disruption plan. very progress I'm network in also The the July pleased decisively last had to November that very in British back team responded summer. in and more Columbia. solid the we've their

has you for our return enabling with century the turn and now, kudos people we future the combining industry leading for build So operator, delivering question. work our engineering it to the over and premier And excellence, bright CN long out technology term. all shareholders the of railroads will there back XXst leveraging a who of operating to operational hard. of very to us

TD The Radbourne go the Please ahead. question comes of line from Instructions] from first Cherilyn Securities. [Operator

I wishing afternoon. JJ, much and Thanks best in very And to start good want you very retirement. our your by

Thank you.

I It in there there's severe if the weather any revenue is you can much results of be almost how enter and traffic was a to might just detect way the and QX, as so impact QX? backlog move that wondering flooding of hard incidents frame earnings in us to help we

that it about, what still help can question. business. to a very know, a So important and bit thanks question, quantify around that for us might be talk can you James Ghislain the obviously,

November we line December. got allowed line December, that the move. main to I a it lose we Yeah, hit December of that in this mentioned, Cherilyn, question. any of snap We we this Listen, tell flooding. not it. up so in in million thought there is terms cold to that from in, be Vancouver, let to jump impact James going we to going some you the to did to business main And and end thanks of did able of quantify JJ that around the as for we early our of so middle from revenue I'll December of did you of $XXX mid could million catch however, December, would to $XXX had the And were catch up back by not we move an that's

to very to weather Yeah, first back of all it good very, to of we're here busy still that's going some a have there behind but, lot Cherilyn, there's get going move. a us. business we quarter get once We're not course,

his think all the for excited the ready they're grain, international think after to Cherilyn. Thanks Rob and the question, about in coal, team the quarter. you move imports, you the there first are and get You here about think about to

Thank you.

go from line comes Konark from question the Please next Gupta Your ahead. Scotiabank. of

I best Thanks JJ. for question my taking and Thanks. you, got wishes for my

in chain the So the now. on industry my and on supply issues question the right labor issues is going

curious have kind this mandates, the market structures, need at lot in point of see employees you kind for year. have a here, hiring this So the now seems what strong vaccine happening these in anticipate trucking -- you some what's the you hiring with of significant of of as demand pretty light you for employees, outlook environment do any to I'm year? Do given

to we doing comes do CN after of So Keith how to very that. supply as Rob that I business, of chains think the with part is that. the And are Rob? labor, well on will it for equipped do impact

Konark. Yeah,

we're the of early did of holidays. terms are see to down our right here volumes cases January, come sized positive bit. there right quite In labor, the Really, a out In that a terms we the now. virus terms of we've over in spike itself, that seen in

really As be where to you harvest. year, going out the look Canadian as forward into a our is growth half more is second the robust look we to

we in basis, one half will here the this be that first as we hiring but hiring productivity of because to evolves. attrition, in do year some a as some won't preparation have well. in for do also we'll one So the first half on for But will there

Keith, we And drivers disruptions? supply how disruption, these leverage truck

just so customers, inventory the in case chain [indiscernible] in program to time supply our they're pivoting actually Yeah, model. and from just like away more

a So, out for chain creates of lot supply a customers. stock as disruption

for Just intermodal so is in rely opportunities trucks time there heavily model changed. has models than that on as more intermodal,

for shortages mic In supply driver got excuse me. truck now, the the that. me, part for shifts for hear that, in of these the reasons on you apologize capacity we of lack addition couldn't I the to are customers understand shift, chain the and

for for Our to I up lack flustered offline intermodal of excuse and to me, us place capacity things boding get well are pick drivers’ because shortages to in The drivers truck volume. a that some the -- truck are sorry. products right there be was little able are

JJ border has As and demand driver with issues. vaccines driver overall the and developed mentioned, mandates vaccine recently cross shortage more

we past those uptick a saw with in our transit this discussions retail wholesale our customers. big and week, customers, customers our Just

how not services. just there there, and but our work to that So the sure offer are them with to the going opportunities we're the to opportunities quantify are definitely customers

and the We forward trains moving that. that. on capacity apologize for have we're I their on

much. so you Thank okay. That’s

you, Thank Konark.

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

the evening. the JJ, Yeah. taking question. on Hi, good congrats Thanks retirement. for

Thank you, Brian.

the industry to the off to not but volume. begin here for a uncommon for year slow I [Multiple start Speakers] know it's

them just of is Clearly, a be more you pull see back grain around can if to want the color So half Canadian that. going to recovery. big part

the You you and around start other look but half put you into more cons more back what visibility maybe prepare and for some can on that bit drill walked of down that. you maybe confidence, some have the opportunities as pros a through once in and

Okay. with Thank very but question. the environment, a starting you. in It operation, is a good maybe Canada current has it still, the know, bright. with quarter-to-date Western And been you Canada, challenging just especially second half looks

talk You and been out know, is has want may actually James, along merchandise the you to bulk story move. and solid there to about freight us all there the for

no Yeah, full meet to a you our I the guidance. demand to here. tough confident there. We're mean, going winter year winter we're it's to but very winters start -- The know, we're tough been is strangers

and can recovery early winter have prairies, good the so operating we in a we are crop for that we're indications that's need about snowpack crop I'll conditions, having happen. think snowfall, you, to tell I the here year here it's all tough but going creating next

going first a so if his the think of first crop, be of tune the of comes going all there of fair year, second year, hit this half to get $XXX back us lot million, pretty XXXX. still first The of out demand about back, we so quarter, that busy into poor we're we this we're crop grain, grain to significant. move be going when to are how in we And finish half about about half, here. real said to team going normal in got excited the busy. that's crop, half second and Rob So you we're the like earlier, is to a this

shore World their we it's of up, X.X this time wrap an would Tu I DC a million be this expansion that have be Long Beach going [indiscernible] for think will fall with negotiation might summer, they're coming person. time for be just where the at the heavy in of to July, long kind in peak To -- have around

will things we Thanks to two these want for Brian. So well. the exploit as question,

JJ. Thanks,

your Seidl Your line line next the question comes of open. Jason from Cowen, from is

the Thank everyone wishing been operator. in pleasure. me JJ, certainly you, It's best. let you join all a

Thank you.

about side. a to bit little wanted the pricing I talk

You that seen guys operators two obviously call reported. the that have that other rail out. with We've

the better in the ongoing is the for supply in cross with that you, here? be as ’XX some getting you pricing environment especially that constraints, are vaccine mandate, border Given that developing of we chain think only do might

James to story was Well, and quarter talk Definitely fourth price can that. about costs.

James? So

Yeah, moving and capacity our higher to everyone's many when capacity I in don't out that have of crystal continue it rail forward, slowing is it good. kind the as realize something we market to effectively. ball, there's have mean, I and market, we there's very with service settled look I And and and as ongoing at discussions customers, going do my down. be value a price we for know, demand price there, the think I see is for we really you there's for

expect beyond, to for into strong your fully ‘XX and environment pricing that so. question. Thank So through you well continue

guys. you Thank

Jason. you, Thank

from comes from the Your next go Vernon question Bernstein. David line ahead. of Please

he's everyone. the Pace, a the on today. if just good afternoon, actually Hey, taking questions had Chairman question for line I

but ask know I he's still can the if don't line you on question. the

whatever solution mean, numbers outside maybe are Obviously, the wrongly, market's is if from question the the or industry years, to doesn't the why it maybe right the The for for themselves. strong was hands lapsed. next operational if for you has speak decision who as going as the have JJ, CN might was CN numbers seven question really, obviously to someone comment three wondering Sure. maybe go to just very have CSR But to Chairman around five, a wanted but discipline focus perception on the is I much know, I the that to may be, rightly the be. experience with the

for I think your themselves. speak numbers question. the point, And to thanks Well, for the

XX very operating do a also this It but from the with is a our XX% a have have a ambition year could we that We definitely it's were the doesn't in QX for ratio in view, tracking and ambition. EPS. but and we QX we QX mean of what solid solid balance it they're end also to

of as for As outsider. I relates a us define wouldn't many an been Tracy, CT it to her a Tracy, long she's time. know

board I think her she she'd heading energy a -- the TransCanada partly in PipeLines. portion TransCanada career; the be sector, more case, of myself, rail career, of mostly early like Company. her time in in two In in jobs treasury, on fiercely my a segments. has operation, She number but of one and the days I was for basically the service, some she at other words, did in with customer in CT was [indiscernible] and of competing

competition, knows knows she network, will railroading the knows she her I railroading. knows that she passion the CN. railroads, very think and into about in you passionate -- She is much she is love the the is So find

So but in a number just outside I of view, energy to you CN she's think and network did about railroader which not And Asia way, Rupert. my on space. ready around are six a the via in are she When she's to the talk out years Edmonton, years, and work a blue hydrogen about energy to and the promoted by I think, from eight has for space. company the there, that which on and about huge products is prospect export point, potential the plant, a petrochemical

she bright network. understand future know, I you it that think need do we will the things part very to of and of to is it the be that on one quickly that western what that [indiscernible] the exploit, grasp will

Thanks JJ. good congratulations right, next your the and in luck commentary for and chapter. All

Thank you, David.

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

dig wanted I something much kind on still how a luck pricing think that it if Thank to about single we mid-single Again, bit go commentary. do of a going we down, to digits so level inflation, pricing pricing pushing pricing inflation like of absolute Is be of going well. comes an deeper wanted that to down for you. comes forward? little are as get changed to very or kind phase. the relative on has basis high and I to market digits, and and just good again, JJ, congrats with bit strategy in color, and also up but follow next the your pricing

So James price. we rent number, different why on the really we're has picked total And What Rent you that. that's call James? we levers pricing above up. in our latest inflation And, using expand many, it inflation. can are was know, many

of latest was shy I X%. think just

want to pricing you talk you about forward? going And, know,

know, at to price you we're When what Ravi, to is I and really have there you really capacity say available in and pretty we for capacity picked the marketplace if think right happened, you the look smart favorable very Yeah, what the kind increase we XXXX, the CN changed, at marketplace. gained have demand of developed up pricing. getting value as

very been successful. that's So

with a If average renewed you just about think of this rate an business of book December, in just of December. XX% of range almost total we our the in X.X%

way all XXXX. carrying about So in that you think the through

got First about half of XXXX, we up our book businesses another of for of XX% renewal.

customers’ us to in freight ability the a I So, time right move we've help markets. their the and for got our think the win this big capacity is and opportunity end is them and exactly and

very, offer these for excited bit for in we that. to but do little things so not about excited XXXX marketplace, am about and a more same-store to price. total that So, have Yeah. All very this price, value price, try in capacity prospects the lean we just out and

Thanks, JJ. James and done, well

Thanks, Ravi.

Thank you, Ravi.

from Please from comes of go ISI. line ahead. question next Evercore Your the Jon Chappell

afternoon, Thank you. everybody. Good

as there is the to with to to of be more a a of few can purchase the Are you maybe you add cost any due or the more but inflecting, of you of bit we and actual half as impact the maybe, side things rents, lack mainline a in accelerate start cost Just offset because attrition, push XQ washout, cost on year, need the the the is on out Rob volumes first on price obvious in head, volumes may the of as mentioned maybe else Ruest that little trough see but equipment little higher seen anything side is cost side, services, to well. bit the the volumes. by the fuel equipment headcount pointed price lower

Rob, stay want on? to you

That the really maintain. lay part able some in Yeah, up Really some was benefit older very our saw to we're older, so reliable, of impact PSM. to that big that. the our we none light of from was locomotives, expensive of least was the where a floods of

with allowed benefit -- well, cars, turn part that's grain that's this here as to been of capital leased of some have investment a our in us seen back cars We grain saw the we also that QX.

material, I was initiatives our we services cost remember of you could of the add end secured. said to identified we $XXX QX, that strategic when had on million purchasing saving we plan already that about and as talking if is well that were at

this good I about progress you still right I would identified we making million speak. tell on that we're think XXX as we're now and

mentioned, So detailed on target. that of up facilities, coming that of in as lot very again, a Rob of and projects we terms confident reducing have we're we a accountability will laying all together consolidating very ton contractors, and just locomotives, deliver different very, our on things

million, to If you we're on and in deliver that. our P&SM, progress plan, remember on had strategic $XXX to we continuing

progress. very question. Thanks that So very, for the proud of

Ruest. you, Thank

Jon. you, Thank

question from Next of go Oglenski line comes ahead. Brandon Please from Barclays. the

Hey, And been JJ, pleasure. a good it's afternoon.

Thank you.

on tonight. the done deal Congrats getting

guess light little that, Did about get maybe you maybe you a little happened as the complacent I are businesses. Thank So a CN, bit the of going just not importantly, guys see last just in from you maybe And that your as non enough on what you. years? you company? costs on know, biggest bit talk focus perspective, the more opportunity rail forward, you leave you exit maybe what's can

question, with very on, Kansas transaction hard for doing -- Brandon. We CN CN complacency know, potentially you culture. Thank you. City. a year the the last No of worked is Thank not folks you in part the

on how working we how the that also how would would that see plan we the And signal During you accelerate, the workforce. And has price together, on on very been transaction -- you the become operating saw that the we streamline come beginning team traction would cannot code the labor the year, efficient sales since integrate, side. potentially time for When on result. which already actually of we matrix. were we the didn't focused more Rob to driving is

in the plan. line main back Western different bridge in an every it have to putting impact when for line of to and of And theme point us. has But July, the Beach. things. We weeks we lost this that us. forward, put for lost a Vancouver last the for fire we that is two look Railroad the of coming again perspective, twice is It'd real, to we aside, year Last solid don’t we lost have You major it's for losing be board thing plan it theme, it, their a like the also there's here. special that then Vancouver entering rebuild but lost year was and had on it's set, key year kind the that that Long with to access Port we to November. solid pricing. from a view solid cost, labor is with Tracy we look for We're backward a year we in

network, case Canadian meaning speed, which this regular able produce to us weights, hasn't will be at regular As allows we operate soon temperature far than quite train the minus the so to on the year XX, GTM. train as weather been warmer

things this come. deliver you. to confident Thank will this very all I'm So year energized the to come is together and team years these and

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

JJ. Thanks. Good afternoon. And best of luck,

you, Thank Chris.

questions a guess I here. couple maybe

sort can if And and may And when in and in to process? with maybe the to capital maybe in bigger you wants might guess get the curious pertain sort of I'm sales number. OR sort to asset cadence then just And in of the the ’XX, I XX Tracy allocation, that what you if not also maybe some she explain are of arrives XXXX, decisions I how number where of the when about then as versus asset you what can be? guess thoughts discussion Just think much – of strategic picture be remind for all on sale those of month. on what us see some buyback? I here And be done that the weigh next

baked which So we this have shut do down we in is then are assumption. in have we sale done. that year, things be looking and spring, vessel Those are things on And it three freight then Transics. to the to forwarding our a

but hand, more think this I you Helen are has three color So Helen? she these can the got with provide some in items.

question, Chris. for much very the Thanks Yeah.

an as sale bidders. to earnings is Regarding accretive Lakes fleet vessels And of vessels operating potential active recall, the this diluted to a with of sale, Great you'll progressing vessel but ratio. process is fleet

to we but continue details deal change earnings finer Transics to value to dilutive a to so regards ratio. we the the to be the with accretive of exploring are ownership a yet favorable should a Again, to potentially partner. value to the us. sale, reminder, to a at working be With are And concluded needs vessels operate potential transaction Therefore, we're we willing a favorable through Transics, not any is actively at models us. just Transics, not operating selling are a of strategic structure to

helping continuing it. a our we has performance business, of great improve highlighted, done and Transics to to are As of job Keith grow the

are improved miles on rail up fact, generated In margins. nearly Transics through XX% year-on-year

road retain drive the I'm ownership environment. continuing but to have And we're comes Tracy reduce explore to update. therefore to and CN, fit stay customers, which good so good tuned that, she So our further is the the conversion, into interest on for a for for ability to will sure good role, view as models rail to

Ghislain, capital? to add you want main to

to market on Well, did maybe line yeah, we that's a $X billion exactly mentioned, with signaled we what JJ so the XX. announce in Chris, September as buyback, share

front buyback X.XX, so of leverage $X plan and XX% the at that the two is with because have you this deploying buyback adjusted share year of I'm of always delivering if this CapEx we're as our adjusted us OR we know, in finish actually, EBITDA And XXXX, what debt plan that's you it year, in share times. know, our be use to planning the with not So, about towards finishing This use of because we announced on still is on ratio, growth have you to on but we first EPS capital, books doing. the yet. the residual plan we this we to business at year close XX I’m billion, look will which

X share moving are we dollars. buyback billion of Yeah, with forward the

That's right.

X. February start will That

Okay. Thank you.

you, Good question, Chris. Chris. Thank

question of from Please ahead. go next Your Justin comes the Stephens. from line Long

what isn't she hear And could the to I level around but more on initial that tweak potentially going sees the executing forward? relative laid she good on know at anything out her to is you're today? that Tracy and from the and a you've vision like for business about plan high do details company, point call speak we'll her strategic could there that things how to Thanks the afternoon. and feel today plan you get you

So she results, April that from will be come soon, the beyond. and Justin. March conference earning and be X will with team team, In the participating financial definitely leading she'll the

in being and view. so in I for when and the think so weeks, I'm patient. the scale for of strategy on couple early I fairly think I herself what that has also that clear, based her is But own to fairly do question actually sure CN will the since a color been her they're looking add beginning Tracy can board to as defer what and would Tracy keep

Thank you. Understood.

Thank you.

comes question the ahead. Amit from Bank, Deutsche Mehrotra Next please of line from go

wanted I Thanks, best. just comment to the a great that operator. Hi, you JJ. that Congrats you mentioned. up on on career. follow Wish

has didn't September, want bit board discussion beyond because be back about growth clear And the strategy. this to translation XX case, And been got in but that the we may still little we Because in I I'm grow. the as uncertain said something profitability. You lost it. to versus with a get need to about think

growth like picking think because strategy been margin that so is around there were versus I board like -- September. confused especially in the was philosophy that new of the the versus CEO, expansion. And people evolution in has you refresh that a was And back when about margin, just issue growth an in talk that biggest terms us can about

a endpoint? back the Yeah, clarify that's to I that. into very September, the want is XX is the we're some to and XX and Is important question. No, think endpoint well got back that is was milestone XXXX not comment the that milestone tracking thanks of to for endpoint. Yeah, I just for the we XX and

to will because and growth was as part free flow but board to definitely this know to crop we crop because difficult year, generate huge and this year, Tracy Canadian and want want improving into good we the right the EPS endpoint did do that point there's get XX, to, good generate know, don't a cash to here have in what Remember, speculate really talk at about Just ROIC it And RTM now the this solid no you the growth Canadian chain crop it's the is our is XX% September, down. supply business. on a side, of disrupted. less the little

for balance, story about that for But And is price about do what everything CN the are crop economy. right ESG, summer story to customers sure now and you that do we shareholders, the the never about also a early capacity rewarding that last basically and move economy, today and have there we if last freight we're up showed for to Rob grow. were solid CN -- growth a we up. more than late making there you is has costs. but set on So means because also

in petrochemical it's at short-term Canadian growth which the in New Rupert, this early at new ammonia got not have because company need mine transportation doing Halifax use we’ve to it, -- you two about move the story, fall. of six ask, term We're CN next coal leave Edmonton, know, price the Rupert, happening all the reopening And you two freight, chain got when CN for hear crop And in term be to market costs. coming up specific that want year-over-year, at when really crop capacity and going we started about CN of with costs, need has we less contract about supply that great we're I for got the the in got the but and solid not in grain so labor it's where the strategy, you you Mobile industry. months to short across the those Orleans. we for and and But to James meantime, disrupted. be at because have a tech, us board time of you lever is the them to -- still he's price So about mandate XXXX talk just blue back and know, is it biodiesel, today this from stories TriCo but hasn't [phonetic] for long the paid and was, and materialized there really often and lever the fall. work into paid market And Keith to you worked hard expansion and sales team to unfortunately, be one is

year that's a So of this XX be year far lever we again, it this -- but you is these the all for using go end team of never can know, that, and decide point the that beyond. I XX and meant is how will after goal second levers think the and will ’XX growth to half

Okay, thank much. very you

you, Amit. Thank

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

Hey, of afternoon JJ. best thanks. Good luck, and

I comments, still say, the with you think comment was rightly year? about is I in railroader. pricing to QX tough Tracy CP. And would pricing to also did go. think or at had some. well, environment, So Why you're of OR there's bad a be upside of going could are a more up XX CP And, one OR there follow wrongly, and on to weak people this some isn't just a want at there JJ, you she look the that she volumes, saying talking to your and guys weather XX and during about then years that the

curious a why just just follow right up you to the railroader? maybe to that So think she's

after about the what and OR potential the talk you want Ghislain, So then OR to Tracy and that. for about I'll talk

Yeah.

and done Scott, that I was proud in QX the think was in mean, thanks, XX OR XX.X of actually So for back we've XXXX. lowest Yeah, record. listen. ever we are I our OR very is on QX, a

finished so is mean, the So to plan full and need to XX.X, eventually a going at XX, to go plan our get is we and there. for listen, the year, drop there. it's to XX XX XX from remember, XX.X I quite so to you

can deliver in things all outside we've the conditions to we ability changing I investors happen, you for lost weeks backup and ups to it, we're downs and and think Vancouver know, to sport, main hope deliver I adapt to quickly our we're be go our as see the five we're during There's when resiliency it. JJ line year, to mentioned got overall. going going our to confident an and

resilient, good stay And drop XX hopefully, do team, goal I So, better, goal, we're I a think to and from the quite a is ever the if and it's great, think tuned. XX. XX going is XX.X we we're and the but

in we and It to Yeah, are XXXX the of but XX the can That's only regarding on we the third XX give good the of goal. is it's or to the mean a week the so end, so a see definitely goal guidance. for whether result. us is time improve not this goal guidance, some year, doesn't

now to her back you will very to the about the Tracy, question meet shortly. chance Going have

has you. impress a leader. will She she followership. think a is I solid very very solid She

mean, want it's got they wrong, it that sometime, the and are -- has to it's to becoming of so to on I and ask think I we she the a we think solid to I yourself team, want the skate want industry, -- think want the company but to the future. blood. -- next. want you what to part what to bit she not has she did almost a the for where player of position into that or a you vision, people need the has is number work the where pucks And was going CEO a that leader. right go you back only at railroading of be She for CN who this She as whether I to of different can CP, rail you team. past, it's go brings to sack in to

So amount ESG potential the company network, what things huge effort for will close growth, necessarily and of like a as on that CN diversity, five, and fuel inclusion, a huge in weren't ten years make leader technology, efficiency, tree prevalent making ago.

mode you customers a have and ESG, where ten and way but that has low one at that But thing more we EPS what lever. ago, ten and all skill ROIC, a technology, be there to the to have go business leader. growth, because we his on I the more leadership years business lot be a to a are and you more a a to have have with relate find think discover when solid; for so there's to you'll a So her the with there. all chance future depend that really unimportant, railroading not point companies, to have is years grow, all we're lever to the on had together you think and all railroad, want the growth, I business very to remain schedule that you're a we to important, business to what us lever Tracy, we and really There that's I find it’s enhance meet find more to to that put transportation. we five, an here want cost also we to only way but operating a obviously back we ability the you is versus if a that we were just get precision definitely with ago, not where produce solid reached these way PSR the costs Not Scott, and bring on use focus Rob in development, such think her, use need from to you'll we they that of is XX, I things industry think, has our need focus and to operating XX and about. with know and want customers’ five, the industry's other fairly team attract of

her should guys. that's fair it. get all open-minded. meet you to Thank think and we'll enough, Appreciate soon that be we I

you, Scott. Thank you. Thank

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

Tom. Hello,

you it's markets and Yeah. insights appreciate years appreciate to Hi, JJ. and really great on and customers say I your working also you I want the over the with best. the so wish

you. Thank

we of and versus this just you was I board and I back can growth Wanted then of to question kind kind margin. I of don't if I know offer growth growth like, that bit took focus and on -- way guess, over, think we to little how you said, know, about you the and things, look that, growth guys I you time do of and prior potential, and board guess going a is had of forward on CN for. did the you And we're about think he Creel you criteria pivot looking Thank if a of for think when CN period grow can or great volume little Do focus the talked what how go volume. to level kind a to over, the about run you. know, going you to if you more you at of strategy? viewing RTMs that the like kind for kind think that, goes the Board back

Thank Rupert operation had this the known I vision, progress when CEO, by that time, became to at but, to became you. both will network that we went that soon some know, way and of on with solidly. place Well, a back bulk do and Tracy use the we a you we RTM anybody the Marketing where Chief where Officer becoming going again, very made her share you very and have port had to to, Creel grew better business and we at not enough the for volume with fishing is make of of from a And find container. time,

you reduce we want think, far. technology – At make I railroad we've future to want leverage lower to the done use we operating really as railroad CN the technology so costs. saw And to to progress of safer, really to our point, is make diverse. this in

just agreement We some that's all customers our about, supply also the attract with technology the business And more very something want the industry more more improve key. to ratio which service. want into very focused relationship, be capital this always rail thing freight and – Google to what go on in We're then is than They friendly. intensive, use the customers key. is raw and the Today, We're operating make want sticky, to be is operating an and deeper will margin the that. chain. to is very

and quarter-to-date. the lot heard about operating ratio in quarter You've third the a

of was huge you, long-term asked there's years of and emission, the Chemical says, I a that's will a know, different on there's think and CN XX CN’s sand vast, make and keeping mine, like whatnot. what, making good with to between mine things Calgary, society, still the first happen Well, refinery part area coal prairies, world how it's chemical I think or oil relevant Dow that, but that of the So are also, on and TriCo costs, technology, is one and landlocked that plants network CN between are is big, access growing with of attracting we you not remember, I only ESG, potash these -- way the wave petrochemical you Vancouver. facility lot for and talent, is does especially industries part time, things and about combination me do more And and talent export they're like, later, guess handling to another I the strategy. petrochemical right like these potential investment, this in a how the all question right that between to potential the time sure do these the between met do you good growth, fantastic Edmonton, Rupert capital they and market future and that rail, be of mine, again, about the – like there's

the and actually think the remain I CN, you I strong Thank a for and a voting And intend for I'm there the on out successful. I'm CN for lot management to the as for to team. team So shareholder of question, biggest Tom. shareholder there's Tracy. be

you, Thank JJ. Great.

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

in pretty Good everyone. afternoon, the tough some Congrats conditions. face these outstanding results of on

at to the so color think speak, some mines. of around already, to the that Just can I green the that referenced described traffic just ramp wanted looking coal you here with plug you've degree but there or buckets of I coal get gap, the new cadence

two have visibility of ramp you if curious Just mines. those the any around

might the half volume. to how I that but the green first gap Thanks. cadence that suggested about just here we could the think until past get had plug coal half of in play through trying some out understand you

Definitely, we that. pick that will do one. will James,

deal available for call here. thanks answer that all HX, significant also as full been particularly about year prospects to for mines Yeah, tech the I've quarter restarting give two Steve. itching in coal, get of to that's the tonnage question, I'm us. extremely We but big, our that and well. excited effect first but with

So And carloads deal. we're when grain, not base, the new with of carloads available timing the a if a is course, we a carload and revenue right carload basis, you have of from not think a to grain capacity coal to of going last perfect. about than it's we that so big us, but that replace just are and it's coming more moving because basis,

Also have I and We've You look coal, volume going the market on. the thermal about the for to leading is still railroads has the things Prince of drilling lean coal, renewable some activity, and tough and they're got at you desire the even tell be are year is tough I'm future parties Western comp crush comps sand as and as think for facility -- to going to happen a is goes to of in away this three there, up our whether all half the growth there move Tough, Also going up position you, both we frac quarter, Rupert. XXXX. move new in starting be that and the solid, capacity our sand talked into that what's it's talks on how first very, CN, about JJ very Vancouver coal story can grain significant Canada, second able US get to to time coast I excited to side record the about coal plants to I the the that. demand about record met going indicator in to We're on ramp there the in on leading to pricing to we're US. new around or lapping close and on got fuel, be in the highs. we're produce indicator business. though, we the solid story mean, is Gulf fuels. how in side mean, going several a frac big renewable part Canada with CN great and that's that

coming. just platinum deal crush, those a As crash we our more a at a matter with of plant on of new friends fact, soybean concluded

look So five for opportunities when the seeds at of next and us, I and XXXX be the incredible in years to for we're story incredible, CN growth in the just sowing drumbeat front the on, in so. customers, just for to Rob his is hold I and wait exciting. know going half and real be move to second there get And those boy, the our team carloads can't oh XXXX boy

right also facility that's now. up you have think I undiluted the crew ramping

is Coast. Yeah, last Gulf thank be facility expect and year of It but same of you. down late undiluted. that barrels facility. new, started full. a to About out we coming moving XX,XXX potential of It's QX Hardesty That's to the up kind of the a heavy, product the it there's a safe size day

leader fully to leader for day a we're time, comes to a crews, XXXX. of I to when going expect run XXX,XXX crude going heavy be the crews. moving and heavy in been For XX,XXX rate we've into is to be the our long it going the range barrels moving still

weighted numbers of a XX,XXX undiluted towards to seen at long And carloads like time. a our about day are XX% for for that crude, XX% times. about barrels safe, haven't we're CN, so very, very heavy We finished exciting in We that heavy crude. QX crude, remember

is facility in Saskatchewan. that located And

Yes, Saskatchewan. yeah. In JJ,

Steve. you, Thank

Thanks, guys.

Jeffrey Please ahead. question from Vertical Research. of Kauffman comes the last Our from line go

endeavors. in lot Thank much. CapEx. JJ, new you been And very of my questions going so luck I'm congratulations A focus your best to of answered, on have and

revenue as you couple reduction of XX% on. hundred of projects have million. of you of going coming number so that's You’re to a be advertised, about Yet new spending a a

kind So the been that I capital in capital year was of program? two? not the wondering, allocation has the in or are reshaping in last what's how of we just budget And lieu new

Rob, this you going about are to year? to talk want capital allocate we how

network coast real information our of running and shape. to of in have Jeff, is technology. that basic terms around network. now giving use network. coast autonomous track across of do of cards, we time those is in good we credit the to The condition cap the is of us a And the big coast our what inspection terms XX our year-over-year It’s in really to from really, is know difference really

we that we undercutting can each much it ties ballasts comes and real information. and more the where That's to that year, really prescriptive when we're So be time with the the plan doing thing. a the and make seeing the the benefit. we'll that's right as evolves, we're sustainable difference. check think We but sure really going model it, the biggest forward, year That's

And during ground extend help to we'll enhance Toronto help will go four as this and sidings new running facility intermodal longer Edmonton, between capacity in the Winnipeg a investing break also trains. forward. we are We'll We which year on in area.

your in I Appreciate question to future to you'll as ready that Jeff. invest we're is and So and see invest there, continuing we'll be handle it. the the think going business forward

Thank some dividend a you with in you. technology, the that for I level advances are example, them guess sustainable this inspection? the the is of of autonomous implying DSR,

but we'll those of on to we we shape so go going on sacrifice we're safety that's make review Yeah, the a we're to but and decisions. that's it annual I railroad what making sustainable as right We believe forward, good to decisions really basis, sure an technology. the do know each benefits tried going say. we're is the We in aren’t and reaping make certainly year

you for thank Okay, your answer.

you, Thank Jeff.

the would back Ruest. turn This to concludes the answer and question Mr. over JJ call like I to session.

Thank keen in a in the Robinson special this calls vision XX,XXX in years, right I'm of side interest is last around and company of is quarterly all the the you, lead confident the and and you're to able incredible time results the right to past alongside team, will you Tracy pose since thank XX here It's you a for as kind been in this accomplish to thanks around XXXX, interest and leader, joining analysts sell for the have thank us table with very me new which the It's great finest honored But your to bittersweet I at have the our people over right the here. industry. we've company interacted I'm the and over to serve very what you with of XXXX keen been whom these me. a special rail solid privilege four of industry. for and this beyond. confident CN years, CEO over proud to

note, on Thank [indiscernible]. So, that you.

Thank welcome. your for conference you call ended. You're participation. The now has

at disconnect line this time. You your may now