Q4 2021 Canadian Pacific Railway Ltd Earnings Call

Once again, please computer standby the conference will begin momentarily. Thank you for your patience.

[music].

Good afternoon. My name is Sylvia 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 Dot C. P. R. C. All lines have been placed on mute to prevent any back.

A lot of noise. After the Speakers' remarks, there will be a question and answer session.

I would like to ask a question simply press Star then the number one on your telephone keypad and if he would like to withdraw. Your question. Please press Star then number two and I would like to introduce Megan Alban Vice President capital markets to begin the conference.

Thank you Sylvie good afternoon, everyone and thank you for joining us today before we begin I want to remind you that this presentation contains forward looking information and actual results may differ materially the risks uncertainties and other factors that could influence actual results are described on slide two in the press release and then.

The MD&A filed with Canadian and U S. Regulators. This presentation also contains non-GAAP measures, which are outlined on slide three with me here today is Keith Creel, our president and Chief Executive Officer, Nadeem, <unk> Executive Vice President and Chief Financial Officer, and John Brooks Executive Vice.

Didn't and Chief marketing officer.

Also attending our call today on behalf of Kansas City, Southern our CEO , Pat Ottens, Myer, and CFO , Mike Upchurch, who will be happy to answer questions regarding case yet.

C. P. Investors are aware Casey S is now beneficially owned by C. P through a voting trust pending control approval by the S. T D.

During this trust period and prior to the S. T D. Approving C piece control Casey S. C P and K C. S operate independently and case, yes. Its business is managed by its own officers overseeing.

Overseen by its own board of directors. During this trust period and prior to the STB, making a determination regarding control C. P and K C. S operate as two independent arm's length companies as a result, only Casey S management is truly in a position to answer investor questions regarding their performance.

And results I would highlight the case, yes, it's posted an information package to their website and.

And should you have any questions about tcs's performance that aren't addressed on today's call. Please feel free to reach out to Mike Ashley and the Casey's team.

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

Great. Thank you Megan let me well.

Let me welcome launching pad to the call today as well.

And then proceed to think our CP family.

It's a lot of railroading is an outdoor sport, but I can tell you this quarter had some exceptionally challenging conditions that the team's commitment.

Grit and determination, certainly which tested but to overcome and produce this result under those truly incredible conditions that I think deserves a special thanks.

From the catastrophic flooding in British Columbia, which we are all very aware of that occurred in November . They took a took a deep breath from what I would call was a miraculous effort to get the railroad open again.

Eight days to sale brought into 40 degree temperatures again, as we close the year out which carried into January .

January so again.

Outdoor sport, yes winter, yes, we know, but I'll tell you this was an exceptional.

Kind of given the challenges that they face and thank you for that and thank you for your commitment your sacrifice.

Now to the results themselves of quarter, we delivered fourth quarter revenues of $2 billion.

Operating ratio of 57.5, and adjusted EPS of <unk> 95 for the full year. Our total revenues were up 4% the operating ratio.

57, six which is 50 basis points increase over last year's record of war.

Adjusted EPS of $3 76 represents.

Revenue growth of 7% versus last year is that.

The CP family finished the year with a strong operating performance in spite of the challenges we face to think that we were able to drive productivity improvements and still increase train lengths and lag three.

3%, respectively. Again is an outstanding result fuel efficiency as well in spite of those challenges improving about 1%.

Outstanding result in all three of these metrics were new record lows for the company.

On the safety front, something we're extremely proud of personal injuries were down 17% year over year to a new all time CP low this marks the sixth consecutive year of improvements on the personal lines very broad and it's a testament to the team's commitment and that's all 12000 employees.

To coming home safely every day.

That said this is an area, where we don't rash safety is a journey I would say that often you never arrive a while we're certainly proud of the progress that we've made on the injury front, we did see a bit of step up in train accidents from our all time record low of last year, but that said again for the 16th consecutive year, we're proud of that.

Our commitment to people process and technology allows us to enjoy the best safety record in the industry.

We know there's more to do with that said, we're going to continue to leverage technology and the strong safety culture that we have this company to drop further improvements in this area.

Focusing on the sustainability front. This is another area that we continue to make significant progress we're proud to be named the highest marine freight transportation company on the corporate Knights Global 100 index as well as named for the second consecutive year to the Dow Jones sustainability, North American index and on the hydrogen front, which is all becoming more topical as the days progress.

As we continue to demonstrate our leadership in this space commitment to a more sustainable future, they're a hydrogen locomotor project, where the additional grant funding that we received from the emissions reduction Alberta, we've been able to expand the scope of the three locomotives in two fueling stations as we enter into 2022, we look forward to moving from the lab.

Setting into the next phase of switching enrolled trials and I am very happy to say that our hydrogen locomotive in the fourth quarter move from concept to reality it actually moved in its own volition under its own power. So it's not a concept it's not span. It's fact, and it's going to change in a very meaningful way the emissions footprint of <unk>.

Great locomotives in this industry.

On the transaction itself. That's another area again in the fourth quarter very excited to hit the milestone, but with our C. PKC journey.

Closing KC us into troughs on December 14th the regulatory review process is well underway.

No doubt many of you have likely seeing some of the early headlines related to this process that we're going to respect the regulatory process, we're going to work with the other rails and the shifting groups to find reasonable solutions to address the concerns are reasonable concerns that might arise.

We're extremely excited too about our ability to reach an agreement with Amtrak demonstrating our commitment to passenger service not only on the CP network, but most specifically to.

The Baton Rouge, New Orleans.

Network on the case, yes railroad.

Customers are enthusiastic about the opportunity for the seamless sufficient reliable single line rail service across the U S, Mexico, and Canada, John will elaborate I'm sure. We can address it in Q&A, but our we have all been intimately involved getting in front of our customers. We made over 90 customer contacts talking about the art of the possible.

Talking about what this new transnational railroad, assuming it's approved or when it's approved by the STB and we will be able to go to work, creating and reaching new markets and service that quite frankly has never been possible and I believe will only be.

Forever is a long time, but I think the single one and only transnational railroad to exist in the North American continent. So with that let me, let me hand, it over to John to bring a bit more color on the markets and then Nadine will elaborate on the numbers and we'll say the balance of the time for Q&A.

Alright, well, thank you Keith and good afternoon, everyone. So as Keith spoke about the fourth quarter was certainly that other reminder, that this is an outdoor sport.

We knew this quarter was going to be challenging certainly given that the grain comps, but the the beefy out it certainly a pride even more pressure to our customers in and into our volumes. My team did as they always do we stayed super close to our customers and our operating team and they worked hard to find solutions.

Across our marketplace.

As our western part of our network continued to recover through the quarter.

Well Q4 performance certainly was challenging aldi in 2020 , one full year with a record for our freight revenue and our total revenue now looking specifically at Q4 revenues were up 1% in the quarter. Despite an 11% decline in our T M fuel and FX combined to be a 4% tailwind.

And price and mix combined to be positive, 8% as you've all heard over the past few weeks from many in the transport industry. The pricing environment continues to be very strong.

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

<unk> volumes were down 21% in the quarter, while revenues were down 12% as expected the 40% reduction in the Canadian crop is driving this decline in volumes.

The good news is we've taken the decline in the Canadian grain crop and created an opportunity we had an all time record quarter and year for our U S grain franchise with 30% year over year, our T M growth.

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

We expect the challenges in Canadian grain to persist until we get the new crop in Q3, we will start to get some better visibility into the potential of the 2022 crop in the spring, but we are certainly happy to see snow on the ground across the priorities providing much needed moisture.

On the potash front volumes were down 4% on the quarter, where revenues were up 14%.

The increase in volume reflects the BC flood outage, but we worked closely with canpotex to minimize the volume lost by moving more trains to Portland.

As you would've seen in December we announced the signing of our new long term contract with Canpotex. We are proud to extend this partnership and we expect to see high single digit volume growth in 2022, if canpotex continues to see strong demand and its global markets.

And as we close out the bulk business coal revenues were down 14%, while volumes were down 27% as the supply chain was challenged by the floods, resulting in reduced volumes from the mines.

And more trains routing north to Red Lake.

Moving on to merchandise.

The energy chemicals plastics portfolio saw revenues increased 15% on slightly negative volumes.

We had a record full year revenue performance in E. C P. Despite flat volumes and crude.

I'm excited to see two new growth opportunities in E. C P with independent energy beginning to produce ultra low sulfur diesel.

And inter pipeline commissioning their new plastics facility in the Alberta Heartland.

Both of these new customers are expected to start rail operations in Q2 and C. P is proud to be their per preferred rail partner.

Now full year, we moved about 60000 carloads of crude.

In 2022 we expect that run rate to slightly declined in the last of our contract liquidated damages to roll off through the year.

The D. R U unit at Hardesty, Alberta has successfully ramped up or we're at a run rate of 50000 barrels per day that we expected as phase one of this initiative.

As a reminder, the D R <unk>.

<unk> produces a non hazardous drew brick product that C. P exclusively surfaces from Hardesty and this movement goes to Kansas City for interchange to the case, yes.

In forest products volumes were flat, while revenues were up 10%. It was a record Q4 in forest products and the team continues to deliver strong price performance.

In MMC revenues were up 28% and volumes increased 20% largely driven by our frac sand business our steel business.

And in an almost double digit growth in our trans load business.

Our service product is winning in both unit train and single Carload business.

And these manifest markets.

Automotive revenues were down 18%, while volumes were down 19% on the quarter, the chip shortage and Covid related facility shutdowns continue to challenge our Oems.

Despite these latest disruptions related to the omicron variant.

2022 outlook is looking better, particularly as we move into the second half of the year.

We were excited last week to see our first Chevy Silverado vehicles load under rail at Gms Oshawa plant.

C. P N G M. A partnered on this new business for the distribution of these vehicles.

Now finally on our intermodal side of our business quarterly volumes were down 5% and revenue was up 9%.

We have now had five consecutive record quarters for our domestic intermodal franchise, even with the significant disruptions in B C.

The new Pacific Trans load expects facility, we opened in Vancouver, with Maersk is offering our domestic intermodal customers new distribution solutions, while enabling merits to spin their containers back faster to overseas markets.

Our trans load solution will take thousands of trucks off the roads of Vancouver, while at the same time, delivering new revenue growth in 2022 to our franchise.

We are also very proud of a new multiyear contract with Canadian tire.

Our long standing partnership with Canadian tire is growing stronger and we look forward to continued collaboration with their team to deliver supply chain solutions.

Across Canada.

And I'll finally, our Internet international franchise.

<unk> train challenges in the BC outage negatively impacted our volumes in the quarter, but I can tell you. The team is working hard with our port partners and customers to regain fluidity.

We see strong pent up import demand and anticipate ongoing recovery as we move through 2022.

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

Speaker 1: business and see opportunities to overcome the Canadian grain headwind ahead of us.

Speaker 1: As always, my team is laser-focused on pricing to the value of our servicing capacity, and we are working closely with our customers to help their win in their marketplace.

As always my team is laser focused on pricing to the value of our servicing capacity.

And we are working closely with our customers to help them win in their marketplace.

Speaker 1: As Keith referenced, we met with almost close to 100 customers in Q4 to educate them on our new routes and the competitive alternatives that the CPKCS combined network, once we're approved by the FTB, will create. I can tell you the opportunity list is growing longer and the customer feedback remains extremely positive.

As Keith Kimmel, Keith referenced we met with almost close to a 100 customers in Q4.

To educate them on our new routes and the competitive alternatives that the C. P. Casey S. Combined network. Once we're approved by the F. T. B will create I can tell you the opportunity list is growing longer and the customer feedback remains extremely positive.

Speaker 1: So with that, I'll stop and turn it over to Niem.

So with that I'll, I'll stop and turn it over to Danny.

Thanks, Joe and good afternoon.

Speaker 2: 2021 was a year of challenges that highlighted the team's resiliency. As we look to 2022, we are excited about the opportunity ahead of us, but it's not without some noise.

2021 was a year of challenges that highlighted the team's resiliency as we look to 2022, we're excited about the opportunity ahead of us, but it's not without some noise you'll notice that we did not provide formal guidance in our press release.

Speaker 2: You'll notice that we did not provide formal guidance in our press release.

With so many moving pieces, we think it would create false precision to provide guidance. If there are more variables unusual that we don't control.

Speaker 2: For example, on the KCS front, we do not have control of their operations and did not create their 2022 plan, so we'll not be providing guidance as to their expected performance and its impact on our earnings.

For example on the case, yes front, we do not have control of their operations and did not create their 2022 plan. So we'll not be providing guidance as to their expected performance and its impact on our earnings.

Speaker 2: timing and conclusion of the regulatory process in the hands of the SPB.

With the timing and the conclusion of the regulatory process in the hands of the STB.

Speaker 2: as well as with Omicron and other macro factors presenting some near-term uncertainty. We felt it was prudent not to provide formal guidance.

As well as with pharma Crown and other macro factors presenting some near term uncertainty we felt it was prudent not to provide formal guidance.

Speaker 2: We're committed to providing as much transparency as we are able to, and I'll provide key modeling data points in my remarks where appropriate.

Committed to providing as much transparency as we are able to and I'll provide key modeling data points in my remarks, where where appropriate.

So now looking at Q4 overall, the operating ratio increased 530 basis points.

Speaker 2: So now looking at Q4 overall, the operating ratio increased 530 basis points to 59.2%. On an adjusted basis, the operating ratio was 57.5%, a 360 basis point increase from Q4, 2014.

59, 2% on an adjusted basis. The operating ratio was 57, 5% a 360 basis point increase from Q4 2020.

Speaker 2: I will remind you that Q4 2020 included a 330 basis point impact from the Detroit River tunnel transaction.

I will remind you that Q4 2020 included a 330 basis point impact from the Detroit River Tunnel transaction.

Speaker 2: Taking a closer look at a few items on the expense side, I will speak to the variances on an FX-adjusted basis.

Taking a closer look at a few items on the expense side I will speak to the variances on an FX adjusted basis.

Comp and benefits expense was down 6% or $25 million versus last year.

The primary driver of the decrease was lower volume in the quarter.

Speaker 2: Fuel expense increased $66 million, or 40%, primarily as a result of higher fuel prices.

Fuel expense increased $66 million or 40%, primarily as a result of higher fuel prices.

Speaker 2: This year we once again achieved a full year record fuel efficiency, moving us a step closer to our 38% locomotive emissions reduction target.

This year, we once again achieved a full year record fuel efficiency moving us a step closer to our 38% locomotive emissions reduction targets.

Speaker 2: Materials expense was down 6% or $3 million as a result of lower volumes in the quarter.

Materials expense was down 6% or $3 million.

As a result of lower volumes in the quarter.

Speaker 2: Equipment rents were down 12% or $4 million as a result of lower volume and lower prices paid for pooled equipment.

Equipment rents were down 12% or $4 million as a result of lower volume and lower prices paid per pooled equipment.

Speaker 2: The depreciation expense is $206 million, an increase of 6% as a result of a higher asset price.

Depreciation expense was $206 million, an increase of 6% as a result of a higher asset base.

For <unk> Standalone, we expect a similar $40 million increase in 2022 as our asset base grows.

Speaker 2: For CP standalone, we expect a similar $40 million increase in 2022 as our asset base grows.

Speaker 2: Purchase services was $250 million, an increase of $56 million, or 29% when adjusted for acquisition costs. The main driver of the increase is lapping the gain related to our acquisition of the Detroit River Tunnel, for a total of $68 million in Q4 2020.

Purchased services was $250 million, an increase of $56 million or 29% when adjusted for acquisition costs. The main driver of the increase was lapping the gain related to our acquisition of the Detroit River tunnel for a total of $68 million in Q4 of 2020.

Speaker 2: Moving below the line, we are recognizing 18 days of equity pickup from KCS, which included $169 million of transaction costs incurred at the end of the year, which we have excluded for our adjusted diluted EPS.

Moving below the line, we are recognizing 18 days of equity pickup from case, yes, which included $169 million of transaction costs incurred at the end of the year, which we have excluded for our adjusted diluted EPS.

Other components of net periodic benefit recovery increased $16 million, reflecting lower discount rates.

Speaker 2: Other components of net periodic benefit recovery increased $16 million, reflecting lower discount rates.

Speaker 2: 2022, we expect this to be relatively flat to 2020.

In 2022, we expect this to be relatively flat to 2021.

Speaker 2: Net interest expense is up $12 million as a result of higher debt load since we issued $10.7 billion in acquisition debt during the quarter.

Net interest expense is up $12 million as a result of higher debt loads. Since we issued $10 7 billion in acquisition debt during the quarter.

Speaker 2: We issued a total of $6.6 billion of U.S. and $2.2 billion of Canadian dollar denominated debt with a weighted average coupon of 2.4%.

We issued a total of $6 6 billion of U S and $2 2 billion of Canadian dollar denominated debt with a weighted average coupon of two 4%.

Speaker 2: Financing across multiple tenors allowed us to finance at very attractive rates while also maintaining the financial flexibility to deliver in accordance with our plan.

Financing across multiple tenors allowed us to finance at very attractive rates, while also maintaining the financial flexibility to delever in accordance with our plans for.

Speaker 2: For 2022, CP standalone interest expense should be approximately $650 million.

For 2020 to CP Standalone interest expense should be approximately $650 million.

Speaker 2: Income tax expense decreased $44 million, or 23%, primarily as a result of a lower-affected tax.

Income tax expense decreased $44 million or 23%, primarily as a result of a lower effective tax rate.

Speaker 2: Rounding out the income statement, adjusted diluted EPS decreased 6% to $0.95 in the quarter.

Rounding out the income statement adjusted diluted EPS decreased 6% to <unk> 95 in the quarter.

Moving on to full year results on the next slide.

Speaker 2: The fourth quarter performance caps a challenging year for the CP family. Her full year adjusted operating ratio was 57.6, a 50 basis point increase year over year.

The fourth quarter performance capped a challenging year for the CP family, our full year adjusted operating ratio was 57, 6%, a 50 basis point increase year over year.

Speaker 2: Adjusted income grew 7% and our record adjusted diluted EPS increased 7%.

Adjusted income grew 7% and our record adjusted diluted EPS increased 7%.

Speaker 2: As you model out 2022, we would expect CP's average share count to be approximately 930 million shares and for the corporate tax rates to be in the 24 to 24.5% range.

As you model 2022, we would expect Cp's average share count to be approximately 930 million shares and for the corporate tax rate to be in the 24 to 24, 5% range.

Speaker 2: We were prudent with our balance sheet this year with actions taken to pause the buyback program and dividend growth as we work on the transformational opportunity of our merger with KCS.

We were prudent with our balance sheet. This year with actions taken a pause the buyback program and dividend growth as we work on the transformational opportunity of our merger with Acs.

Speaker 2: Leverage is currently at its peak as we have issued all of our acquisition debt.

Leverage is currently at its peak as we have issued all of our acquisition that Youll.

Speaker 2: You'll see our leverage rapidly come down as we pay down acquisition debt over the coming 24 months.

Youll see our rapid or lever leverage rapidly come down as we pay down acquisition debt over the coming 24 months, the buyback and dividend increases will remain pause until we return to our two five times debt to EBITDA target. We are already starting to see cash flow from Acs was a dividend in January of this month that will be applied.

Speaker 2: The buyback and dividend increases will remain paused until we return to our 2.5 times debt to EBITDA target. We are already starting to see cash flow from KCS with a dividend in January this month that will be applied to outstanding debt.

The outstanding debt.

Speaker 2: Before wrapping up, I want to provide a little accounting context around the KCS equity pickup.

Before wrapping up on a private provide a little accounting context around the Tcs equity pickup.

Speaker 2: We are recognizing 100% of their net income in our financial statements as one line below operating income, reflecting that we do not have control. In Q4 2021, we only own the shares for 18 days, so you see 18 days of equity pickup, which includes 169 million of transaction costs, creating a loss you see in those.

We are recognizing 100% of their net income in our financial statements as one line below operating income reflecting that we do not have control in Q4 2021, we only own the shares for 18 days.

So you see 18 days of equity pickup, which includes a $169 million of transaction costs, creating a loss you see in those 18 days embedded in the equity pickup will be the step up in depreciation and amortization from the preliminary purchase price allocation.

Speaker 2: Embedded in the equity pickup will be the step up in depreciation and amortization from the preliminary purchase price allocation.

Speaker 2: In 2022, we expect the depreciation step-up to be approximately $220 million U.S., partially offsetting the increase in depreciation will be credits for deferred taxes and interest expense.

In 2022, we expect the depreciation step up to be approximately 220 million U S. Partially offsetting the increase in depreciation will be credits for deferred taxes and interest expense. So the net impact of the equity pick up as a reduction of $125 million U S from Casey's as 2020 equity income.

Speaker 2: So the net impact to the equity pickup is a reduction of $125 million in U.S. from KCS's 2020 equity.

Speaker 2: 2021 tested our metal and our team of railroaders rose to the occasion at every turn. 2022 will be a year of opportunity, but it will not be without some noise. We'll work hard to be as transparent as possible as we move through the regulatory process. I'm proud of the team and look forward to what we can.

2021 tested our model and our team of Railroader rose to the occasion at every turn 2022 will be a year of opportunity, but it will not be without some noise. We will work hard to be as transparent as possible as we move through the regulatory process I'm proud of the team and look forward to what we can accomplish in 2022.

Speaker 2: So with that, let me pass things over to Keith to wrap things up before Q&A.

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

Speaker 3: Okay, thanks Nadine and John . Let me close my remarks by, you know, saying, sort of looking forward as we move past some of the uncertainty and disruptions, we're super excited about the opportunities that lie ahead of us in 2022. The demand environment is strong. You couple that with our unique initiatives and our service capabilities.

Okay. Thanks, Nadeem and John Let me close my remarks by saying sort of looking forward as we move past some of the uncertainty and disruptions. We're super excited about the opportunities that lie ahead of us in 2022. The demand environment is strong you coupled out with our unique initiatives and our service capabilities.

Speaker 4: to succeed in 2022 and beyond. You combine our standalone opportunities with this combined CPC-KC network, the future is extremely, extremely bright.

And to succeed in 2022 and beyond you.

You combine our standalone opportunities with added this combined CPC Casey network the future is extremely extremely bright.

Please stand by while we reconnect Keith's line.

Yeah.

Okay.

Yeah.

Yeah.

Please standby everyone.

Uh huh.

Speaker 4: Ladies and gentlemen, please continue to stand by while we reconnect the host site.

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

Yes.

Yes.

Okay.

Hello.

Please go ahead, Sir you've been reconnected.

Okay, so I'm going to assume that.

Everything that I've said, which quite frankly I think.

Okay.

Speaker 3: The remarks that I made a minute ago were not heard, so I apologize for the...

The remarks that I made a minute ago, we're not hurts, so I apologize for the technology.

Speaker 3: technology difficulties. So let me back up and just say, you know, thank you, John and Nadine for that color. And I'm going to close my remarks.

Difficulties. So let me let me back up and just say, thank you John and Nadeem for that color and I'm going to close my remarks.

Speaker 3: By saying, as we look forward to 2022, we get past some of the uncertainty and the disruptions. We're excited about the opportunity.

By saying as we look forward through 2022, we get past some of the uncertainty and the disruptions we're excited about the opportunity.

Speaker 3: that lie ahead. This demand environment is extremely strong. You couple that with our unique initiatives and our service capabilities, we're extremely well positioned to succeed.

That lie ahead. This demand environment is extremely strong and couple that with our unique initiatives and our service capabilities, we're extremely well positioned to succeed.

Okay.

Please standby, ladies and gentlemen.

Speaker 4: Once again, ladies and gentlemen, please continue to stand by while we reconnect.

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

Okay.

Operator, I think.

It's nadeem blending we have myself and Keith Creel.

Please go ahead.

Alright, we can open up for Q&A.

Speaker 5: Certainly. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. And if you would like to withdraw your question, please press star followed by two. As previously highlighted, please limit your questions to one. There will be a brief pause while we compile the Q&A roster.

Certainly ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone and if you would like to withdraw your question. Please press star followed by two as previously highlighted please limit your questions to one there will be a brief pause while we compile the <unk>.

<unk> roster.

Speaker 5: And your first question will be from Walter Spracklin at RBC. Please go ahead.

And your first question will be from Walter <unk> at RBC. Please go ahead, yes, thanks very much good afternoon, everyone.

Speaker 6: Yeah, thanks very much. Good afternoon, everyone. Yeah, so perhaps what we could start with just a question on on concessions. I know I get a lot of those if you can hear me, if you get a lot of those from investors, there's been a lot of noise in the end and filings. You mentioned that you're separating what's reasonable from what's not reasonable. Can you can you highlight what what what?

Thank you Walter.

So perhaps.

Could start with just a question on on concessions I know I get a lot of those.

If you can hear me.

We get a lot of those from investors has been a lot of.

The noise in the in filings you mentioned that you're separating what's reasonable from what's not reasonable can you.

Can you highlight what what what what areas of request that you might deem reasonable that that you received in that we may see an are you you continue to be of the view that material concessions.

Speaker 6: What areas of request that you might deem reasonable that you received and that we may see? Do you continue to be of the view that material concessions continue to be unlikely as part of the outcome for this review?

<unk> continue to be unlikely as part of the outcome for this for this review.

Speaker 3: Well, let me, Walter, hopefully you can hear me okay. I'll start with confirming the statement that you just made. You know, often we think about this, significant concessions are required to offset losses of competition.

Well, let me Paul drove Lee can you hear me, Okay I'll start with the statement that you just made.

And oftentimes, we think about that.

Given the catastrophe bond offset losses of competition.

Speaker 3: network overlap, predatory proxying, or poor service. Did none of those...

Network overlap.

<unk>.

Speaker 3: points are true about this transaction, this proposed transaction. So, that's the starting point. You know, the requests that have been made so far are not a surprise, obviously. We expected everybody to come to the table asking...

Those points.

Points are true about this transaction as proposed transaction so.

Good morning.

The requests that have been made so far not a surprise, obviously, we expected everybody to come to the table.

Speaker 3: for certain things, but at the same time, as we said from the very beginning, we're going to negotiate on reasonable terms, and reasonable is a two-way conversation, obviously.

For sure.

But.

As we are beginning.

Hey.

And reasonableness.

The two way conversation obviously.

Again pro competitive that haneda.

Speaker 3: me leads to a good outcome for the customer, for the country, for the freight network.

Thanks for a good outcome for the customer.

The tax rate for the <unk>.

Speaker 3: So, certificate concessions, when you have good stats and they all support competition, are not a reasonable expectation for anyone to come to Staples.

So significant concessions when you have to act and they also for competition reasons.

A reasonable expectation for any one.

Speaker 7: That's probably the best way I can say it. I can tell you, Walter, I was very encouraged to see the SDB's recent ruling. You know, I think about what that says to me. I think it's...

But that's probably the best way I can say and I think all your.

Paul Barry.

Orange facility the STB.

Recent ruling.

Think about what that estimate.

Thank you.

As a fair and open process.

Speaker 7: I think it demonstrates a commitment to the procedural schedule and a commitment to an efficient and timely review of our proposed transaction, all which bodes well for the very positive, pro-competitive facts of this combination.

Illustrates that the amendment for the procedural schedule.

In addition family review.

Our proposed transaction.

Which bodes well for the very cost competitive back to this combination.

I appreciate the time as always thank you Keith.

Thank you Frank.

Speaker 5: Thank you. Next question will be from Tom Waterwitz at UBS. Please go ahead.

Thank you next question will be from Tom <unk> of UBS. Please go ahead.

Yes, good afternoon.

Speaker 8: Keith, my understanding is that, you know, you're obviously constrained on the operating side. You can't, you know, you can't touch the KCS network, but from a customer perspective, you can go to customers, obviously. I mean, you said, I guess you, I don't know if it was in conjunction with KCS management, but, you know, 100 calls or meetings is a lot.

Keith My understanding is that you're obviously constrained on the operating side you can't you can't touch the case, yes network, but from a customer perspective, you can go to customers. Obviously I mean, you said I guess I don't know if it was in conjunction with K C. S management, but 100 calls or meetings is a lot.

Speaker 8: Do you think that we would expect any kind of new win type of announcements in 2022 of business related to the combination that, you know, you're able to reach, you know, talking together with KSU, you know, auto contracts, new ag sites, you'll be serving things like that?

Do you think that we would expect any kind of new win type of announcements in 2022.

Business related to the combination debt.

You were able to reach.

Talking together with KSU, you know auto auto contracts, New AG sites, you'll be serving things like that.

Yes.

Speaker 3: You know, let me let me start by saying, you know, we have to handle this.

Let me, let me start by saying we.

We have to handle this.

Speaker 3: in a very singular fashion, you know, Pat and his team are handling KCS's business, CP, obviously myself and our team handling ours. There's nothing that prevents us from going to a customer that might be interested from or that might benefit from this new proposed single line service. Assuming the STP approves the transaction, we could make...

Singular fashion.

Abraham Lincoln.

Obviously myself and our team handling or.

There's nothing that prevents us from going to a customer that might be interested problem or that might benefit from the changes proposed single line.

Service, assuming the STB approval transaction, we can make.

Speaker 3: Any discussion contingent upon that, so the answer is yes, that's possible.

Any discussion of contingent upon that so the answer is yes.

Possible.

Speaker 3: But at this point, I can tell you the meetings that we've had, the lines here.

This morning, I can tell you the meeting with that.

The Lions share all participated in their J P. James talking about JV opportunities with our customers and then obviously, we just got what the future might look like so the groundwork is being late.

Speaker 3: I participated in their CP team talking about...

Speaker 3: T. P. Opportunities with our customers, and then obviously we discussed what the future might look like. So the groundwork is being laid, you know, the key point with our customers.

With our customers.

Speaker 3: So, to get into long-term contracts that lock you out of the opportunity to benefit from the pro-competitive nature and opportunities and options of this transaction.

To get into long term contracts that lock you out of the opportunity to benefit from the competitive nature and opportunities and options in this transaction.

Speaker 3: For me, it's the customer's decision to make, but obviously, we're doing our best to educate them to the benefits of not using that, so that they can uniquely benefit from the unique benefits this combination is going to create. So hopefully that answers your question, Tom. We've got to be very careful not to excerpt, and we will not.

The name of the customer decision to make but obviously, we're doing our best to educate them to the benefits of that using that so that they can uniquely benefit.

This combination is going to create.

So hopefully that answers your question.

We got to be very careful not to extend and we will not enter control or influence over standalone.

Speaker 3: control or influence over KCS is standalone, but again, the two together can talk about.

And alone, but again, the two together and talk about what the future looks like and what that might mean for the customer assuming any particular transaction.

Speaker 3: what the future looks like and what that might mean for the customer assuming the SKD frees our transaction.

Speaker 8: So it sounds like maybe keep the expectations low for this year and probably setting the stage for more to come after the approval.

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

Speaker 7: Yeah, we're certainly not taking in any customer wins or business as a result of the transaction. We're just preparing for and laying the groundwork for what's to come beyond the possible.

Yes, we're certainly not making thank you Ann.

Any customer wins that business.

After the transaction, we're just preparing for and laying the groundwork for what's to come and it's possible.

Great. Thank you Keith.

Thank you. Thank you Tom.

Speaker 9: Next question will be from Fadi Shamoon at BMO. Please go ahead. Thank you. Good afternoon, everyone.

Next question will be from Saudi Shimon at BMO. Please go ahead.

Thank you good afternoon, everyone.

<unk>.

A question along the same lines I mean, you have.

Speaker 9: this Amtrak support statement, which clearly addresses the key concern by regulators. Are there other things that you can potentially

With Archrock to support statement, which clearly.

Russia is a key concern.

Bye bye bye regulators.

Are there other things that you can potentially.

Speaker 9: And I try to firm up, you know, ahead of this regulatory process with, you know, other key parties in this transaction, like short lines or even other railroads. I just wonder if there are things that you can, you know, address potentially before there's, if we go through the hearing process, maybe, you know, I'm a little bit.

And I try to.

Firm up.

Head of regulatory process week.

Other key.

Parties in this transaction like short lines or even other railroads I guess longer.

Okay.

I don't think that you can.

Address.

Potentially before before then.

We go to the hearing process maybe.

No.

A little bit quieter on so.

Speaker 3: Yes, yes, Toddy, great question, and the answer is absolutely yes, and I would suggest that, you know, the individual parties, if we can reach agreement on whatever the item might be, come to reasonable terms between ourselves, whether it's with a short line, whether it's with a main line, whether it's with a customer, whether it's with an association, I think the SBB would prefer that. So, you know, obviously those discussions are being had in all those areas. We've had discussions, some

Yes, yes.

A question and the answer is absolutely yes.

Suggest that.

The individual partners, if we can reach agreement on whenever the aten might be under reasonable terms.

Wayne ourselves, whether it's where the short line, whether it's for the mainline with us for the customer whether it's where they.

Ken Association.

I think the STB would prefer that.

So obviously those discussions are being added all those areas.

Had discussions.

More than others.

Speaker 3: All the class one, we've had discussions with short lines. We're having discussions with shipping organizations. So we're prepared to making ourselves available to have reasonable discussions, to listen to concerns, and hopefully come to reasonable, acceptable.

All the class one we've had discussions with short lines, we're having discussions with shipping organization.

So we're prepared and making ourselves available to have reasonable discussion.

Serums and hopefully.

First of all acceptable.

Speaker 3: solutions between all of those parties prior to, alongside, I guess in parallel with the merger application process.

Solutions between all of those parties.

Too long Todd.

Todd I guess in parallel with the merger application process.

Speaker 9: And are the views, like when you kind of address some of these things with the other class one carriers, are the views widely different between where you see things and where they want things to go?

Okay.

Our our Odyssey view when you Kevin.

Kind of address some of these things we see a world class one carriers are the views widely different between where do you see things and where do they want things to go.

Speaker 3: Well, the way I look at it, you know, number one, I'm going to listen to what the app gives, but the backdrop, I...

Well the way I look at it number one im going to lessen and wanted to ask is the backdrop.

Speaker 3: I compare it to, and obviously I've got a lot of precedents, I've got a lot of history.

I can Eric.

Obviously I've got a lot of precedents I've got a lot of history I think we.

Speaker 3: I think we can review because this is moving forward under the old rules. So obviously there is a catalog of different deals that have been done and concessions and agreements that have been made that have been filed with the SBB. So we have the benefit of precedence and the benefit of those that have navigated these waters before us.

You can review because this is moving forward under the old rules. So obviously there is a there is a.

Catalog of different deals that have been done.

Sure.

Great.

It had been filed with the SP base, we have the benefit a prospect to the benefit of those that have navigated these waters.

We may.

Speaker 3: certain commitments, obviously, to keep the interchanges open on reasonable terms and physical terms. We're not going to create a bottleneck crisis. We're willing to enter into some reasonable...

FX, obviously to keep interchanges often on reasonable terms in physical terms.

We're not going to create new bottleneck pricing.

Willing to enter into some reasonable.

Speaker 3: arbitrated settlement process, and individual discussions with our shipping groups and or our customers. So there's a menu of options.

Arbitration settlement cost at individual discussions with our shipping group, nor our customers.

So theres a menu of Akshay.

Speaker 3: that are on the table, but always with a backdrop of I understand, we understand what the laws are, we understand that pro-competition is what the SDB seeks, and when we represent pro-competitive facts, puts us in a very strong position to have these discussions on reasonable terms again to come to reasonable solutions. And if they're not, I've said this before, you know, if we can't resolve it because someone's being unreasonable, then if we have to at the end, that's what will be said.

Or on the table.

But always with a backdrop of I understand we understand what the laws are we understand that competition.

The STB.

We represent pro competitive facts.

And a very strong position.

These discussions are reasonable terms again to come to a reasonable solution and if they're not up.

Sure.

If we can't resolve it somewhat at least to help Dan.

Dan will be tabled and that's what.

Speaker 3: We have to be open when we're at the final.

We estimate the ultimate lots of vinyl.

Okay, Great I appreciate it thanks.

Speaker 5: Thank you, Sally. Thank you. Next question will be from Chris Weatherby at Citi. Please go ahead.

Thank you Patty.

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

Speaker 10: Yeah, thanks. Good afternoon, guys. You know, I appreciate that. There's a lot of moving parts to this year, certainly, but I was hoping that maybe we could talk a little bit about you've got 2 fronts. Maybe how you see the volume dynamic playing out. Obviously, there's been some challenges outside of your control and 21 that may be thoughts around at least maybe the ramp of volume as we go through 2022 and then just any thoughts that you have in terms of operating ratio. Give us some help on some individual line items within the cost within within the cost, but I guess I want to get a sense of on a standalone basis. How you're thinking about a war for 2022.

Yeah, Hey, thanks, good afternoon guys.

I appreciate that there's a lot of moving parts to this year certainly.

But I was hoping that maybe we could talk a little bit about you got two fronts, maybe how you see the volume dynamic playing out obviously, there's been some challenges outside of your control 21 that would be thoughts around at least maybe the ramp of volume as we go through 2022, and then just any thoughts Nadeem you have in terms of operating ratio I know you gave us some help on some individual line.

Items within the cost with them.

Within.

Costly because we want to get a sense of what a CP standalone basis, how you're thinking about a walk for 2022.

Speaker 11: Now let me, uh...

Now let me.

Speaker 3: Without getting into guidance, I'll give him my level of color and I'll let him fill in the blanks that he might want to, but, you know, this is the way I see it, Chris. You know, this is a tell of two stories this year. We obviously have a pretty tough conflict.

Without getting into guidance I'll give some color and I'll, let David go any blank city might want to but.

This is the way I see it Chris.

Chris This is a <unk> story this year, we obviously have pretty tough comps.

Speaker 3: First half, we don't have grain this year. We had grain last year. You know, we had a unicorn January , the best.

First half we don't have rain this year, we had grain last year.

We had.

We had a unicorn January the bet.

Speaker 3: weather-conditioned January that I've experienced in my history railroading in the Canadian Railroad as compared to last year, that's not the case.

Weather conditions in January that experienced in my history railroading in the Canadian railroad as a compared to last year.

Thanks.

Speaker 3: this year. So there's some obvious pressures from fluidity from operating conditions and from a computer standpoint on volume that we won't benefit from that are headwinds in the first step. So you could expect

This year. So there are some obvious pressures.

We ended the from operating condition and from a compare standpoint on volumes that we won't benefit from that are headwinds in the first half. So you can expect.

Speaker 3: Park ends to be down in the first half, but in the second half, and again, what's true in the first

Our teams to be down in the first half.

In the second half.

And again what is true in the first.

Speaker 3: to tell when in a second. We've got weather on our side. We've got very favorable conditions.

The tailwind in the second weather on our side.

Got very favorable cost.

Speaker 3: We hope and we anticipate with all that snow that's falling, we're going to see a more normal grain harvest that comes in the fourth quarter when the new grain starts.

And we anticipate with all that celebrates falling we're going to see a more normal grain harvest that comes in.

Fourth quarter, when <unk> starts to move and I think youre going to see auto some of the chip shortage that start.

Speaker 3: And I think you're going to see autos, some of the chip shortages, that start to normalize and to stabilize. So again, with that demand environment, you fill that valley in with grain.

Normalizing the stabilized so again with that demand environment do you feel that valeant with grain and with all these other initiatives with these contract wins that John spoke to assess too.

Speaker 3: And with all these other initiatives, with these contract wins that John has spoken to, that gives us to a run rate on the second half double digit RPM growth. So that leads us to positive RPM growth for the year. That leads us to margin improvement for the year. That leads us to positive EPS growth for the year, all on a stand-alone basis.

The run rate on the second half double digit RPM growth. So that leaves us to positive RPM growth for the year that leads to margin improvement for the year that lead to positive EPS growth for the year all on a standalone basis.

Okay. That's super helpful. Appreciate that.

Thank you.

Speaker 12: Next question will be from Jason Seidel at Cohen. Please go ahead. Thank you, Operator Keith and team. Thanks for taking my call. Wanted to talk a little bit about the intermodal sector. It seems like the way you guys are couching it, it might be more of a back half story as congestion eases, just want to make sure I'm reading that right. Also, wanted to see if you guys have seen.

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

Thank you operator, Keith and team thanks for taking my call.

Wanted to talk a little bit about the intermodal sector. It seems like the way you guys are are couching it it.

It might be more of a back half story as congestion eases its got to make sure I'm reading that right also wanted to see if you guys have seen.

Speaker 12: any inquiries given sort of the vaccine mandate there for cross-border traffic in the truck.

Any inquiries given sort of the vaccine mandate there for cross border traffic in the trucking industry.

Speaker 1: Hey Jason, this is John . I'll jump in there. You know, I think certainly on the international side of the business, we've got a lot of pent up import demand out there, not only in Vancouver, on the water, but so I do think it's going to take a little bit of time to grind through that. The good news is the volumes are nowhere representative of the demand environment, if you think about international, intermodal for us.

Hey, Jason I can this is John I'll jump in there.

I think certainly on the international side of the business, we've got a lot of pent up.

Import demand out there not only in Vancouver are on the water but.

So I do think it's going to take a little bit of time to grind through that.

The good news is that the volumes are nowhere representative of the demand environment as you think about international intermodal for us.

Speaker 1: Um, domestically we've, we've hummed strong, um, you know, I expect, uh,

Domestically, we've we've come strong.

You know I expect.

Speaker 1: our domestic intermodal franchise to continue to execute.

Our domestic intermodal franchise to continue to execute.

Speaker 1: I think you'll see a strong Q1, Q2, and as I said, I think we're expecting another record year for our domestic intermodal franchise in that space. So maybe it's a little different between the two. Yeah, probably more of a second half story on international.

Youll see a strong Q1 Q2 and.

As I said I think we're expecting another record year for our domestic intermodal franchise in that space. So.

Maybe it's a little different between the two yeah, probably more of a second half story on international.

Speaker 1: Um, but, but I would expect a strong full year in our domestic.

But but I would expect.

<unk> full year on our domestic franchise.

Speaker 1: Okay, and regarding the cross border, you know what we were looking at sort of our volume on a few of our train pairs early this morning. And, you know, we haven't seen a lot of variability yet. I can tell you there's a fair amount of discussion going on with our customers on that front, but I would say we're kind of in a wait and see mode right now in that in that cross border. Okay.

Okay and regarding the cross border.

What.

We were looking at sort of their volume on a few of our trained pairs are early this morning.

We haven't seen a lot of variability yet I can tell you. There is a fair amount of discussion going on with our customers on that front, but I would say, we're kind of in a wait and see mode.

Right now in that and that cross border.

I appreciate the time as always gentlemen.

Yeah.

Speaker 5: Thank you. Next question will be from Steve Hansen at the Raymond James. Please go ahead.

Thank you next question will be from Steve Hansen of Raymond James. Please go ahead.

Speaker 13: Yeah, thanks guys for the time. John , I wanted to circle back on one of your comments on the Pet Chem side, where you talked about the opportunity on, I think it was both plastics and the ultra low sulfur diesel opportunity. Your peers also been talking about this concept of renewable diesel and the big opportunity it might present in the coming years. Is that is that something that you see also starting to ramp up on your on your line as well? And just give us some context around that broader step up over time.

Yeah, Thanks, guys for the time.

John I wanted to circle back on one of your comments on the pet Chem side, where you talked about the opportunity.

I think it was both plastics and the ultra low sulfur diesel opportunity. Your peer has also been talking about this concept of renewable diesel and the big opportunity that might present in the coming years is that is that something that you see also starting to ramp up on your on your line as well and just give us some context around that broader step up overtime.

Speaker 1: Steve, thanks. Thanks for the question. It definitely is. You know, not only across Canada as we're working, you know, certainly close with the input side with the, whether it be canola oil or other oils, but also in our US franchise, as you know, we're looking at opportunities for additional soybean crush on our franchise as feedstock for those opportunities.

Yes.

Steve Thanks for thanks for the question it definitely is.

Not only are.

Across Canada as we're working you know certainly close with the input side with the whether it be canola oil or other oils, but also on our U S franchise. As you know we're looking at opportunities for additional soybean crush on our franchise as feedstock for those opportunities.

Speaker 1: So, I think the easier answer is yes, we see this as sort of a long-term opportunity for the franchise and frankly, you know, if the FTB grants control and as we look to the future relative to CBKC, I think it's a tremendous opportunity as we've got the feedstock.

So I think the easy answer is yes, we see this as sort of a long term opportunity.

For the franchise, then and frankly, you know if the FTB.

Grants control and as we look to the future relative to CPE Casey I think it's a it's a tremendous opportunity as we've got the feedstock in the origin franchises planted in the rights to that with the with the grain customers and potentially the single line haul to get down to the refineries in <unk>.

Speaker 1: in the origin franchise planted in the right spot with the grain customers.

Speaker 1: and you know potentially the single line haul to get down to the refineries and into the gulf market so uh... i think stand alone it's uh... it's a good story for cp and

The golf market so.

I think standalone, it's a it's a good story for TEP and <unk> and in the future <unk> could provide a pretty good opportunity also.

Speaker 1: And in the future, CPKT could provide a pretty good opportunity also.

I appreciate the color. Thanks.

Speaker 5: Thank you. Next question will be from Brandon Oglenski at Barclays. Please go ahead.

Thank you next question will be from Brandon of Glinski at Barclays. Please go ahead.

Speaker 6: Hey, good afternoon, everyone, and thanks for taking my question. Just point of clarification, I think I heard earlier that Pat Ottensmeyer and Mike Upchurch were on the call. Is it okay if I ask a question of them on KSU?

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

Just point of clarification, I think I heard earlier that pet Ottens Meyer and Mike Upchurch were on the call is it okay. If I ask a question of them on cashew.

Of course, absolutely.

Speaker 6: Yeah, hey guys, and I apologize. I didn't realize you put out your ends released until his call. So I'm not that great at multitasking, but it looks like, you know, things came in pretty much in line with where maybe we thought it would be maybe margins a little bit ahead. I guess. What can you talk about, you know, some of the opportunities and, you know, challenges that you see approaching here in 2022 for your network. Appreciate it.

Yeah, Hey, guys and I apologize I didn't realize you put out your earnings release until this call. So I'm not that great at multitasking, but it looks like you know things.

Things came in pretty much in line with where maybe we thought it would be maybe margins a little bit ahead, I guess, what can you talk about some of the opportunities and chat.

Challenges that you see approaching here in 2022 for your network I appreciate it.

Speaker 14: Mike, I'll give you just a quick overview here. I think on the volume and revenue side, we would expect to continue to see nice growth.

Yes, Thanks, Mike.

Give you just a quick overview here I think on the volume and revenue side, we would expect to continue to see nice growth.

Speaker 14: We believe that all of our segments, with the exception of chemical and really due to the refined product issue that I think has been well discussed in past, should grow. We have a lot of new facilities on our line, particularly in the steel side of the business. We have metal, ternium, steel dynamics, all with major facilities.

We believe that all of our segments with the exception of chemical and really due to the refined product issue that I think has been well discussed in past should grow we have a lot of new facilities on our line, particularly in the steel side of the business.

We have mittal attorney M steel dynamics, all with major facilities.

Speaker 14: built in the U.S. Gulf Coast or down in Mexico at Pasadena and Lazaro.

Built in the U S Gulf coast or down in Mexico, and <unk> Lazar Roe.

Speaker 14: I should see a little bounce back in auto.

Should see a little bounce back in auto.

Speaker 14: Um, grain, I think looks really strong with, with, uh,

Brain I think looks really strong with with.

Speaker 14: significant growth in the cross-border grain shipments. We also are really excited about an expansion of the Diamond Green Renewable Diesel Facility.

Significant growth in the cross border grain shipments. We also are really excited about an expansion of the diamond Green renewable diesel facility, that's going to add some growth.

Speaker 14: going to add some growth. You know, the Drew facility down in Port Arthur should add some growth. So we're pretty excited about the growth opportunities and that should lead to good volume and revenue growth. On the cost side, as you know from our first three quarterly earnings releases we had in 21, we had some cost challenges. Those are behind us.

The Dru facility down in Port Arthur should it should add some growth so.

We're pretty excited about the growth opportunities and that should lead to good volume and revenue growth on the cost side as you know from our first three quarterly earnings releases, we had in 'twenty. One we had some cost challenges those are behind us.

Speaker 14: Really, the John Wars leadership and the entire operating team, many things to them. We really have a network that's running very, very efficiently right now. And 2022 is going to be all about continuing to generate productivity on the labor side and around fuel efficiency and continuing to better leverage our equipment in our franchise. So.

John Where's leadership and the entire operating team.

Many thanks to them, we really have.

Network, that's running very very efficiently right now in 2022 is going to be all about continuing to generate productivity on the labor side and around fuel efficiency and continuing to better leverage our equipment in our franchise. So we're pretty excited about those opportunities here in <unk>.

Speaker 15: You know, we're pretty excited about those opportunities here in 2022. Yeah, Brandon, I would just add to that, if you look at the package that we put on our website.

22, Brandon I would just add to that if you look at the package that we put on our website.

Speaker 15: Look at some of the operating metrics and statistics that we included in that package, including the performance of our grain fleet. So we definitely had some weakness in a couple of the areas that that Mike mentioned the cross border refined fuels continues to.

Look at some of the operating metrics and statistics that we included in that package.

Including the performance of our grain fleet. So we definitely had some weakness in a couple of the areas that Mike mentioned.

The cross border refined fuels continues to.

Speaker 15: lag because of some regulatory changes in Mexico, but our service has improved just substantially.

Lag because of some regulatory changes in Mexico, but our service has.

Prove just substantially.

Speaker 15: since the middle of last year, so we are well positioned. We think we've got.

Since the middle of last year. So we are well positioned we think we've got good visibility to some of these opportunities coming back and our network is performing extremely well and I think we're in great shape too to see and take advantage of those growth opportunities when they come back.

Speaker 15: good visibility to some of these opportunities coming back, and our network is performing extremely well, and I think we're in great shape to see and take advantage of those growth opportunities when they come back.

Thank you.

Speaker 5: Thank you. Your next question will be from Ken Hexter at Bank of America. Please go ahead.

Thank you. Your next question will be from Ken Hector at Bank of America. Please go ahead.

Speaker 13: Hey, great. Pat, Keith, congrats on closing the acquisition. Keith, obviously a lot of cost impacts here. Maybe you can talk a little bit about anything ongoing costs, talk about the restructuring costs and what you plan to spend. I don't know if it's too early for that or maybe just walk us through what we should expect this year in terms of the impact on costs. And then, Pat, just, you know, coming back to your thoughts there on KCS, any thoughts on the outlook that you're providing with for KCS at this time?

Hey, great.

Keith Congrats on closing the acquisition Keith obviously, a lot of cost impacts here, maybe you can talk a little bit about any ongoing costs to talk about the restructuring costs and what you plan to spend.

Too early for that or maybe just walk us through what we should expect this year in terms of the impact on costs and then.

Just.

Coming back to your thoughts there on case, yes, any any thoughts on the outlook that you're providing with for KC up at this time.

Speaker 2: As a candidate, I just want to clarify, when you say impact of costs, can you just

Yes, Ken it's.

Just wanted to clarify when you say impact of course.

Can you just clarify that.

Speaker 2: Yeah, I guess there's two phases. One is on M&A, and the second would be any kind of restructuring costs. I guess it's too early until you blend the companies, right? So, just a standalone operating, it's just a mathematical example. Is there any other costs we should be aware of in terms of the ownership structure here in 22?

Yes, I guess I guess there are two phases, one is on M&A and the second would be any kind of restructuring costs I guess, it's too early until you blend the companies right. So just a standalone operating it's just a mathematical example, there's is there any other costs, we should be aware of.

In terms of the ownership structure here in 'twenty two.

Speaker 2: And I guess it's too early to talk about restructuring it to 23. Yeah, no, you're right. There's it's too early on 23. But I would say, you know, we've talked about this being a growth story. So, you know, that that's going to be additive to headcount over time as we as we grow to.

It's too early to talk about restructuring into 2020, yes. No. You are right. There is it's too early on 23.

But I would say we've talked about this being a growth story so.

That's going to be.

Additive to head count over time, as we as we grow the two networks and.

Speaker 2: add on the synergies that we talked about, the billion dollar synergies.

Add on the synergies that we talked about the $1 billion of synergies.

Speaker 2: And then some cost savings through

And then some cost savings through.

Speaker 2: through IS and finance and some headcount as we talked about there, shifting to Kansas City. But apart from that, in 2022, I talked a little bit about the equity pickup and we'd have our net income from KCS would come up through our net income, but there would be some depreciation step up.

Through ice and in finance and some head count as we talked about there.

Shifting to Kansas City, but apart from that.

In 2022.

<unk> talked a little bit about the the equity pickup in.

We would have.

Our net income from from Tcs would be would come up through our net income.

There would be some depreciation step up about $220 million U S.

Speaker 2: about $220 million U.S., and there'd be an offset to that of about $40 million of credit for the fair value increase in Kansas City Southerners' debt, and also an offset of about $55 million U.S. credit for deferred taxes.

And there'll be an offset to that.

About $40 million of.

Credit for the fair value increase in.

Kansas City Southern is debt and also an offset of about $55 million U S credit for deferred taxes. So that's that's the income statement impact that I'd highlight so apart from that nothing.

Speaker 2: That's the income statement impact that I'd highlight. So apart from that, nothing as far as costs or restructuring.

<unk> costs or restructuring.

Speaker 13: And then, Pat, any thoughts in your – did you provide an outlook any different than what CP is talking about in terms of forecasting?

Okay, and then Pat any thoughts.

And you're out but did you provide an outlook any different than what <unk> was talking about in terms of forecast.

Speaker 15: We have not and we're going to shy away from that at this time, just so many uncertainties about COVID and the impact on workforce and supply chain congestion and chip issues affecting auto and auto-related business and then the future trend in refined products.

We have not and we're going to shy.

Shai away from that at this time, just so many uncertainties about.

Covid and the impact on workforce and supply chain congestion and chip issues affecting our auto and auto related business and then the.

The future.

The trend in the refined products.

Speaker 15: We're going to stay away from specific guidance at this point, but as Mike covered and I touched on with our service, I think we see opportunities for some pretty nice productivity gains when volume recoveries occur.

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

Okay, great. Thanks for the commentary.

Right.

Speaker 5: Thank you. Next question will be from John Chappell at Evercore ISI. Please go ahead.

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

Speaker 16: Thank you. Good afternoon. Good timing for the follow up. Pat, you touched on just really briefly there refined products. Obviously, Mexican administrations made a big announcement since we last spoke to you in October on on oil dependency or independency. I should say refined products has been such a huge growth, you know, silo for you over the last couple of years.

Thank you good afternoon.

Good timing for the follow up Pat you'd touched on just really briefly their refined products obviously.

Mexican administrations made a big announcements since we last spoke to you in October on an oil dependency or independency I should say refined products has been such a huge growth.

Silo for you.

For the last couple of years, I know youre, not giving guidance, but how should we think about the Mexican administration, new views on oil and refined products and how that relates to your rail in either growth or maybe even some some deceleration there.

Speaker 16: I know you're not giving guidance, but how should we think about the Mexican administration's new views on oil and refined products and how that relates to your rail and either growth or maybe even some deceleration there?

Speaker 14: Yeah, this is Mike. I'll go ahead and take that one. Obviously, this market has been a terrific opportunity for us, at least through through mid year 2021, then the government really stepped up regulations, inspecting cars because some shippers were legally labeling the product to avoid excise tax.

Yeah. This is Mike I'll go ahead and take that one obviously this market has been a terrific opportunity for us at least through through mid year 2021.

Then the government really stepped up regulations.

Inspecting cars be because some shippers were illegally labeling the product to avoid excise tax.

Speaker 14: And the next step the government took was to inspect and shut down a number of refined product rail terminals that were receiving this product in Mexico.

And the next step the government took was to inspect and shutdown a number of refined product rail terminals.

<unk> this product in Mexico.

Speaker 14: You know, we're beginning to see stabilization in that business, so that's good news. Hard to predict exactly where that's going to take us here in 2022.

We're beginning to see stabilization in that business. So that's good news.

To predict exactly where.

That's going to take us here in 2022.

Speaker 14: But if you think about the overall macro environment here, the demand is still relatively weak in Mexico.

But if you think about the overall macro environment here the demand is still relatively weak in Mexico.

Speaker 14: Pemex did in 21 over, you know, Easy Thompson in 2020, increased production, but really not above 2018 and 2019 levels. So we'll kind of see, you know, what their production is for 2022.

Pemex did in 'twenty, one over easy comps in 2020 increased production, but really not above 2018 in 2019 levels. So we'll kind of see what their production is for 2022, but imports have clearly.

Speaker 14: but imports have clearly shifted from rail to truck.

Shifted from rail to truck and Thats whats hurt our business.

Speaker 14: And that's what's hurt our business because of the closure of these rail receiving terminals in Mexico.

Because of the closure of these rail receiving terminals in Mexico.

Speaker 14: They've inspected pretty much every terminal in Mexico. The good news is companies are beginning to get approval to continue to be open. So we're optimistic that that market will stabilize here and hopefully even grow because the macro environment, Pemex is only producing about a third of the overall demand in Mexico. So the other two-thirds have to come from imports.

They've inspected pretty much every terminal in Mexico. The good news is companies are beginning to get approval to continue to be open. So we're optimistic that that market will stabilize here and hopefully even grow because the macro environment.

Pemex is only producing about a third of the overall demand in Mexico. So the other two thirds has to come from him imports and that's where.

Speaker 14: And that's where we are very hopeful that we'll see a shift back from truck to rail, which is much more economical.

We are very hopeful that we'll see a shift back from truck to rail, which is much more economical and.

Speaker 14: And maybe one final point, Pemex just recently announced acquisition of a Deer Park refinery and they're really looking to ship a lot of fuel, heavy fuel oil into that facility and then refined product down back into Mexico. So we're going to be ultra focused on finding a way to work with Pemex to make them successful both on the shipments north and the refined products back.

And then maybe one final point pet Pemex, just recently announced the acquisition of a deer Park.

Refinery and that are really looking to ship a lot of fuel heavy fuel oil into that facility and then refined product down back into Mexico. So we're going to be ultra focused on finding a way to work with pemex to make them successful both on the shipments north and the refined products back.

Speaker 14: So hopefully that gives you a little bit of color on this market.

So hopefully that gives you a little bit of color on this market.

Speaker 14: And still long-term, we believe this is a good growth opportunity for us.

And still long term, we believe this is a good growth opportunity for us.

Definitely does thanks for that detail Mike.

Speaker 5: Thank you. Next question will be from Scott Group at Wolf Research. Please go ahead.

Thank you next question will be from Scott Group at Wolfe Research. Please go ahead.

Speaker 17: Hey, thanks. Good afternoon, guys. So last year, we talked about potential for a 55 or standalone. And obviously, there were there were a lot of challenges last year. Keith, do you think there's possible of getting there this year? Or is that more of a 2023? When we get the grain recovery?

Hey, Thanks, good afternoon, guys. So.

Last year, we talked about potential for 55 O or Standalone and obviously there were a lot of challenges last year. Keith do you think there is possible of getting there this year or is that more of a 'twenty.

2023, when we get the green recovery.

Speaker 18: Yeah, realistically, Scott, without giving you guidance, obviously, again, tell it two stories, it's going to be challenging.

Yes. Please.

Scott without giving any guidance.

Honestly again, showing a two story that's going to be challenging.

Speaker 18: Obviously, to get to that level, I see a path to more improvement, and obviously, when things normalize, you get into 23 with a normal grain crop, and the benefit of that meaningful volume is when those outcomes become more achievable.

Obviously to get to that level.

Or improvement and obviously when things normalize we get into 'twenty, three with the normal grain crop and the benefit of that meaningful volume and those outcomes.

Fortunately.

Not in 2022.

Speaker 17: And then can I just ask John just one question? So with the revenue synergy targets, I'm sure there's some bigger, lumpier kinds of contracts that you have in mind. Just directionally, are there a lot of those opportunities in late 22, 23, in terms of the bigger contracts in mind?

Okay and then Ken this is.

John just one question so with the revenue synergy targets I'm sure. There are some bigger lumpier kinds of contracts that you have in mind just directionally to those are there are a lot of those opportunities in 'twenty late 'twenty two 'twenty three.

In terms of the bigger contracts in mind.

Speaker 1: Yeah, I think so. Scott is Keith said earlier, you know, we've we've undertaken a pretty aggressive outreach to the customers in some of those areas that might have lumpier contracts to talk to them about.

Yeah, I think so Scott as Keith said earlier, you know, we've we've undertaken a pretty aggressive outreach to the customers and some of those areas, where it might have lumpier contracts to talk to them about.

Speaker 1: why they need to think about if the STV does grant control that, you know, don't miss the opportunity for this new competitive option in the marketplace. And it's been received well.

Why they need to think about if the STB does grant control that don't Miss the opportunity for this new competitive option in the marketplace and it's been received well.

Speaker 1: You know, Scott, so you've got that bucket of opportunities. And I think you got a whole, whole bunch that are out there that, um, um, you know, just contract timing works well. And as we create a new product.

Scott.

So you've got that bucket of opportunity that I think you've got a whole bunch that are out there that are.

Just contract timing works, well and as we create a new product it opens up those opportunities for those customers regardless of their of their contract status and you know I I just give you an example.

Speaker 1: It opens up those opportunities for those customers, regardless of their contract status. And, you know, I just, I'll give you an example, and you probably saw some of this, but.

And you probably saw some of this but.

Speaker 1: You know, most recently, you've had two major Canadian companies.

Most recently you've had two major Canadian companies.

Announce where they've made acquisitions into the United States and in more of the global and North American markets, one being Richardson and international and the other one just most recently being by Terror and you look at those opportunities.

Speaker 1: where they've made acquisitions into the United States and in more of the global and North American markets, one being Richardson International and the other one just most recently being Viterra.

Speaker 1: And you look at those opportunities, and those are synergies that sort of go above and beyond, but they're totally indicative of what we believe this North American combination can create, and the desire for some of these companies to invest.

And those are synergies that that sort of go above and beyond but they're totally indicative of what we believe this north American combination can create.

And in the diet desire for some of these companies to invest to be able to help create the opportunity to your share in the new routes that this combination creates is powerful and with those two examples.

Speaker 1: to be able to help create the opportunity or share in the new routes.

Speaker 1: that this combination creates is powerful. And with those two examples, you know, and those are big base customers for CP today that are very excited about, you know, what this combination, if we get approval, you know, presents them.

You know and those are big base customers for CPE today that are that are very excited about what this combination if we get approval.

Presents them.

Helpful. Thank you guys appreciate it.

Thank you Scott.

Speaker 5: Thank you. Next question will be from Conard Gupta at Scotiabank. Please go ahead.

Thank you next question will be from Connor Gupta at Scotia Bank. Please go ahead.

Speaker 19: Thanks and good afternoon everyone. Just wanted to come back to the demands from your competitors that you have received so far and potentially will receive from the remaining guys.

Thanks, and good afternoon, everyone.

Just wanted to come back to the demands from from your competitors.

That you have received so far and potentially vascepa from the remaining guys.

Speaker 19: shortly. If in case, Keith, I know you mentioned that you will address all reasonable demand.

Shortly.

Keith Keith I know you mentioned that you will address all reasonable demand.

Speaker 19: When you address any reasonable demand from your competitors, especially, do you see or anticipate any kind of impact on your stated synergy targets, considering you may be required to perhaps divest some sections or let go some lanes? Can you talk a little bit about the impact, potentially, on synergy targets from those demands? Thank you.

When do you have any address any reasonable demand.

From your competitor, especially deep do you see or anticipate any kind of.

<unk> on your stated synergy targets.

You may be acquired to perhaps divest some sections on that for some some lanes that is can you talk a little bit about the impact potentially on synergy targets all of those demands.

Yes.

Yes.

Speaker 18: I'd be speculating, but let me take it back. They tend to always work best for me. When it comes to significant concessions...

But let me turn to always works.

That's really.

When it comes to significant concessions.

Speaker 18: The facts don't support it, you know, specifically divestiture. I know there was one particular railroad RV competitor that suggested they'd love to see us divest the line from Springfield to Kansas City, but if you get to the facts, some of the assumptions that were made in that request.

Got it.

Specifically divestiture I know there is one.

Particular railroad our main competitor.

Yes.

They'd love to see as the best of luck Greenfield City.

But if you get to the back some of the assumptions that were made in that request.

Speaker 18: or that proposed request are based on bad facts. There's factual errors, there's misstatements. If you truly get into the details of our filing and understand what our plan calls for, that specific line will grow. It's not going to shrink. It's not an overlapping track. It doesn't go to Chicago. So, again, when I think about unreasonable request, I would say that is, and you can expect this company to vehemently oppose that and certainly not concede to that, and I don't think...

That proposed request based on that fact factual errors misstatement.

If we get into the details of our filing can understand.

Planning cost for that specific line grow it's not going to shrink.

I don't overlapping track it doesn't go to Chicago.

Again, when I think about a reasonable request I would say that is you can expect.

We expect this company to be able to.

We oppose that certainly not a piece of that and I don't think.

Speaker 18: When the facts are heard and the facts are ruled upon, that's going to carry the argument for one moment. That's going to be a viable part of our network.

That was a factor.

<unk>.

That's good to hear the argument.

The other part of our network as part of our single line.

Speaker 18: part of our single line benefits that this transaction brings uniquely to the table and competition that it introduces.

This transaction brings uniquely to the table and competition.

Speaker 18: So again, that one I would say is very unreasonable, and I'm not concerned on that, based on that. If you get to the other ones, you think about what's been asked for.

Please.

So again.

That one I would say very unreasonable.

Don.

Thanks Bill.

You get to the other ones, we think about what's been asked before.

Speaker 18: You know, the NS is asking for additional rights of the meridian fairway, which, frankly, they're not currently contemplating in the JV agreement. That was an associated agreement between the KCS and the NS back in 2006. So, again, if you think about Cresta, to use the transaction to gain advantage or to gain a better position that you otherwise wouldn't benefit from.

David answered that.

The convergence of Airwave, which frankly, they're not currently contemplated in the JV.

The negotiated agreement between the two.

Casey Haire Savannah back in 2000.

Again, if you think about that.

The transaction.

The advantage of the gain a better position.

That you otherwise would.

Benefit from this.

Speaker 18: There's precedence around that. There are rules around that. There are laws around that. The VNS staff, they're looking for traffic to drive south of Laredo and from Clinton, Iowa, north of Savannah. Again, asks that have been asked for before. These facts...

His presence around the rules around that they're a long program.

Debate, that's out there with a protracted breaks out of Reno.

Now with north of Savannah.

Dan asked that have been asked.

That.

Speaker 18: don't change or create that fact, and if it didn't make sense then, I can't understand how it might make sense now. So again, in the context of a settlement, we'll talk about reasonable asks and reasonable terms and reasonable outcomes, and as long as it's reasonable for both parties, then we can get there. But if it's unreasonable, we're not going to be in a position to agree to it. Our pro-competitive facts don't indicate that they need to.

Don't change or create that back and if it did.

Blake.

I understand.

Now so again in the context of the settlement, we will talk about reasonable at reasonable terms and reasonable outcomes.

It's reasonable.

And then we can get there, but if it is unreasonable.

We're not going to be in a position to a great year.

Our third competitive attack.

Got it.

Yes.

Okay I appreciate the time thank you.

Speaker 5: Next question will be from Benoit Poirier at Desjardins, please go ahead.

Next question will be from <unk> Bank. Please go ahead.

Speaker 20: Yes, thank you very much and good afternoon everyone. Gentlemen, given the congestion with the West Coast ports,

Yes, thank you very much and good afternoon, everyone.

Gentleman, given the congestion with the West coast ports.

Speaker 20: Do you see an increased interest for eSports and maybe for PAD, do you see an increased interest for Lazaro Cardenas?

Do you see an increased interest for east coast ports, and maybe for cloud do you see an increased interest or Lazaro cardenas.

Speaker 18: You know what, all those things speak to a case for all those potential outcomes and while and those are all things that we're discussing at different stages of discussion with our steamship lines, you know, the Port of Lazaro.

You don't want all of those things.

Two a case for all of those potential outcomes, while windows or update or discussing.

Current stages of discussion with our steamship lines.

Reported growth.

Speaker 18: Obviously, they're talking direct to KTS about that, but what I know about it from my diligence is, it's a port built with a ton of capacity, deepwater access, it can complement what's going on in L.A. Long Beach, it will never replace it, but there's certainly business cases to be made looking at today's traffic.

Obviously, theyre talking directly about that but what I know about it.

It is built with a ton of capacity deepwater asset.

Okay complement what's going on in that legal nature will never replace it with.

Certainly the case that the debate looking at today's traffic.

Speaker 18: much less, considering what Nearshoring is going to bring in the future, that that's a viable port that should uniquely benefit this franchise. KCS today, TPKC in the future, sending the STB to print our transactions. And the same can be said for the Port of St. John . You know, the Port of St. John has a tremendous amount of capacity. As the crow flies from tidewater to the key market.

Flat, considering but near shoring, it's going to bring in the future.

Before that should uniquely.

Great.

Yesterday, a PK study in the future assuming the SPP approves our transaction.

Thank you.

John has a tremendous amount of capacity.

The crane side for Tidewater to the key markets.

Speaker 18: The CP solution is the shortest route. So in our best day, with the capacity, as long as they can handle it expeditiously and efficiently through the port, we've got a better product. And that's exactly what we're selling. And again, when you have these discussions, the beauty of this now, and in the future, assuming the STP approves our transactions, we now have three codes, the triangle that is a powerful.

The <unk> solution is the shortest route so in our best day.

With the capacity as long as they can handle it expeditiously and efficiently through the port we've got a better product.

But what we're selling and again when you have these discussions.

Yes.

And in the future.

The SPP approves our transactions, we now have three pretty close design all of that.

Oracle.

Speaker 18: solution enabler, supply chain enabler for growth for our customers, for our stakeholders. And that's all something we continue to be extremely excited about. And those messages and the art of the possible.

Solution enable our supply chain enabler for growth for our customers our stakeholders, but thats also something we continue to be extremely excited about the message.

And the art of the possible.

Speaker 18: it's exciting to those customers too. So I see a perfect marriage coming for growth and that's exactly why we're pursuing this transaction and that's exactly why we're excited. There's something in it for everyone here. Pro competition.

Starting to those customers too so I see a perfect marriage coming for growth and that's exactly why we're pursuing this transaction.

Exactly.

There's something in it for everyone here.

<unk> great.

Speaker 18: pro-growth, our employees get better paying jobs, more of those, our customers, KTS customers, CP customers, and customers of tomorrow that neither of us might serve today all have an opportunity to benefit from what this unique transaction brings to the table that otherwise would not be possible and I believe to be the last major transaction, major combination of merger in the North American continent that will uniquely connect all three countries that in a beautiful time.

Great growth.

Get better paying jobs.

Our customers kgs customers customers customers of tomorrow than either of us might serve today.

We have an opportunity to get better.

This unique transaction.

That otherwise would not be possible and I believe to be the last major transaction nature combination or merger and the North American continent.

In that country.

At a beautiful time.

Speaker 7: in a world where, because of all those supply chain challenges, we need a solution like this. So, it's extremely compelling, and all those conversations are following that mirror, and it just makes too much sense at a perfect time in history.

In a world where because of all the supply chain challenges.

We need a solution like this.

Extremely compelling.

All of those conversations are.

Following that it just makes too much.

Perfect time in history.

That's great. Thanks, Steve.

Speaker 5: Thank you. We are now out of time. I would like to turn the call back over to Mr. Keith Creon. Please go ahead.

Thank you.

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

Speaker 18: Okay, well, listen, let me close by thanking you for your time this afternoon. I can tell you, as we look forward, obviously proceed with number one, running the railroad efficiently, safely for our customers.

Okay, well listen let me close by thanking you for your time. This afternoon I can tell you as we look forward, obviously, where Steve with 31, earning the.

Efficiently safely for our customers.

Speaker 18: Throughout this process, we'll be running and participating, completing the merger application process in parallel with planning for integration of these two great companies so that when we do.

Throughout this process will be running and participating completing the merger application process in parallel with planning for integration.

Two great companies, so that when we do.

Speaker 18: get a favorable outcome for the SDP, which we hope for and anticipate. We'll be prepared to hit the ground running day one as seamlessly as possible and start to create all these unique benefits for all of our stakeholders that we've been so proudly talking about. So that's what we'll be focused on the balance of 2022 and we look forward to sharing our second quarter results or first quarter results on the next call.

Yet the favorable locker CFPB, which we.

We anticipate we'll be prepared to hit the ground running day, one as seamlessly as possible and start to create accretion.

Any benefits for all of our stakeholders.

They are talking about so that's what we'll do.

Are you focused around about 2022, and we look forward to sharing our second quarter results our first quarter.

On the next call.

Thank you.

Thank you Sir.

Speaker 21: This does conclude today's conference, you may now disconnect. Thank you. Thank you.

This does conclude today's conference you may now disconnect.

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