Q2 2024 Canadian Pacific Kansas City Ltd Earnings Call

Beau: Standby, we're about to Good afternoon, everyone. My name is Beau, and I will be your conference operator today. At this time, I would like to welcome everybody.

Boe: Good afternoon, everyone. My name is Boe, and I will be your conference operator today.

Please stand by, we're about to begin.

Boe: At this time, I would like to welcome everyone to CPKC's second quarter 2024 earnings conference call. The slides accompanying today's call are available at investor.cpkcr.com. All lines have been placed on mute to prevent any background noise.

Bo: Good afternoon, everyone. My name is Beau, and I will be your conference operator today. At this time, I would like to welcome everyone to CPKC's second quarter 2024 earnings conference call.

Beau: Slides accompanying today's call are available at KCR.com. All lines have been placed on mute to prevent any background noise. Question and answer. If you would like to ask a question, simply press star, then the number one.

Bo: The slides accompanying today's call are available at investor.cpkcr.com.

Boe: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star two.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2.

Beau: Pad. If you would like to withdraw your question, press. I would now like...

Chris de Bruyn: I would now like to introduce Chris De Bruyn, Vice President, Capital Markets to begin the conference. Chris, please go ahead.

Chris de Bruyn: I would now like to introduce Chris DeBruin, Vice President, Capital Markets, to begin the conference. Chris, please go ahead.

Chris de Bruyn: Thank you, Bo.

Chris: Thank you, Bo. Good afternoon, everyone, and thank you for joining us today. Before we begin, I want to remind you this presentation contains forward-looking information, and actual results may differ materially.

Chris de Bruyn: Good afternoon, everyone, and thank you for joining us today. Before we begin, I want to remind you this presentation contains forward-looking information. Actual results made different materially. The risks, uncertainties, and other factors that could influence actual results are described on slide two, in the press release, and in the Indian A5 of the Canadian and US regulators. This presentation also contains non-GAAP measures outlying on slide three. Please note, in addition to our regular quarterly financials, there's supplemental Q2 combined revenue and operating performance data available at investor.cpkcr.com. Which some of today's discussion will focus on.

Chris de Bruyn: Thank you, Beau.

Chris de Bruyn: Good afternoon, everyone, and thank you for joining us today.

Speaker Change: Before we begin, I want to remind you this presentation contains forward-looking information. Actual results may differ materially.

Speaker Change: The risks, uncertainties, and other factors that could influence actual results are described on slide 2 in the press release and in the MD&A files of Canadian and U.S. regulators.

Chris: The risks, uncertainties, and other factors that could influence actual results are described on slide two in the press release and in the MD&A files of Canadian and U.S. regulators. This presentation also contains non-GAAP measures, outlined on slide three. Please note in addition to our regular quarterly financials, there is supplemental Q2 combined revenue and operating performance data available at investor.cpkcr.com, on which some of today's discussion will focus. With me here today is Keith Creel, our President and Chief Executive Officer, Nadeem Velani, our Executive Vice President and Chief Financial Officer, and John Brooks, our Executive Vice President and Chief Marketing Officer.

Speaker Change: This presentation also contains non-GAAP measures outlined on slide 3. Please note, in addition to our regular quarterly financials, there is supplemental Q2 combined revenue and operating performance data available at investor.cpkcr.com, which some of today's discussion will focus on.

Keith Creel: With me here today is Keith Creole, our President and Chief Executive Officer, Nadine Villani, our Executive Vice President and Chief Financial Officer, and John Brooks, our Executive Vice President and Chief Marketing Officer.

Speaker Change: With me here today is Keith Creel, our President and Chief Executive Officer, Nadeem Velani, our Executive Vice President and Chief Financial Officer, and John Brooks, our Executive Vice President and Chief Marketing Officer.

Chris de Bruyn: The formal remarks will be followed by Q&A. In the interest of time, we'd appreciate if you limit your questions to one.

Speaker Change: The formal remarks will be followed by Q&A. In the interest of time, we'd appreciate it if you limit your questions to one.

Chris: The formal remarks will be followed by Q&A. In the interest of time, we'd appreciate it if you limit your questions to one. It is now my pleasure to introduce our president and CTO, Mr. Keith Creel. Thanks, Chris, and good afternoon. Listen, before we get into the results, on behalf of our CPKC family, I want to extend our heartfelt prayers and condolences to Pat Otzmaier's family and friends. Our family mourns his tragic passing.

Keith Creel: It is now my pleasure to introduce our President and CEO, Mr. Keith Creole. Thanks, Chris, and good afternoon.

Keith E. Creel: It is now my pleasure to introduce our President and CEO , Mr. Keith Creel. Thanks, Chris, and good afternoon. Listen, before we get into the results, on behalf of our CPKC family, I want to extend our heartfelt prayers.

Keith Creel: Listen, before we get into the results, on behalf of our CPC family, I want to extend our heartfelt prayers and condolences to Pat Oxnars, family and friends. Our family mourns its tragic passing. We extend our deepest condolences to Ciance, Diana, this entire family, as well as the many friends and former colleagues. Pat's legacy lives only can be seen in the work. We'll do every day at CPC.

Keith E. Creel: We extend our deepest condolences to his fiancée, Deanna, his entire family, as well as many friends and former colleagues. Pat's vision and leadership played a monumental role in the great history of Kansas City Southern. He helped reshape the railway industry.

Keith E. Creel: and condolences to Pat Otzmaier's family and friends. Our family mourns his tragic passing. We extend our deepest condolences to his fiancée, Deanna, his entire family, as well as many friends and former colleagues.

Speaker Change: Past vision and leadership played a monumental role in the great history of Kansas City Southern. He helped reshape the railway industry. We've lost a truly remarkable leader and a cherished friend. All who knew him as a professional and a railroader had nothing but respect and admiration for the material impact he made across Kansas City.

Keith E. Creel: We've lost a truly remarkable leader and a cherished friend. All who knew him as a professional and a railroader had nothing but respect and admiration for the material impact he made across so many aspects of our industry. And if you had the honor to have enjoyed a friendship with Pat, as I did, words will never capture what a class gentleman and human being he was.

Speaker Change: So many aspects of our industry, and if you had the honor to have enjoyed a friendship with Pat as I did, words will never capture what a class gentleman and human being he was.

Keith E. Creel: Pat's legacy lives on. It can be seen in the work we do every day at CPKC. I'm also pleased to be hosting this call in Kansas City at our brand new, state-of-the-art U.S. operations headquarters at Nokia Yard. This facility is just one small example of what would never have been possible without Pat's vision and strength as a leader. His contributions as a railroader and as a person will never be forgotten

Keith Creel: I'm also pleased to be hosting this calling Kansas City that our brand new state-of-the-art US operations headquarters at Nokia yard. This facility is just one small example. It would have never been possible without Pat's vision and strength as a leader. This contributions as a railroaders a person will never be forgotten.

Speaker Change: Pat's legacy lives on. It can be seen in the work we'll do every day at CPKC. I'm also pleased to be hosting this call in Kansas City at our brand new state-of-the-art U.S. Operations Headquarters at Nokia Yard. This facility is just one small example of what would have never been possible without Pat's vision and strength as a leader.

Keith Creel: Moving on to the quarter, I'd like to first start by thanking the 20,000-strong CPC family for their efforts in the second quarter. As a leader, it's always my honor to represent the results. We're going to cover on behalf of this team, which I'm extremely proud of. In the second quarter, the family delivered revenues of 3.8 billion, which is up 8% strong volume growth and increases 6%. Operating ratio of 61.8, which is a 280 basis point improvement versus last year. An EPS of a dollar five, a 27% increase. Certainly extremely pleased with these results. I can tell these numbers that I just walked through do not happen by accident, but through execution.

Keith E. Creel: Moving on to the quarter, I'd like to first start by thanking the 20,000-strong CPKC family for their efforts in the second quarter. As a leader, it's always my honor to present the results we're going to cover on behalf of this team, which I'm extremely proud of. In the second quarter, the family delivered revenues of $3.8 billion, which is up 8%, strong volume growth, an increase of 6%, an operating ratio of 61.8, which is a 280 basis point improvement versus last year, and EPS of $1.05, a 27% increase. I am certainly extremely pleased with these results. I can tell these numbers that I just walked through did not happen by accident but through execution.

Speaker Change: This contribution to the railroad as a person will never be forgotten.

Speaker Change: Moving on to the quarter, I'd like to first start by thanking the 20,000 Strong CPKC family for their efforts in the second quarter. As a leader, it's always my honor to represent the results we're going to cover on behalf of this team, which I'm extremely proud of.

Speaker Change: In the second quarter, the family delivered revenues of $3.8 billion, which is up 8%, strong volume growth, an increase of 6%, operating ratio of 61.8, which is a 280 basis point improvement versus last year, and EPS of $1.05, a 27% increase.

Speaker Change: Certainly extremely pleased with these results. I can tell these numbers that I just walked through do not happen by accident but through execution.

Keith Creel: So only operating front, I applaud Mark and his operating team for their continued strong operating performance across this network. They deliver significant improvement across the number of our key operating metrics.

Keith E. Creel: So on the operating front, I applaud Mark and his operating team for their continued strong operating performance across this network. They delivered significant improvement across a number of our key operating metrics. Unfortunately, Mark had an unexpected eye procedure he had done yesterday, so he's not with us today.

Speaker Change: So on the operating front, I applaud Mark and his operating team for their continued strong operating performance across this network. They delivered significant improvement across a number of our key operating metrics.

Keith Creel: Unfortunately, Mark had an unexpected eye procedure he had done yesterday, so he's not with us today. So, I'm going to cover his results in his body of work. Average term rolled well, decline 9% in the quarter, average train speed improved 6%, locomotive productivity up 10%, and fuel efficiency improved 2%. All of these results reflect a network that's fluid, that's running well and delivering strong service to our customers as we carry that momentum into the second half. And from a safety perspective, train exits were down 4%, and personal injuries an astounding 38% improvement. I'm extremely proud that teens continue to focus on safety each and every quarter.

Keith E. Creel: So I'm gonna cover his results and his body of work. Average terminal dwell declined 9% in the quarter, average train speed improved 6%, locomotive productivity increased 10%, and fuel efficiency improved 2%. All of these results reflect a network that's fluid, that's running well, and delivering strong service to our customers as we carry that momentum into the second half. And from a safety perspective, train exits were down 4%, and personal injuries saw an astounding 38% improvement. I'm extremely proud of the team's continued focus on safety each and every quarter.

Speaker Change: Unfortunately, Mark had an unexpected eye procedure he had done yesterday, so he's not with us today, so I'm going to cover his results and his body of work.

Speaker Change: Average terminal dwell declined 9% in the quarter, average train speed improved 6%, locomotive productivity up 10%, and fuel efficiency improved 2%. All of these results reflect a network that's fluid, that's running well and delivering strong service to our customers as we carry that momentum into the second half.

Speaker Change: And from a safety perspective, train exits were down 4% and personal injuries an astounding 38% improvement. I'm extremely proud the team's continued focus on safety each and every quarter.

John Brooks: Commercially, John and his team continue to bring in business that's going to fit our network well, working in close collaboration with our operating and service design team, and the team continues to prize the value of the service that this new network uniquely offers. The team's executing on the vision we had when we first proposed putting these networks together, and it's leading us to a differentiated outcome. Well, it's been well publicized.

Keith Creel: Conversely, John and his team continue to bring all business that's going to fit our network well, working in close collaboration with our operating and service design team. And the team continues to price the value of the service that this new network uniquely offers. The team's executing on the vision we have when we first propose putting these networks together, and it's leading us to a differentiated outcome. Well, that's been well publicized.

Speaker Change: Commercially, John and his team continue to bring on business that's going to fit our network well, working in close collaboration with our operating and service design team.

Speaker Change: and the team continues to prize the value of the service that this new network uniquely offers. The team is executing on the vision we had when we first proposed putting these networks together and it's leading us to a differentiated outcome.

John Brooks: The freight environment continues to be challenging. We're not making excuses. We're leaning into the challenge. We're creating opportunities that are uniquely enabled by this new network. So in closing, let me say I'm extremely pleased with the first half of the year and even more excited about what the second half holds.

Keith Creel: The freight environment continues to be challenging. We're not making excuses. We're leaning into the challenge. We're creating our own opportunities that are uniquely enabled. By this new network.

Speaker Change: Well, it's been well publicized. The freight environment continues to be challenging. We're not making excuses. We're leaning into the challenge. We're creating our own opportunities that are uniquely enabled by this new network.

Keith Creel: So, in closing, let me say I'm extremely pleased with the first half of the year, even more excited about what the second half holds. We're in a position of strength. We're carrying momentum to the second half that we're going to build on. As I said in January, we're positioned to deliver an exciting year of value creation. And that is exactly what this team is delivering.

Speaker Change: So, in closing, let me say I'm extremely pleased with the first half of the year, even more excited about what the second half holds. We're in a position of strength. We're carrying momentum into the second half that we're going to build on.

Keith E. Creel: We're in a position of strength. We're carrying momentum into the second half that we're going to build on. As I said in January, we're positioned to deliver an exciting year of value creation, and that is exactly what this team is delivering. We're uniquely positioned to deliver strong value in 24, and more importantly, for years to come. So with that said, John, I'm gonna hand it over to you to provide some color on the markets, and then Nadeem will elaborate on the numbers. All right, thank you, Keith, and good afternoon, everyone.

Speaker Change: As I said in January , we're positioned to deliver an exciting year of value creation, and that is exactly what this team is delivering. We're uniquely positioned to deliver strong value in 24, and more importantly, for years to come.

Keith Creel: We're uniquely positioned to deliver strong value in 24 and, more importantly, for years to come.

John Brooks: So that said, John, I'm going to hand over to you to provide some color on the markets, and the next game will elaborate on the numbers. Alright, thank you, Keith, and good afternoon, everyone. I'm extremely pleased with the strong top line growth the team delivered this quarter. This franchise is creating the unique opportunities we've talked about since day one. Our operations are strong, and we're pricing to the value of the differentiated service we are providing our customers. Now looking at our results are on a combined basis, we delivered freight revenue growth of 8% on a 6% increase in our TMS. Since for our TM was up 2% with strong pricing and the slight tail in from FX, partially offset by next.

Speaker Change: So that said, John , I'm going to hand it over to you to provide some color on the markets, and then Nadeem will elaborate on the numbers.

John Brooks: I'm extremely pleased with the strong top-line growth the team delivered this quarter. This franchise is creating the unique opportunities we've talked about since day one. Our operations are strong, and we're pricing to the value of the differentiated service we are providing our customers. Now looking at our results on a combined basis, we delivered freight revenue growth of 8% on a 6% increase in RTM. Cents per RTM was up 2% with strong pricing and a slight tailwind from FX, partially offset by NIC.

John: All right, thank you Keith and good afternoon everyone. I'm extremely pleased with the strong top-line growth the team delivered this quarter.

Speaker Change: This franchise is creating the unique opportunities we've talked about since day one. Our operations are strong and we're pricing to the value of the differentiated service we are providing our customers.

Speaker Change: Now, looking at our results on a combined basis, we delivered freight revenue growth of 8% on a 6% increase in RTMs.

Speaker Change: Cents per RTM was up 2% with strong pricing and a slight tailwind from FX, partially offset by NICS.

John Brooks: Now taking a closer look at our second quarter revenue performance, I'll speak to an FX adjusted result on a CPKC combined basis. Starting with Bolt, grain revenues were up 17% on 15% RTM growth. U.S. grain volumes grew 17% over the prior year.

John Brooks: Now taking a closer look at our second quarter revenue performance, I'll speak to an FX adjusted results on a CPKC combined basis. Starting with bulk, grain revenues were up 17% on 15% RTM growth. US grain volumes grew 17% over prior year. Our franchise is benefiting from strong shipments of corn to the PNW, Mexico, and Alberta, along with increased shipments of soybeans and wheat to Mexico, which remains a strong area of synergy growth for CPKC. Canadian grain volumes were up 13% on the quarter. As we saw a stronger than expected spring and summer sales program emerge, if farmers reduce their on-farm inventory, in preparation of the upcoming harvest.

Speaker Change: Now taking a closer look at our second quarter revenue performance, I'll speak to an FX adjusted result on a CPKC combined basis.

Speaker Change: Starting with Bolt, grain revenues were up 17% on 15% RTM growth.

Speaker Change: U.S. grain volumes grew 17% over prior year. Our franchise is benefiting from strong shipments of corn to the PNW.

John Brooks: Our franchise is benefiting from strong shipments of corn to the PNW, Mexico, and Alberta, along with increased shipments of soybeans and wheat to Mexico, which remains a strong area of synergy growth for CPKC. Canadian grain volumes were up 13% in the quarter, as we saw a stronger than expected spring and summer sales program emerge as farmers reduce their on-farm inventory in preparation of the upcoming harvest. Now looking forward, early indications are that this harvest will be more in line with our five-year average, or, if not, stronger.

Speaker Change: Mexico and Alberta, along with increased shipments of soybeans and wheat to Mexico, which remains a strong area of synergy growth for CPKC.

Speaker Change: Canadian grain volumes were up 13% on the quarter as we saw a stronger than expected spring and summer sales program emerge as farmers reduce their on-farm inventory in preparation of the upcoming harvest.

John Brooks: Now looking forward, early indications are that this harvest will be more in line with our five-year average or, if not stronger. That couple with our regulated grain pricing of approximately 6.5% has us well positioned in Canadian grain. Moving on to podcast, revenue grew up 24% on 11% volume growth. We moved higher volumes of podcast with Camp Protects to their Portland terminal as we lap the impact of their ship loader outage back in April of 23. Now looking forward, podcast supply chain is performing very well and export demand is sold out for the second half of the year.

Speaker Change: Now, looking forward, early indications are that this harvest will be more in line with our five-year average, or if not, stronger.

John Brooks: That coupled with our regulated grain pricing of approximately 6.5% has us well positioned in Canadian grain. Now moving on to PODAS, revenues are up 24% on 11% volume growth. We moved higher volumes of potash with Campitex to their Portland terminal as we lapped the impact of their shiploader outage back in April of 23.

Speaker Change: That, coupled with our regulated grain pricing of approximately 6.5%, has us well positioned in Canadian grain.

Speaker Change: Now moving on to PODAS, revenues are up 24% on 11% volume growth.

Speaker Change: We moved higher volumes of potash with Campitex to their Portland terminal as we lapped the impact of their shiploader outage back in April of 23.

John Brooks: Now looking forward, the Potash Supply Chain is performing very well, and export demand is sold out for the second half of the year. We are on pace to set a record all-time tonnage with Campa, Texas here. Coal revenue was up 3% on a 2% decline in volume, although lower natural grass prices weakened demand for our US coal franchise.

Speaker Change: Now, looking forward, Potash Supply Chain is performing very well, and export demand is sold out for the second half of the year. We are on pace to set a record all-time tonnage with Campa, Texas, here.

John Brooks: We are on pace to set a record all-time tonnage with Camp Protects this year. Coal revenue was about 3% on a 2% decline in volume. Lower natural gas prices weakened demand for our US coal franchise. And that weakness was partially offset by more export Canadian coal to Vancouver and Thunder Bay. On the merchandise side, energy chemicals and plastics revenue grew 10% on a 14% volume growth. The volume growth in the quarter was driven by higher crude as we lap the impact of some outages last year and growth from synergies across just about all of the ECP portfolio, including LPGs, plastics for renewable diesels, and refined fuels.

Speaker Change: Coal revenue was up 3% on a 2% decline in volume.

John Brooks: And that weakness was partially offset by more export of Canadian coal to Vancouver and Thunder Bay. On the merchandise side, energy, chemicals, and plastics revenue grew 10% on a 14% volume growth. Volume growth in the quarter was driven by higher crude as we lapped the impact of some outages last year and growth from synergies across just about all of the ECP portfolio, including LPGs, plastics, renewable diesel, and refined fuels. We are excited about the wins we've captured in this space as we are connecting markets from Alberta to the Gulf Coast and into Mexico with our single line haul service.

Speaker Change: Lower natural grass prices weakened demand for our U.S. coal franchise, and that weakness was partially offset by more export Canadian coal to Vancouver and Thunder Bay.

Speaker Change: On the merchandise side, energy, chemicals, and plastics revenue grew 10% on a 14% volume growth.

Speaker Change: The volume growth in the quarter was driven by higher crude as we lapped the impact of some outages last year and growth from synergies across just about all of the ECP portfolio, including LPGs, plastics, renewable diesels, and refined fuels.

John Brooks: We are excited about the wins we captured in this space as we are connecting markets from Alberta to the Gulf Coast and into Mexico with our single line haul service. Looking forward, the ongoing ramp-up of these synergies, we are set up for a solid second half of 24 and ECP. In the forest products area, we are down 1% revenues on a 1% decline in volumes. Forest product volumes continue to be challenged by a soft macro environment impacting both our paper and lumber products. However, we are largely offsetting this headwind with synergy growth and extended line haul, shipping more lumber from Canadian producers down to our franchise in Texas in the Gulf markets.

Speaker Change: We are excited about the winds we've captured in this space as we are connecting markets from Alberta to the Gulf Coast and into Mexico with our single line haul service.

John Brooks: Looking forward to the ongoing ramp-up of these synergies, we are set up for a solid second half of 2024 in ECP. In the forest products area, we were down 1% in revenues on a 1% decline in volume.

Speaker Change: Looking forward, the ongoing ramp-up of these synergies, we are set up for a solid second half of 24 in ECP.

Speaker Change: In the forest products area, we were down 1% revenues on a 1% decline in volumes.

John Brooks: Forced product volumes continue to be challenged by a soft macro environment impacting both our paper and lumber products. However, we are largely offsetting this headwind with synergy growth and extended line haul, shipping more lumber from Canadian producers down to our franchise in Texas in the golf market. Metals, Minerals, and Consumer Products revenue was down 3% on a 9% volume decline.

Speaker Change: Force product volumes continually challenged by a soft macro environment impacting both our paper and lumber products.

Speaker Change: However, we are largely offsetting this headwind with synergy growth and extended line haul, shipping more lumber from Canadian producers down to our franchise in Texas in the Gulf markets.

John Brooks: Metals minerals and consumer products revenue was down 3% on a 9% volume decline. Volumes in the quarter were impacted by weakness and frax and driven by the lower natural gas prices, but also a labor destruction we had at Arsler, Mattel Steel Facility in Mexico. Looking forward, although we expect the weakness and frax to continue, the labor destruction has ended and we expect Arsler to ramp up production in the back after the year. In automotive, we produced another record quarter with revenues up 28% on 21% volume growth and exceptional performance by this team. Our auto franchise is benefiting from higher longer haul volumes out of Mexico as their closed loop model service solution only continues to ramp up.

Speaker Change: Metals, Minerals, and Consumer Products revenue was down 3% on a 9% volume decline.

John Brooks: Volumes in the corridor were impacted by weakness in frac sand, driven by lower natural gas prices, but also by the labor disruption we had at the ArcelorMittal Steel Facility in Mexico. Now looking forward, although we expect the weakness and frac to continue, the labor distraction has ended, and we expect Arthur to ramp up production in the back half of the year. In automotive, we produced another record quarter with revenues up 28% on 21% volume growth, an exceptional performance by this team.

Speaker Change: Volumes in this order were impacted by weakness in frac sand, driven by the lower natural gas prices, but also a labor destruction we had at ArcelorMittal Steel Facility in Mexico.

Speaker Change: Now looking forward, although we expect the weakness in FRAC to continue, the labor distraction has ended and we expect Arthur to ramp up production in the back half of the year.

Speaker Change: In Automotive, we produced another record quarter with revenues up 28% on 21% volume growth. An exceptional performance by this team.

John Brooks: Our auto franchise is benefiting from higher, longer haul volumes out of Mexico, as our closed-loop model service solution only continues to ramp up. I'm also pleased to share that our new Dallas Auto Compound, located at our Wiley, Texas, Intermodal Terminal, opened in late June.

Speaker Change: Our auto franchise is benefiting from higher, longer haul volumes out of Mexico as our closed-loop model service solution only continues to ramp up.

John Brooks: I'm also pleased to share that our new Dallas auto compound located at our Wiley, Texas, Intermodal Thermal opened in late June. This compound is part of our playbook that unlocks an entirely new supply chain model for the OEMs, giving them new competition, service, and capacity certainty like they've never had before. Our auto business continues to deliver differentiated growth, and we expect a strong performance as we move through the second half of the year. Now, on the other side, revenue was down 7%, and a 3% volume decline. Starting with domestic intermodal, volumes were up 3% despite a soft base demand environment.

Speaker Change: I'm also pleased to share that our new Dallas auto compound located at our Wiley, Texas, Intermodal Terminal opened in late June .

John Brooks: This compound is part of our playbook that unlocks an entirely new supply chain model for the OEMs, giving them new competition, service, and capacity certainty like they've never had before. Our auto business continues to deliver differentiated growth, and we expect a strong performance as we move through the second half of the year. Now on the moral side, revenue was down 7% on a 3% volume decline.

Speaker Change: This compound is part of our playbook that unlocks an entirely new supply chain model for the OEMs.

Speaker Change: Giving them new competition, service, and capacity certainty like they've never had before.

Speaker Change: Our auto business continues to deliver differentiated growth, and we expect a strong performance as we move through the second half of the year.

Speaker Change: Now on the intermodal side, revenue was down 7% on a 3% volume decline.

John Brooks: Starting with domestic intermodal volumes, which were up 3% despite a soft base demand environment, our MMX or 180-181 cross-border service continues to perform extremely well in what I would consider a very challenging domestic market. Volumes on this service are up 50% since our exit rates at the end of 2023, and we have a strong pipeline of opportunities stacked up for the back half of the year. This includes new wholesale opportunities, new retail opportunities, temp control service operation, and new joint line routes into both the Southeast U.S. and the Ohio Valley market. Moving on to the international side, volumes were down 9%, primarily related to the timing of the impact of lingering strike uncertainty and the timing of some share shifts in business.

Speaker Change: Starting with domestic intermodal, volumes were up 3% despite a soft base demand environment.

John Brooks: Our MMX or 180-181 cross-border service continues to perform extremely well in what I would consider a very challenging domestic market. Volumes on this service are up 50% since their exit rates at the end of 2023, and we have a strong pipeline of opportunities stacked up to the back half of the year. This includes new inner wholesale opportunities, new retail opportunities, temp control service operating, and new joint line routes into both the Southeast US and the Ohio Valley markets. Moving on to the international side, volumes were down 9%, primarily related to the timing of the impact of lingering strike uncertainty and the timing of some share shifts in business.

Speaker Change: Our MMX or 180-181 cross border service continues to perform extremely well in what I would consider a very challenging domestic market.

Speaker Change: Volumes on this service are up 50% since our exit rates at the end of 2023, and we have a strong pipeline of opportunities stacked up for the back half of the year.

Speaker Change: This includes new wholesale opportunities, new retail opportunities, temp control service operating and new joint line routes into both the Southeast U.S. and the Ohio Valley markets.

Speaker Change: Moving on to the international side, volumes were down 9%, primarily related to timing of the impact of lingering strike uncertainty and the timing of some share shifts in business.

John Brooks: With new business ramping up in a solid outlook for demand, we are well positioned across all our ports for the second half of the year. To close, volumes in the first half came in slightly better than we expected, and were off to a strong starting Q3. Well, the macro remains challenging in some areas. Overall demand has stabilized, and more importantly, we continue to have line of sight, strong differentiated growth from synergies, self-help initiatives, and disciplined pricing. The operations team is delivering reliable, resilient service to our customers, and my team is laser focused on selling into that service and taking advantage of our expansive new network.

John Brooks: With new business ramping up and a solid outlook for demand, we are well positioned across all our ports for the second half of the year. To close, volumes in the first half came in slightly better than we expected, and we're off to a strong start in Q3. Well, the macro environment remains challenging in some areas, overall demand has stabilized, and more importantly, we continue to have line of sight, strong differentiated growth from synergies, self-help initiatives, and disciplined pricing. The operations team is delivering reliable, resilient service to our customers.

Speaker Change: With new business ramping up and a solid outlook for demand, we are well positioned across all our ports for the second half of the year.

Speaker Change: To close, the volumes in the first half came in slightly better than we expected and we're off to a strong start in Q3.

Speaker Change: Well, the macro remains challenging in some areas. Overall demand has stabilized, and more importantly, we continue to have line of sight, strong differentiated growth from synergies, self-help initiatives, and disciplined pricing.

John Brooks: And my team is laser focused on selling into that service and taking advantage of our expansive new network. I'm excited about what we've accomplished so far this year and even more about the opportunities we have ahead of us. So with that, I'll stop and pass it over to Nadeem.

Speaker Change: The operations team is delivering reliable, resilient service to our customers, and my team is laser focused on selling into that service.

John Brooks: I'm excited about what we have accomplished so far this year, and even more for the opportunities we have ahead of us.

Speaker Change: and taking advantage of our expansive new network. I'm excited about what we've accomplished so far this year and even more for the opportunities we have ahead of us.

Nadine Velani: So with that, I'll stop and pass it over to Nadine.

Nadeem S. Velani: Well, thanks, John. That's a great report. So, let me start by sharing my enthusiasm for the strong performance for the quarter. Our success is driven by the hard work and dedication of CPKC's railroaders, and I'm proud of what the team has accomplished. Looking at the quarter, CPKC's reported operating ratio was 64.8%, and the core adjusted combined operating ratio came in at 61.8%. Earnings per share was $0.97, and core adjusted combined earnings per share was $1.05, up 27%.

Nadine Velani: Well, thanks, Sean. It's a great report. So let me start by sharing my enthusiasm for the strong performance for the quarter. Our success is driven by the hard work and dedication of CPKC's railroads, and I'm proud of what the team is accomplishing. Looking at the quarter, CPKC's reported operating ratio was 64.8%, and the core adjusted combined operating ratio came in at 61.8%. Earnings per share was 97 cents, and core adjusted combined earnings per share was a dollar five of 27%, 27%.

Speaker Change: With that, I'll stop and pass it over to Nadeem. Well, thanks, John . That's a great report. So let me start by sharing my enthusiasm for the strong performance for the quarter. Our success is driven by the hard work and dedication of CPKC's railroaders, and I'm proud of what the team is accomplishing.

Nadeem: Looking at the quarter, CPKC's reported operating ratio was 64.8%, and the core adjusted combined operating ratio came in at 61.8%.

Speaker Change: Earnings per share was $0.97, and core adjusted combined earnings per share was $1.05, up 27%.

Nadine Velani: Similar to what we shared in previous quarters, our combined operating expenses in 2023 illustrate the effects of the acquisition for the second quarter. Is that the acquisition closed on January 1, 2022. I will speak to effects adjusted combined operating insults in these prepared marks. Now taking a closer look at our income statement, reported operating expenses provided on slide 11 and combined operating expenses on slide 12, where I'll focus my comments. Excluding adjustments, common benefits expense was 610 million. The year-over-year decline in common benefits was driven by reduced stock-based compensations, as well as efficiency gains from reduced overtime, improved fluidity, and engineering productivity gains.

Nadeem S. Velani: Similar to what we shared in previous quarters, our combined operating expenses in 2023 illustrate the effects of the acquisition for the second quarter, as if the acquisition closed on January 1, 2022. I will speak to FX adjusted combined operating results in these prepared, Now, taking a closer look at our income statement, reported operating expenses are provided on slide 11 and combined operating expenses on slide 12, where I'll focus my comments. Looting Adjustments, Comp, and Benefits Expense was $610,000,000.

Speaker Change: Similar to what we shared in previous quarters, our combined operating expenses in 2023 illustrate the effects of the acquisition for the second quarter, as if the acquisition closed on January 1, 2022. I will speak to effects-adjusted combined operating results in these prepared remarks.

Speaker Change: Now taking a closer look at our income statement, reported operating expenses provided on slide 11 and combined operating expenses on slide 12, where I'll focus my comments.

Speaker Change: Excluding adjustments, comp and benefits expense was $610 million. The year-over-year decline in comp and benefits was driven by reduced stock-based compensations, as well as efficiency gains from reduced overtime, improved fluidity, and engineering productivity gains.

Nadeem S. Velani: The year over year decline in coffin benefits was driven by reduced stock-based compensation, as well as efficient efficiency gains from reduced overtime, improved fluidity, and engineering productivity. This was partially offset by inflation, volume-driven increases from higher GTMs, and higher current service costs from our DB pension plan due to a lower discount rate at year-end 2023. Looking to the rest of 2024, we continue to expect average headcount to be roughly flat on a year over year basis, driving further labor productivity gains as we grow volume. Fuel expense was $466 million, up 9%.

Nadine Velani: This was partially offset by inflation, volume-driven increases from higher GCMs, and higher current service costs from our DV pension plan, due to a lower discount rate at year-end 2023. Looking to the rest of 2024, we continue to expect average headcounts to be roughly flat on a year-over-year basis, driving further labor product to be gains as we grow volumes. That improvement in fuel efficiency, which resulted in a nine million savings, another area where we are seeing network efficiency gains translate directly into margin improvement. Excluding adjustments, material expense was 95 million. The decline in the quarter was driven primarily by timing of locomotive and freight car maintenance, as activity schedules across the network are aligned.

Speaker Change: This was partially offset by inflation, volume-driven increases from higher GTMs, and higher current service costs from our DV pension plan due to a lower discount rate at year-end 2023.

Speaker Change: Looking to the rest of 2024, we continue to expect average headcount to be roughly flat on a year-over-year basis, driving further labor productivity gains as we grow volumes.

Nadeem S. Velani: The increase was primarily driven by a $24 million, or 4% increase in fuel price, along with volume-driven increases from higher GPM. Increases from price and volume are partially offset by a 2% improvement in fuel efficiency, which resulted in $9 million in savings. Another area where we are seeing network efficiency gains translate directly into margin improvement. Excluding Adjustments, Materials Expense was $95 million.

Speaker Change: Fuel expense was $466 million, up 9%. The increase was primarily driven by a $24 million, or 4%, increase in fuel price, along with volume-driven increases from higher GTMs.

Speaker Change: Increases from price and volume were partially offset by a 2% improvement in fuel efficiency, which resulted in a $9 million in savings. In other area where we are seeing network efficiency gains translate directly into margin improvement.

Nadeem S. Velani: The decline in the quarter was driven primarily by the timing of locomotive and freight car maintenance, as activity schedules across the network are aligned. Equipment rents were $82 million, down 5% year-over-year. The decline was driven by reduced car hire payments and receipts, along with efficiency gains from improved cycle times and increased network velocity. Depreciation expense was up 6% resulting from higher, Including adjustments, purchase services, and other expenses was $581 million.

Speaker Change: Excluding Adjustments, Materials Expense was $95 million.

Speaker Change: The decline in the quarter was driven primarily by timing of locomotive and freight car maintenance as activity schedules across the network are aligned.

Nadine Velani: Equipment rents were 82 million, down 5% year-over-year. The decline was driven by reduced car hire payments and receipts, along with efficiency gains from improved cycle times and increased network velocity. Appreciation expense was up 6%, resulting from a higher asset base. Excluding adjustments, purchase services and other expense was 581 million. Cost inflation and terminal service costs were partially offset by a year-over-year decline in casual state expense. So overall top line growth in the quarter, coupled with strong cost control and execution, resulted in a 17% increase in core adjusted combined operating income and a 280 basis point improvement in our core adjusted combined operating ratio to 61.8%.

Speaker Change: Equipment rents were $82 million, down 5% year-over-year. The decline was driven by reduced car hire payments and receipts, along with efficiency gains from improved cycle times and increased network velocity.

Speaker Change: Depreciation expense was up 6% resulting from a higher acid base.

Speaker Change: Excluding adjustments, purchase services and other expense was $581 million.

Nadeem S. Velani: The cost of inflation and terminal service costs were partially offset by a year-over-year decline in casualties. So overall, top line growth in the quarter coupled with strong cost control and execution resulted in a 17% increase in core adjusted combined operating income and a 280 basis point improvement in our core adjusted combined operating ratio to 61.8%. Moving below the line on slide 13.

Speaker Change: Cost of inflation and terminal service costs were partially offset by a year-over-year decline in casualty expense.

Speaker Change: So overall, top line growth in the quarter coupled with strong cost control and execution resulted in a 17% increase in core adjusted combined operating income and a 280 basis point improvement in our core adjusted combined operating ratio to 61.8%.

Nadine Velani: Moving below the line on slide 13, other income was 40 million, driven by higher equity income, along with a gain on some debt repurchases in the quarter. Other components of net periodic benefit recovery was 88 million in Q2. This reflects the lower discount rate compared to 2023 and partially offsetting the headwinds of common benefits benefits from current service cost. Net interest expense was 200 million, or 195 million excluding the impact of purchase accounting. The decline was driven by reduced debt balance. Income tax expense was 292 million or 328 million on a core adjusted combined basis.

Nadeem S. Velani: Other income was $40 million, driven by higher equity income, along with a gain on some debt repurchases in the quarter. Other components of net periodic benefit recovery were $88 million in Q2. This reflects a lower discount rate compared to 2023 and partially offsetting the headwinds of comp and benefits from current services. Net interest expense was $200 million, or $195 million excluding the impact of the purchase account. The decline was driven by a reduced debt. Income tax expense was $292 million, or $328 million on a core adjusted combined basis.

Speaker Change: Moving below the line on slide 13.

Speaker Change: Other income was $40 million, driven by higher equity income, along with a gain on some debt repurchases in the quarter.

Speaker Change: Other components of net periodic benefit recovery was $88 million in Q2. This reflects a lower discount rate compared to 2023 and partially offsetting the headwinds of comp and benefits from current service costs.

Speaker Change: Net interest expense was $200 million or $195 million excluding the impact of purchase accounting.

Speaker Change: The decline was driven by a reduced debt balance.

Speaker Change: Income tax expense was $292 million or $328 million on a core adjusted combined basis.

Nadine Velani: We still expect that CPKC core adjusted expected tax rate to be approximately 25% for the year. Turning the slide 14, we are generating strong cash flow and cash provided by operating activities of 1,278 million in Q2. Capital investments and safety and growth remain our priority. In this quarter, we reinvested 808 million in line with our expectations to invest approximately 2.75 billion in 2024. We continue to make strategic investments in capacity across our network, positioning us that continue efficiently absorbing the growth of the merger and has enabled. On the quarter, we generated 526 million and adjusted combined free cash flow and continue to repay debt.

Nadeem S. Velani: We still expect the CPKC core adjusted expected tax rate to be approximately 25% for the year. Turning to slide 14, we are generating strong cash flow and cash provided by operating activities of $1,278,000,000 in Q2. Capital investments in safety and growth remain our priority. In this quarter, we reinvested $808 million, in line with our expectation to invest approximately $2.75 billion in 2024. We continue to make strategic investments in capacity across our network, positioning us to continue efficiently absorbing the growth that the merger has enabled. For the quarter, we generated $526 million in adjusted combined free cash flow and continue to repay debt.

Speaker Change: We still expect the CPKC core adjusted expected tax rate to be approximately 25% for the year.

Speaker Change: Turning to slide 14, we are generating strong cash flow and cash provided by operating activities of $1,278,000,000 in Q2.

Speaker Change: Capital investments in safety and growth remain our priority. In this quarter, we reinvested $808 million, in line with our expectation to invest approximately $2.75 billion in 2024.

Speaker Change: We continue to make strategic investments in capacity across our network, positioning us to continue efficiently absorbing the growth that the merger has enabled.

Speaker Change: On the quarter, we generated $526 million in adjusted combined free cash flow and continue to repay debt. Our leverage ratio is 3.2 times, and we still expect to reach target leverage in early 2025, at which point we will evaluate shareholder returns with our board.

Nadine Velani: Our leverage ratio is 3.2 times, and we still expect to reach target leverage in early 2025.

Nadeem S. Velani: Our leverage ratio is 3.2 times, and we still expect to reach target leverage in early 2025, at which point we will evaluate shareholder returns with our board. In review of the quarter, the team delivered another strong volume growth ahead of expectation, along with continued discipline on price and cost control. Synergies are continuing to ramp up as the network is performing well. We continue to gain momentum on our expense synergies, and improvements in velocity as well as locomotive and car productivity are generating operating savings.

Nadine Velani: At which point we will evaluate shareholder returns with our board. and Review of the Quarter, the team delivered another strong volume growth ahead of expectations, along with continued discipline on price and cost control. Synergies are continuing to ramp, and the network is performing well. We continue to gain momentum on our expense synergies, improvements in velocity as well as locomotive and car productivity or generating operating savings. We are also gaining procurement savings through consolidating agreements across the company, as well as savings in GNA through combining processes and functions. We will well-entract and deliver double digit core just to combine earnings growth, growth driven entirely from the business and without any help from shareholder returns.

Speaker Change: In review of the quarter, the team delivered another strong volume growth ahead of expectations, along with continued discipline on price and cost control.

Speaker Change: Synergies are continuing to ramp as the network is performing well.

Speaker Change: We continue to gain momentum on our expense synergies, improvements in velocity as well as locomotive and car productivity are generating operating savings.

Speaker Change: We are also gaining procurement savings through consolidating agreements across the company as well as savings in G&A through combining processes and functions.

Speaker Change: We're well on track to deliver double-digit, core-adjusted combined earnings growth.

Speaker Change: Growth driven entirely from the business and without any help from shareholder returns.

Nadine Velani: This network is delivering strong and profitable growth, and I'm excited for the opportunities we have ahead.

Nadeem S. Velani: We're also gaining procurement savings through consolidating agreements across the company, as well as savings in G&A through combining processes and functions. We are well on track to deliver double-digit core adjusted combined earnings growth, growth driven entirely from the business and without any help from shareholder return. This network is delivering strong and profitable growth, and I'm excited for the opportunities we have ahead. With that, let me turn it back to you.

Keith Creel: With that, let me turn it back to you, over you, Keith. That's great.

Speaker Change: This network is delivering strong and profitable growth, and I'm excited for the opportunities we have ahead. With that, let me turn it back to you. Over to you, Keith. That's great, Dan. Let's open it up for questions.

Keith E. Creel: Over to you, Keith. That's great, guys. Let's open it up for questions. Thank you, Mr. Creel. Ladies and gentlemen, if you would like to ask a question, simply press a star.

Keith Creel: Let's open it up for questions.

Boe: Thank you, Mr. Creel. Ladies and gentlemen, if you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, again, press star two.

Speaker Change: Thank you, Mr. Creel. Ladies and gentlemen, if you would like to ask a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, again, press star two. As previously highlighted, please limit yourself to one question. We go first this afternoon to Chris Wetherbee with Wells Fargo.

Boe: As previously highlighted, please lend yourself to one question.

Chris Wetherbee: We go first this afternoon to Chris Wetherbee with Wells Fargo. Thanks, good afternoon, guys, and condolences to the CBKZ family and certainly to Pat and his family as well. It will be missed.

Beau: If you would like to withdraw your question, again, press 1, as previously highlighted, first this afternoon to Chris Wetherbee: Hey, thanks. Good afternoon, guys. And condolences to the CPKC family and certainly to Pat and his family, Pat's family as well. He'll be missed.

Christian F. Wetherbee: Hey thanks good afternoon guys and condolences to the CBKC family and certainly to Pat and Pat's family as well. He'll be missed.

Christian F. Wetherbee: Um, you know, if I could maybe start a little bit on the synergy side, the revenue synergy side, maybe we could get a sense of how that's kind of progressing. And as we think about the back half of the year, could we see an acceleration of sorts of activity, you know, get a sense of kind of what we're thinking about in terms of revenue, revenue, synergy, progress, and maybe what we think the exit rate could look like as we get through the end of 24? Yeah, Chris, so it's John here.

John Brooks: If I could maybe start a little bit on the synergy side, the revenue synergy side, maybe if we could get a sense of how that's kind of progressing, and as we think about the back half of the year, could we see an acceleration sort of activity? I just get a sense of what we're thinking about in terms of revenue synergy progress and maybe what we think the exit rate could look like as we get through the end of 24.

Christian F. Wetherbee: You know, if I could maybe start a little bit on the synergy side, the revenue synergy side, maybe if we could get a sense of how that's kind of progressing. And as we think about the back half of the year, could we see

Speaker Change: and Acceleration and sort of activity. I just get a sense of kind of what we're thinking about in terms of revenue synergy progress and maybe what we think the exit rate could look like as we get through the end of 24.

Walter Spracklin: Yeah, Chris, so if John here, super pleased with progress. We came out of the gates, you know, really strong last year and a number of announcements and piled up a pretty good, you know, exit rate in that 350 range, which we've talked about at the end of 2023. And I mean, maybe just to get to the point, I fully expect, you know, we said we double that, but I fully expect that we're on a run rate that could get us closer to that 800 million type number as we exit 2024. And if you think about that, it's really spread pretty evenly across our book. Just to give you a sense, about half of that I would bump in area of intermodal, so international, domestic, automotive.

John Brooks: I'm super pleased with the progress. We came out of the gates, you know, really strong last year with a number of announcements and piled up a pretty good exit rate in that 350 range, which we talked about at the end of 2023. And I mean, maybe just to get to the point, I fully expect, you know, we said we'd double that, but I fully expect that we're on a run rate that could get us closer to that 800 million-type number as we exit 2024. And if you think about that, it's really spread pretty evenly across our book.

Speaker Change: Yeah, Chris, so it's John here. Super pleased with the progress. We came out of the...

Speaker Change: The Gates were really strong last year and a number of announcements and piled up a pretty good exit rate in that 350 range which we've talked about at the end of 2023.

Speaker Change: And I mean, maybe just to get to the point, I fully expect, you know, we said we'd double that, but I fully expect that we're on a run rate that could get us closer to that $800 million type number as we exit 2024.

John Brooks: Just to give you a sense, about half of that, I would bump the area of intermodal, so international domestic automotive. And then the other half, maybe split pretty evenly between our bulk franchise, as we've really seen here this summer, our grain shipments down into Mexico accelerate. And then the other half of that being our ECP merchandise business. So I'm quite pleased with where we sit so far here. And I expect, again, a pretty good ramp-up as we move through the second half of 24. Thanks very much.

Speaker Change: And if you think about that, it's really spread pretty evenly across our book. Just to give you a sense, about half of that, I would...

Speaker Change: Up in the area of intermodal—so international domestic automotives—

John Brooks: And then the other half maybe split pretty evenly between our bulk franchise as we've really seen here this summer. Our grain shipments down in the Mexico accelerate. And then the other half of that being our ECP merchandise business. So I'm quite pleased with where we fit so far here. And I expect again, a pretty good ramp up, as we move through the second half of 24. Thanks very much.

Speaker Change: And then the other half, maybe split pretty evenly between our bulk franchise, as we've really seen here this summer, our grain shipments down into Mexico accelerate. And then the other half of that being our ECP merchandise.

Speaker Change: So I'm quite pleased with where we sit so far here, and I expect, again, a pretty good ramp up as we move through the second half of 24.

Walter Spracklin: Appreciate it. Thanks, Chris.

Speaker Change: Great. Thanks very much. Appreciate it.

Fadi Chamoun: Thank you. We go next now to Walter Spratlin. RBC Capital Markets. Yeah, thanks very much. I can afternoon everyone.

Walter Spracklin: I appreciate it. Yep. Thanks, Chris. Thank you. We go next now to Walter Spracklin at RBC. Thanks very much. Good afternoon, everyone.

Chris: Yep. Thanks, Chris.

Speaker Change: Thank you. We go next now to Walter Spracklin at RBC Capital Markets.

John Brooks: So, John, sticking with you, you spent a bit of your time there in your prepared remarks talking about the Dallas auto compound opening and some of the opportunity there. Can you talk a little bit about the capacity there? How much you could ramp it up? How quickly it could come on?

Keith Creel: So John, it's taking with you. You spent a bit of your time there on the, on your prepared remarks talking on the Dallas auto compound opening and some of the opportunity there. Can you talk a little bit about the capacity there? How much you could ramp it? How quickly it could come on? And, and if you could frame the quantitatively even better, but just here is to hear what the upside there is on that particular lane. Yeah, Walter, so I'm really excited about this one. You know, this is an opportunity, you know, similar to the play Looking Canada where we identified the land available down and widely and aggressively got after that opportunity.

Walter Spracklin: Yeah, thanks very much. Good afternoon, everyone. So, John , in sticking with you, you spent a bit of your time there on your prepared remarks, talking on the Dallas auto compound opening.

Walter Spracklin: and some of the opportunity there. Can you talk a little bit about?

Walter Spracklin: The capacity there, how much you could ramp how quickly it could come on, and if you could frame it quantitatively even better. But just curious to hear hear what the upside there is on that particular leap.

John Brooks: And if you could frame it quantitatively, even better. But just curious to hear what the upside there is on that particular lane. Yeah, Walter, so I'm really excited about this one. You know, this is an opportunity, similar to the playbook in Canada, right? We identified the land available down in Wylie and aggressively went after that opportunity.

Speaker Change: Yeah, Walter, so I'm really excited about this one. You know, this is an opportunity, you know, similar to the playbook in Canada, where we identified the land available down in Wylie and aggressively got after that opportunity. You know, the...

Keith E. Creel: You know, in terms of capacity, we're looking at a facility that'll do, let's say, 160 to 180,000 VINs annually. We used about 35 acres or so there. You know, right now, we've got three OEMs that are signed on and actively shipping into the facility. You know, my sense is those three, probably at full run rate, Walter, will get us to 75% capacity, roughly in that neighborhood. And then we've got two or three fish on the line that I'm pretty excited about that I can see coming on, maybe even towards the end of this year, but certainly into 2025. And you know, if you look to the future, the great thing about that location is it's expandable. We can add some capacity there, and it's really going to provide a pretty unique solution.

John Brooks: You know, the, in terms of capacity, we're looking at a facility that will do, let's say, 160 to 180,000 VINs annually. You know, we utilized about 35 acres or so there. You know, right right now, we've got three OEMs that are that are signed on and actively shipping into the into the facility. You know, my, my sense is those three probably a full run rate, Walter, get us to 75% capacity, roughly in that neighborhood. And then we've got two or three fish on the line that I'm pretty excited about that I can see coming on and maybe even towards the end of this year, but certainly in the 2025.

Speaker Change: In terms of capacity, we're looking at a facility that'll do, let's say, 160,000 to 180,000 VINs annually. You know, we utilized about...

Speaker Change: 35 acres or so there, you know, right, right now, we've got three OEMs.

Speaker Change: that are signed on and actively shipping into the facility.

Speaker Change: My sense is those three probably at full run rate, Walter, get us to 75% capacity roughly in that neighborhood.

Speaker Change: And then we've got two or three fish on the line that I'm pretty excited about that I can see coming on, maybe even towards the end of this year, but certainly into 2025.

John Brooks: And you know, if you look to the future, that's the great thing about that location is it's expandable. We can we can add some capacity there, and it's really going to provide a pretty unique solution. I also think as you see the production grow in the eastern US with connections to the NS and in CSX, that becomes a pretty big opportunity for the future. Yeah, I would I would just add to that that that entire opportunity, as well as we execute, is well beyond our investor; they got it wasn't in the base plan. You've got 430 acres left, Walter, to expand into, so we have the capacity; we have the land.

Speaker Change: And you know, if you look to the future...

Keith E. Creel: I also think as you see production grow in the eastern US with connections to the NS and CSX, that becomes a pretty big opportunity for the future. Yeah, I would just add to that. That entire opportunity, as well as we execute it, is well beyond our investor data. It wasn't in the base plan.

Speaker Change: The great thing about that location is it's expandable.

Speaker Change: We can add some capacity there.

Speaker Change: And it's really going to provide a pretty unique solution, I also think, as you see the production grow in the eastern U.S.

Speaker Change: with connections to the NS and CSX, that becomes a pretty big opportunity for the future. Yeah, I would just add to that, that entire opportunity as well as we execute is well beyond our investor day guidance. It wasn't in the base plan. You've got 430 acres left.

Keith E. Creel: You've got 430 acres left, Walter, to expand into. So we have the capacity; we have the land. I think we're going to have business opportunities. We've got great partners with CSX and with NS to reach all other markets and feed traffic into that Dallas market and then down to Mexique. So I think it uniquely complements this network that we're optimizing. And if anyone's going to be in Dallas in September, we're going to be doing a tour there. Yeah, we're happy to show that facility off in September. All right. Thank you very much.

John Brooks: I think we're going to have the business opportunities. We've got great partners with CSX and within us to reach all other markets and fee traffic into that Dallas market and then down to Mexico. So I think it compliments uniquely this this network that we're optimized.

Speaker Change: Walter to expand into. So we have the capacity, we have the land. I think we're going to have the business opportunities. We've got great partners with CSX and with NS.

Speaker Change: to reach all other markets and feed traffic into that Dallas market and then down to Mexico. So I think it complements uniquely this network that we're optimized.

John Brooks: And if anyone's going to be in Dallas in September, we're going to be doing a tour there. Yeah, we're happy to show that facility off in September.

Speaker Change: And if anyone's going to be in Dallas in September , we're going to be doing a tour there. Yeah, we're happy to show that facility off in September .

Walter Spracklin: All right, thank you very much for your time. Thanks, Walter.

Speaker Change: All right, thank you very much. Appreciate the time.

Boe: Thank you.

Walter Spracklin: Appreciate the time. Thanks, Walter. Thank you. We go next now to Fadi Chamoun at BMO Capital. Unknown Speaker, for taking my question.

Fadi Chamoun: We go next now to fought each on out at BMO Capital Markets. Yeah, good for taking my question.

Walter Spracklin: Thanks, Walter.

Speaker Change: Thank you. We go next now to Fadi Chamoun at BMO Capital Markets.

Keith Creel: Keith, maybe can you give us an update? Are you sure? And I wanted to ask you, John, like, you know, typically your second half does end up being a little bit stronger than the first half from a volume perspective. It's just difficult to deny it, I guess, but how are you seeing some of the diversion issues that we have? experience in the second quarter and your experiencing now, the stabilizing, do you think that there's potential for more kind of headwind on that front that we look into the third and fourth quarter?

Fadi Chamoun: Keith, maybe you can give us an update? And I wanted to ask you, John, Typically, your second half does end up being a little bit stronger than the first half from a volume perspective, like just typical seasonality, I guess, but how are you seeing some of the diversion issues that we have? ,,,,,,,,,,, Hey, Fadi, you cut out on the question to Keith. Can you just repeat the first part?

Fadi Chamoun: Y'all are good.

Fadi Chamoun: Thanks for taking my question. Keith, maybe can you give us an update?

Fadi Chamoun: and I wanted to ask you, John , like

Speaker Change: You know, typically your second half does end up being a little bit stronger than the first half from a volume perspective, like just typical seasonality, I guess, but how are you seeing some of the diversion issues that we have?

Speaker Change: Experienced in the second quarter and you're experiencing now that it's stabilizing, do you think that there's potential for more kind of headwind on that front as we look into the third and fourth quarter?

Keith Creel: Hey, Fadi, you cut out on the question to Keith. Can you repeat, please, for you at the first part? Well, the first part is just about an update on the labor situation, as you can just give up your latest thoughts on that. Okay, well, as we all know, we've been trying our dead level best to make sure we keep our customers updated and all key stakeholders. The CRIB took hold of a question that the Minister of Labor challenged relative to potential threat to Canadian safety. We're waiting for a ruling on that question. They've committed to how that really come out by August the night.

Speaker Change: Hey, Fadi, you cut out on the question to Keith. Can you just repeat, please, for the first part?

Fadi Chamoun: Oh, the first part is just about an update on the labor situation. If you can just give us your latest thoughts on, Okay, well, as we all know, we've been trying our dead level best to make sure we keep our customers updated and all key stakeholders. The CRIB took hold of, a question that the Minister of Labor challenged relative to a potential threat to Canadian safety.

Fadi: Oh, the first part is just about an update on the labor situation, if you can just give us your latest thoughts on that.

Speaker Change: Okay well as we all know we've been trying our dead-level best to make sure we keep our customers updated and all key stakeholders. The CRIB took hold of

Speaker Change: A question that the Minister of Labor challenged relative to potential threat to Canadian safety. We're waiting for a ruling on that question. They've committed to have that ruling come out by August the 9th.

Keith E. Creel: We're waiting for a ruling on that question. They've committed to have that ruling come out by August 9th. What we've asked for, in return, is essentially a little bit of time for our customers to plan so they can responsibly wind down their operation and not just have mass chaos. Because you can imagine the impact, obviously, both, of railroads in the nation being shut down. That said, you know, the parties, although we stay at the table, we're far apart.

Keith Creel: What we've asked for in return is essentially a little bit of time for our customers to plan so they can responsibly line down their operation and not just out mass chaos. Because you can imagine the impact, obviously, both railroads of the nation being shut down. That said, the parties, although we stay at the table, we're far apart. I'm just being transparent, honest. It's going to be a challenge. We've offered to enter to binding arbitration given we understand the potential damage to the Canadian economy. We understand the damage and the pain in suffering on our employees, even those that might be out on strike, as well as those that are out on strike.

Speaker Change: What we've asked for in return is essentially a little bit of time for our customers to plan so they can...

Speaker Change: responsibly wind down their operation and not just have mass chaos, because you can imagine the impact obviously of both.

Speaker Change: Railroads of the Nation being shut down. That said, you know, the parties, although we stay at the table, we're far apart. I'm just, I'm just being transparent and honest.

Keith E. Creel: I'm just being transparent and honest. It's going to be a challenge. You know, we've offered to enter into binding arbitration, given we understand the potential damage to the Canadian economy, we understand the damage and the pain and suffering on our employees, even those that might be out on strike, as well as those that aren't out on strike. So it's not a good outcome for anyone.

Speaker Change: It's going to be a challenge. You know, we've offered...

Speaker Change: to enter into binding arbitration given we understand.

Speaker Change: The potential damage to the Canadian economy, we understand the damage and the pain and suffering on our employees, even those that might be out on strike, as well as

Keith Creel: So it's not a good outcome for anyone, but that said, at this point, I'll remain cautiously optimistic. It's most probable that we'll have a work stoppage, both railroads. My guess is best guess. They released the parties by the night that would put a work stoppage probably sometime the end of the month, is what I would be guessing at and planning for. But again, we won't know until that ruling comes out from the CRIB. At or on the later than off tonight, based on their commitment.

Keith E. Creel: But that said, at this point, I'll remain cautiously optimistic. It's most probable that we'll have a work stoppage, both railroads. My guess is, best guess. They will release the parties by the night.

Speaker Change: Those that aren't out on strike. So it's not a good outcome for anyone. But that said, at this point, I'll remain cautiously optimistic. It's most probable that we'll have work stoppage, both railroads. My guess is, best guess,

Keith E. Creel: That would put a stop to work. It's probably sometime, the end of the month is what I would be guessing at and planning for, but again, we won't know until that ruling comes out from the CRIB at or on the later than August 9th, based on their commitment. Yeah, Fadi, you know, a few things here. I would say, certainly, I feel better about where I thought I would be at this point in the year.

Speaker Change: They released the parties by the night. That would put a work stoppage probably sometime...

Speaker Change: The end of the month is what I would be guessing at and planning for but again we won't know until that ruling comes out from the CRIB at or on the later than August the 9th based on their commitment.

John Brooks: Yeah, fatty, you know, few things here, I would say, you know, certainly I feel better about where I thought was going to be at this point of the year, and I do have quite a bit of an optimism around the run rate. If you think about the back half of the year, now that being said, I'll tell you we still got to keep just spoke to, we got to get through what is likely going to be a strike that brings a certain level of uncertainty. Of course, we got an election year, we've got, you know, a macro environment that, you know, is still not great in some areas.

Keith E. Creel: And I do have quite a bit of optimism around the run rate if you think about the back half of the year. Now, that being said, I'll tell you, we still have to, as Keith just spoke to, get through what is likely going to be a strike that brings a certain level of uncertainty. Of course, we've got an election year; we've got, you know, a macro environment that is still not great in some areas.

Speaker Change: Yeah, Fadi, you know, a few things here I would say, you know, certainly

Speaker Change: I feel better about where I thought I was going to be at this point of the year, and I do have quite a bit of optimism around the run rate, if you think about the back half of the year. Now, that being said, I'll tell you, we still got to, as Keith just spoke to, we got to get through

Keith: What is likely going to be a strike that brings a certain level of uncertainty, of course we've got an election year, we've got, you know, a macro environment that

John Brooks: So, you know, that being said, maybe the counterbalance to that is, as I said, I think we're shaping up for a pretty good grain season. And we are really well positioned in the Western Corridor, in terms of our capacity and in being able to provide the service our grain shippers need in that region. In addition, I'm super excited about what we've been able to do in the US and bringing Mexico into our portfolio of destinations.

John Brooks: So, you know, that being said, you know, maybe the counterbalance of that is, as I said, I think we're shaping up for a pretty good grain season. And we are really well positioned in the Western corridor in terms of our capacity and being able to provide the service our green shippers need in that region. In addition, I'm super excited about what we've been able to do in the U.S. and bringing Mexico into our portfolio of destinations. So, I definitely see the bulk accelerating; I think in a pretty sizable way as we move through the back half of the year.

Speaker Change: That, you know, it's still not great in in some areas, so, you know, that that that being said, you know, maybe the counterbalance to that is, as I said, I think we're shaping up for a pretty good grain season.

Speaker Change: We are really well positioned in the Western Corridor in terms of our capacity in being able to provide the service our grain shippers need in that region.

John Brooks: So, I definitely see the bulk accelerating, I think, in a pretty sizable way as we move through the back half of the year. You know, we're going to keep plugging along on the domestic intermodal front. I'm pleased with the growth, but it's a tough, it's a tough market out there. There's no doubt about it.

Speaker Change: In addition, I'm super excited about what we've been able to do in the U.S. in bringing Mexico into our portfolio of destinations. So, I definitely see the bulk accelerating, I think, in a pretty sizable way as we move through the back half of the year.

John Brooks: You know, we're going to keep plugging along on the domestic intermodal front. I'm pleased with the growth, but it's a tough market out there. There's no doubt about it. So, we'll see how that unfolds. I'm excited about some things we have ramping up in that business unit. And frankly, some of those merchandise areas kind of present a little bit of a mixed headwind. And some of those opportunities, as you know, that carload area is a pretty strong sense for RTM.

Speaker Change: We're going to keep plugging along on the domestic intermodal front. I'm pleased with the growth, but it's a tough market out there. There's no doubt about it.

John Brooks: So, we'll see how that unfolds. I'm excited about some things we have ramping up in that business unit. And, frankly, some of those merchandise areas kind of present a little bit of a mixed headwind. And in some of those opportunities, as you know, that carload area is pretty strong sense for RTM, but that's an area where in the forest products and steel and some of those areas where we're definitely not counting on a rebound in the back half of the year. So, hopefully, that's a little bit more color.

Speaker Change: So we'll see how that unfolds. I'm excited about some things we have ramping up in that business unit. And frankly, some of those merchandise areas

Speaker Change: You know kind of present a little bit of a mixed headwind and in some of those opportunities if you know that carload areas is

John Brooks: But that's an area where, in the forest product and steel, and some of those areas, where we're definitely not counting on a rebound the back half of the year.

Speaker Change: It's pretty strong sense for RTM, but that's an area where in the forest products and steel and some of those areas where.

Keith Creel: So, hopefully that's a little bit more color. I think Fatty does one more thing.

Speaker Change: We're definitely not counting on a rebound the back half of the year, so hopefully that's a little bit more color. Yeah, I think, Fadi, there's one more thing I think is important that everyone takes away. Our guidance is assuming the work stoppage, so unless it's one of long duration, when I say long, more than two weeks.

Keith E. Creel: I think, Fadi, there's one more thing I think is important that everyone takes away. Our guidance assumes the work stoppage. So, unless it's one of long duration, when I say long, more than two weeks.

Keith Creel: I think it's important that everyone takes away our guidance is assuming the workshop is. So, unless it's one of long duration, when I say long, more than two weeks, we're anticipating that. We're planning for that, and it's not going to impact our guidance once we get beyond that. I think we'll be in a very good position to have a better, a better, more responsible, a lot of side to the end of the year. We'll see how the labor situation plays out. We'll have a good picture of grain. I think by then, and then we'll look at if we need to change it around.

Keith E. Creel: We're anticipating that, we're planning for that, and it's not going to impact our guidance once we get beyond that. I think we'll be in a very good position to have a better, more responsible line of sight at the end of the year. We'll see how the labor situation plays out. We'll have a good picture of grain, I think, by then, and then we'll look at if we need to change it or not. Thank you. I appreciate it. Thank you. We go next now to... Yeah, good afternoon guys, thanks for the time. Look, if I'm listening to your recap.

Fadi: We're anticipating that, we're planning for that, and it's not going to impact our guidance once we get beyond that.

Fadi: I think we'll be in a very good position to have a better, more responsible line of sight at the end of the year. We'll see how the labor situation plays out. We'll have a good picture of grain, I think, by then, and then we'll look at if we need to change our outlook.

Boe: Hello, thank you. I appreciate you.

Steve Hansen: Thank you. We go next now to Steve Hansen with Raymond James. Yeah, good afternoon, guys. Thanks for the time.

Speaker Change: Thank you. I appreciate it.

Speaker Change: Thank you. We go next now to Steve Hansen with Raymond James.

Keith Creel: Look, if I'm listening to your recap this evening, it's almost like you weren't operating in the western corridor. One of your peers talked about a lot of congestion problems in the West, and it raises a lot of questions about, you know, ultimate capacity at West here and how that's serviceable. And into the keyboard or the keyboard terminals out here. I mean, how do you feel that you were able to escape the congestion issues that the other faced, and do you feel like the capacity into the key jurisdiction here is still sufficient for you? Any comments around that would be super helpful.

Steven P. Hansen: Yeah, good afternoon, guys. Thanks for the time. Look, if I'm listening to your recap this evening, it's almost like you weren't operating in the Western Corridor. One of your peers talked about a lot of congestion problems in the West, and it raises a lot of questions about, you know, ultimate capacity out West here and how that's serviceable into the key corridors or key port terminals out here. I mean, how do you feel that you were able to escape the congestion issues that the other faced? And, you know, do you feel like the capacity into the key jurisdiction here is still sufficient for you? Any comments around that would be super helpful.

Unknown Attendee: It's almost like you weren't operating in the Western Corridor. We've just talked about a lot of congestion problems in the West, and it raises a lot of questions. I mean, how do you feel?

Keith Creel: Yeah, Steve, let me focus our comments on CBC and, you know, I've said this all along. You can't oversubscribe your network. You've got to understand your capacity. You've got to understand your limitations, and you sell to the strength of your franchise. You don't oversell it. You don't oversubscribe it. You got to have the right number of locomotives, right number of cars, right number of crews. You got to understand what the business is coming on and at our railroad. We focus intently in a very disciplined fashion of making sure that we right size our assets and we sell to that capacity.

Keith E. Creel: Yeah, Steve, let me focus our comments on CPKC. And, you know, I've said this all along, you can't oversubscribe your network, you've got to understand your capacity, you've got to understand your limitations, and you sell to the strength of your franchise, you don't oversell it, you don't oversubscribe it, you got to have the right number of locomotives, the right number of cars, the right number of crews, you got to understand what the business is

Steven P. Hansen: Yes, Steve, let me focus our comments on CPKC and...

Speaker Change: You know, I've said this all along.

Speaker Change: You can't oversubscribe your network, you've got to understand.

Speaker Change: Your capacity, you've got to understand.

Speaker Change: your limitations and you sell to the strength of your franchise. You don't oversell it. You don't oversubscribe it. You gotta have the right number of locomotives, the right number of cars, the right number of crews. You got to understand when the business is coming on and at our railroad we focus

Speaker Change: Intently in a very disciplined fashion of making sure that we right-size our assets and we sell to that capacity. That's a discipline, you know.

Keith E. Creel: And at our railroad, we focus intently in a very disciplined fashion on making sure that we right-size our assets, and we sell to that capacity. That's a discipline. You know, If you let your aspirations get ahead of your capacities, then ultimately, I know that we would get in trouble.

Keith Creel: That's a discipline. You know, if you let your aspirations get ahead of your capacities, then ultimately I know that we would get in trouble. And as an operating CEO, I'm intently focused on that routinely. It's a discipline that's moving into our DNA. And as long as I have anything to do with this railroad into or anyone that I train and work with has anything to do with this railroad, that's the way CTC will be running Canada, US, and Mexico. It's the recipe for truly running a true precision scheduled railroad that provides great service, controls cost, allows earned margins, and allows it to be sustainable for your customer.

Speaker Change: If you let your aspirations get ahead of your capacities, then ultimately, I know that we would get in trouble. And as an operating CEO , I'm intently focused on that.

Keith E. Creel: And as an operating CEO, I'm intently focused on that routinely. It's a discipline that's woven into our DNA, and as long as I have anything to do with this railroad and or anyone that I train and work with has anything to do with this railroad, that's the way CTKC will be running in Canada, the US, and Mexico. and allow it to be sustainable for your customer because they're making their decisions based on our ability to keep our word and do what we say we're going to do. And the last thing I want to do is destroy that credibility because they have a very short memory.

Speaker Change: routinely.

Speaker Change: It's a discipline that's woven into our DNA, and as long as I have anything to do with this railroad, and or anyone that I train and work with has anything to do with this railroad, that's the way CTKC will be running Canada, U.S., and Mexico. It's the recipe for truly running a true, precision-scheduled railroad that provides great service.

Speaker Change: Controls Costs, Allows

Keith Creel: Because they're making their decision based on our ability to keep our word and do what we say we're going to do. And the last thing I want to do is to store that credibility because they have very short memories. Very helpful.

Speaker Change: Earned margins and allows it to be sustainable for your customer because they're making their decisions based on our ability to keep our word and do what we say we're going to do. And the last thing I want to do is destroy that credibility because they have very short memories.

Boe: Thanks.

Speaker Change: Very helpful, thanks.

Tom Wadewitz: Thank you.

Keith Creel: We go next now to Tom Wadewitz with UBS. Good afternoon.

Tom: We go next now to Tom. Yeah, good afternoon. Keith, I wanted to ask you how you think about, or John, how you think about the capacity of some of the services you have? And also, maybe, how you think about the potential for 2025 to be a strong margin expansion year. I guess I think of, it's just one example, but the, you know, 180, 181, that you probably still have a good amount of capacity.

Keith E. Creel: So you see some growth; it should be pretty strong, incremental margins. You know, you've had some noise this year, kind of, I guess, anticipating the labor issue, and so forth. So I just wonder if you have a kind of a broad idea that could potentially set up for a pretty strong margin expansion year next year and how you think about available capacity on some of the services you have. Thank you. You know, we're well positioned from a capacity standpoint, Tom. It's a great question. 181 is a perfect example.

Speaker Change: Thank you. We go next now to Tom Wadewitz with UBS.

John Brooks: Keith, I wanted to ask you how you think about or John, how you think about the capacity of some of the services you have and also maybe how you think about the potential for 2025 to be a strong margin expansion year. I guess I think of it's just one example, but that you know 181 81 that you probably still have a good amount of capacity. So you see some growth. It should be pretty strong, incremental margins. You know you've had some noise this year, kind of I guess anticipating the labor issue and so forth. So I just wonder if you have a kind of a broad thought that you know potentially set up for a pretty strong margin expansion year next year and how you think about available capacity on some of the services you have.

Thomas Wadewitz: Yeah, good afternoon.

Thomas Wadewitz: Keith, I wanted to ask you how you think about, or John , how you think about capacity of some of the services you have.

Thomas Wadewitz: and also maybe how we think about the potential for 2025 to be a strong margin expansion year. I guess I think of, it's just one example, but the, you know, 180, 181 that you probably still have a good amount of capacity. So you see some growth that should be pretty strong, incremental margins.

Speaker Change: You know, you've had some noise this year kind of, I guess, anticipating the labor issue and so forth. So I just wonder if you have a kind of a broad thought that, you know, potentially set up for a pretty strong margin expansion year next year and how you think about available capacity on some of the services you have. Thank you.

Keith Creel: Thank you. You know, we're well positioned from a capacity standpoint. Tom, you know, it's a great question. 181 81's a perfect example. You know, we're eating some margin because we got that service out there, but to John's point, it's up 50% here since the beginning of the year. That train's running at half train. So we still have additional capacity selling to in the margins only approved once you got the base cost covered in that train start. So again, all across this network, all these lanes that we're selling, we said this to the SDD, and I'll say it again and again and again.

Keith E. Creel: You know, we're eating some margin because we've got that service out there, but to John's point, it's up 50% since the beginning of the year. That train's running at half train length. So we still have additional capacity to sell it to, and the margin's only approved once you've got the base cost covered in that train start. So again, all across this network, all these lanes that we're selling, we said this to the STD, and I'll say it again and again and again, we're building this network out to match these synergies so that we can onboard this business, not deteriorate our service offering, not deteriorate our car cycle times, our locomotive productivity, all those things that allow us to run a successful business to be able to continue That's the recipe. It's not rocket science.

Speaker Change: We're well positioned from a capacity standpoint, Tom.

John: Eating some origin because we've got that service out there, but to John's point, it's up 50% here since the beginning of the year. That train's running at half train length.

John: So we still have additional capacity to sell into and the margins only improve once you get the base cost covered in that train start.

Speaker Change: So again, all across this network, all these ways that we're selling, we said this to the SBB, and I'll say it again and again and again.

Keith Creel: We're building this network out to match these synergies so that we can onboard this business, not deteriorate our service offering, not deteriorate our car cycle times, our local motor productivity, all those things that allow us to run the successful business to be able to continue. The poor records amount of capital and its networks so they can grow in a responsible way that rewards the shareholder as well as provides the customer the reliable service they need. That's the recipe. It's not rocket science. The issue is having the discipline. , and if you do that, you're going to continue to put yourself in a position of success that, frankly, is proven to be very unique in this industry.

Speaker Change: We're building this network out.

Speaker Change: to match these synergies so that we can onboard this business.

Speaker Change: Not deteriorate our service offering, not deteriorate our car cycle times, our locomotive productivity, all those things that allow us to run a successful business to be able to continue to pour records amount of capital.

Speaker Change: in this network so they can grow in a responsible way that rewards the shareholder as well as provides the customer the reliable service they need. That's the recipe. It's not rocket science. The issue is having the discipline to execute.

Keith E. Creel: The issue is having the discipline to execute. And if you do that, you're going to continue to put yourself in a position of success that, quite frankly, has proven to be very unique in this industry. Do you think the available capacities are fair to think they're broader than that particular service that you would have it across, you know, kind of multiple areas in the network? I would say we're not capacity constrained in any way. That's probably the best way to say it.

Speaker Change: And if you do that, you're going to continue to put yourself in a position of success that, quite frankly, has proven to be very unique in this industry.

Keith Creel: Do you think the available capacity is fair to think it's broader than that particular service that you would have it across, you know, kind of multiple areas in the network. I would say we're not capacity and strain in any lane. That's probably the best way to say it. And think about the capital that we're spending. In line with the rest of the submission, we said we're going to spend about 275 million. We're well in our way. We've got seven eight side exam. We've got the bridge of the radio that's about to be completed. I was just looking at the progress of it a couple of hours ago.

Speaker Change: Do you think the available capacity, it's fair to think it's broader than that particular service that you would have it across, you know, kind of multiple areas in the network?

Speaker Change: I would say we're not capacity constrained in any way. That's probably the best way to say it. And think about the capital that we're spending.

Keith E. Creel: And think about the capital that we're spending. In line with our STB submission, we said we'd spend about $275 million. We're well on our way. We've got seven, eight sightings in.

Keith E. Creel: We've got the bridge at Laredo that's about to be completed. I was just looking at the progress of it a couple of hours ago. It will be done, and it will be online.

Speaker Change: In line with our STD submission, we said we're going to spend about $275 million. We're well on our way. We've got 7-8 sightings in. We've got the bridge at Laredo that's about to be completed. I was just looking at the progress of it a couple of hours ago.

Keith Creel: It'll be done. It'll be online. We've got six or seven capital projects. We did not even plan that we added into the capital and below in Mexico, based on the learnings of last year when we put that task force down there that haven't came online yet. So they're at what I would call critical capacity points. Once that capacity comes online, you're going to see locomotives move faster. You're going to see cars move faster. You're going to see costs come down. And guess what? You're going to create capacity for more growth. So again, this network is not capacity constrained.

Keith E. Creel: We've got six or seven capital projects we did not even plan that we added to the capital envelope in Mexico based on the learnings of last year when we put that task force down there that haven't come online yet. So they're at what I would call critical capacity points. Once that capacity comes online, you're going to see locomotives move faster. You're going to see cars move faster. You're going to see costs come down. And guess what?

Speaker Change: It'll be done, it'll be online. We've got six or seven capital projects we did not even plan.

Speaker Change: that we added into the capital envelope in Mexico based on the learnings of last year when we put that task force down there that haven't came online yet. So they're at what I would call critical capacity points.

Speaker Change: Once that capacity comes online, you're going to see locomotives move faster, you're going to see cars move faster, you're going to see costs come down, and guess what? You're going to create capacity for more growth.

Keith E. Creel: You're going to create capacity for more growth. So again, this network is not capacity constrained. It's our job to make sure that we don't get in that position.

Keith Creel: It's our job to make sure that we don't get in that position. As long as our customers work closely with us, they give us good forecast. Now, I'm not going to say that we can go back to March of this year. And we had a 40% increase in business on the West Coast of Vancouver. And it's oversubscribed that. The ports that actually did we took decisions. We took steps responsibly responding to that in March to make sure we weren't over-subscribed. We allow contracts. Causes to be relaxed so the traffic could be diverted so that our customers could still continue to meet their customers' expectations.

Speaker Change: So again, this network is not capacity constrained. It's our job to make sure that we don't get in that position. As long as our customers work closely with us, they give us good forecast. Now, I'm not going to say that we can go back to March of this year and we had a 40% increase in business on the west coast of Vancouver.

Keith E. Creel: As long as our customers work closely with us, they give us good forecasts. Now, I'm not going to say that we can go back to March of this year, and we had a 40% increase in business on the West Coast of Vancouver, and it oversubscribed that. But it actually did.

Keith E. Creel: We took decisions. We took steps responsibly, responding to that in March to make sure we weren't oversubscribed. We allowed contracts.

Speaker Change: and it oversubscribed that.

Speaker Change: The ports, it actually did. We took decisions, we took steps responsibly responding to that in March to make sure we weren't oversubscribed. We allow contracts

Speaker Change: causes to be relaxed so the traffic could be diverted so that our customers could still continue to meet their customers expectations. We also allowed contracts shifting to occur early in anticipation of the strike because we knew at that time we thought the strike was going to happen in May.

Keith Creel: We also allowed contracts shifting to occur early in anticipation of the strike because we knew at that time we thought the strike was going to happen in May. And it was our responsibility to make sure we protected our capacity so that we could deliver for our customers and bounce back from that strike in a very good fashion. And that's exactly the rhythm and the discipline that we've applied as we go forward. Rather, the strike happens in August, September, October; God help us. It doesn't. We need to get this uncertainty over. But this railroad is going to deal with what we can deal with control, which you can control.

Keith E. Creel: And it was our responsibility to make sure we protected our capacity so that we could deliver for our customers and bounce back from that strike in a very good fashion. And that's exactly the rhythm and the discipline that we've applied as we go forward. Rather, the strike happens in August, September, and October. God help us, it doesn't.

Speaker Change: And it was our responsibility to make sure we protected our capacity so that we could deliver for our customers and bounce back from that strike in very good fashion. And that's exactly the rhythm and the discipline that we've applied as we go forward.

Keith E. Creel: We need to get this uncertainty over, but this railroad's going to. Deal with what we can deal with, control what you can control, and you're going to have a very differentiated outcome if you do that. And Tom, let me just add we laid out a year ago guidance for 2024 to 2028 of high single-digit revenue growth. And we're right on track for that in year one, and we have plenty of capacity to support that revenue growth. We're going to bring it on at a low incremental cost. Great. Thank you for your time.

Speaker Change: rather the strike happens in August , September , October God help us if it doesn't we need to get this uncertainty over but this railroad is going to deal with what we can deal with, control what you can control and you're going to have a very

Keith Creel: And you're going to have a very differentiated outcome if you do that.

Nadine Velani: And Tom, let me just add, we laid out a year ago guidance for 2024 to 2028 of high single-digit revenue growth. And we're right on track for that in year one, and we have plenty of capacity to support that revenue growth. We're going to bring it on at a low and incremental cost. Great. Thank you for the time.

Thomas Wadewitz: Differentiated outcome if you do that. And Tom, let me just add, we laid out a year ago guidance for 2024 to 2028 of high single-digit revenue growth.

Speaker Change: and we're right on track for that in year one and we have plenty of capacity to support that revenue growth and we're going to bring it on at a low incremental cost.

Scott Group: Thank you, Tom. We're going to next now to Scott Group with a little free search. Hey, thanks Afternoon.

Thomas Wadewitz: Great, thank you for the time.

Tom: Thank you, Tom, is the next to Scott now. Hey, thanks for the afternoon, and I echo the condolences on Pat from earlier. Nadeem, at the beginning of the year, you talked about inflation sort of catch up. Can you just give us an update on how that's playing out and the same store price trends? And then maybe just John, just some thoughts like the RTM carload spread is just so wide right now. I think it was like 10 points in the second quarter, and a similar spread in the third quarter.

Thomas Wadewitz: Thank you, Tom.

Speaker Change: We'll go next now to Scott Group with Wolf Research.

Scott Group: I echo the condolences. I'm Pat from earlier. At the beginning of the year, you talked about an inflation sort of catch up. Can you just give us an update on how that's playing out and same store price trends. And then maybe just John to some thoughts like the RTM carload spread is just so wide right now. I think it was like 10 points in the second quarter, similar spread in the third quarter. Is this the right way to think about? The business sort of going forward with the synergies, or is there something sort of unusual just given commodity dynamic?

Scott H. Group: Hey, thanks afternoon and I echo the condolences on Pat from earlier.

Scott H. Group: Nadeem, at the beginning of the year, you talked about an inflation sort of catch-up.

Scott H. Group: Can you just give us an update on how that's playing out?

Speaker Change: Unknown Speaker And same store price trends. And then maybe just John , just some thoughts like the RTM carload spread is just so

John: wide right now, I think it's like 10 points in the second quarter, similar spread in third quarter. Is this the right way to think about

Scott H. Group: Is this the right way to think about business sort of going forward with the synergies? Or is there something sort of unusual?

Scott H. Group: Just given commodity dynamics? How should we think about this? What's the right spread, I guess, going forward? Scott, you know, you're right on. I mean, we highlighted that there's going to be an opportunity to have some pricing catch up just the way the contracts, the nature of the contracts, and just the way that cost inflation has surged so much in the previous 18 months, 24 months. So we're starting to see inflation moderate on the cost side, kind of in that mid-threes, three and a half percent kind of level.

John: The business sort of going forward with the synergies or is there something sort of unusual Just given commodity dynamics. How should we think about this? What's the right spread I guess going forward?

Scott Group: How should we think about this? What's the right spread, I guess, going forward? This God, you know, you're right on. I mean, we highlighted that there's going to be an opportunity to have some pricing catch up just the way the contracts and nature of the contracts and just the way that cost inflation has served so much in the previous fall at 18 months, 22 to 24 months. So we're starting to see on the cost side inflation moderate, you know, kind of in that mid three, three and a half percent kind of level. We're seeing that the strength of our service being rewarded in the marketplace, and we're seeing kind of the same sort of pricing in that north of five.

John: Scott, you know, you're right on. I mean, we highlighted that there's going to be an opportunity to...

Scott H. Group: to have some some pricing catch up just the way the contracts, the nature of the contracts, and just the way that cost inflation surged so much in the previous, call it, 18 months, 22, 24 months, so

Scott H. Group: We're starting to see, on the cost side, inflation moderate, you know, kind of in that mid-3's, 3.5% kind of level. We're seeing the strength of our service being rewarded in the marketplace, and we're seeing kind of...

Scott H. Group: We're seeing the strength of our service being rewarded in the marketplace, and we're seeing kind of the same sort of pricing in that north of five. So that spread of pricing versus inflation is widening, and I don't see that changing.

Nadine Velani: So that's bread of pricing versus inflation is widening, and I don't see that changing. In fact, I see that accelerating to an extent more so because I see inflation moderating further. I mean, we've seen that across the board of whether that's on the material side, you know, labor has been a bit higher. But again, that's going to moderate over the next year. And so I think we're going to see the benefits of strong pricing and lower inflation. I think that's going to be helpful to our margin story. In Scott, on the RTM and Carlotes question, I mean, RTM Sue us will be get paid for.

Scott H. Group: The same sort of pricing in that north of five, so that spread of pricing versus inflation is widening, and I don't see that changing, and in fact, I see that accelerating to an extent.

Nadeem S. Velani: And in fact, I see that accelerating to an extent, more so because I see inflation moderating further. I mean, we've seen that across the board, whether it's on the material side, you know, labor has been a bit higher. But again, that's going to moderate over the next year. And so I think we're going to see the benefits of strong pricing and lower inflation.

Scott H. Group: more so because I see inflation moderating further. I mean, we've seen that across the board of whether that's on the material side. You know, labor has been a bit higher. But again, that's going to moderate over the next year. And so I think we're going to see the benefits of...

Nadeem S. Velani: I think that's gonna be helpful to our margin story. And Scott, on the RTM and car loads question, I mean, RTMs to us, what we get paid for, they're the most important metric, even more so with this new expanded length of haul network. So what you're seeing in the spreads today is accentuated or exaggerated because we haven't yet left that loss of the short haul, low profit business that left us. I guess it was the fourth quarter of last year.

Speaker Change: Nadeem Velani, Mark Redd, John Brooks

John Brooks: They're the most important metric. Even more so with this new expanded length of all networks. So what you're seeing in the spreads today is accentuated or exaggerated because we have yet left that loss of the short haul low profit business that left us. I guess it was fourth quarter of last year. What are magnitude? That's 170,000 carloads. So if you get caught up in the carloads, you're going to miss the power of what's really occurring. Every carload that we have with the burning link to fall, whether it's 30% longer, 40% 50. Your miles are going to catch it.

Speaker Change: Even more so with this new expanded link-to-call network. So what you're seeing in the spreads today is accentuated or exaggerated.

Speaker Change: because we haven't yet left that loss of the short-haul, low-profit business that left us, I guess it was fourth quarter of last year, order of magnitude.

Nadeem S. Velani: Fourth quarter magnitude, that's 170,000 car loads. So if you get caught up in the car loads, you're gonna miss the power of what's really occurring. Every car load that we have with converting length of haul, whether it's 30% longer, 40%, 50, your models aren't gonna catch it.

Speaker Change: That's 170,000 carloads, so if you get caught up in the carloads, you're going to miss the power of what's really occurring.

Speaker Change: Every carload that we have we're converting late to fall, whether it's 30% longer, 40%, 50%, your models aren't going to catch it. So again, RTM should be the holy grail when it comes to this railroad.

Scott H. Group: So again, RTM should be the Holy Grail when it comes to this railroad, not car loads. Makes sense. And just so I understand your point, Nadeem, even if, even with the new labor deal coming, you still feel good about labor, inflation, overall inflation slowing. I do, I do.

Nadine Velani: So again, RTM should be the holy grail when it comes to this railroad. Nice carloads. Makes sense. And just so I understand your point, Nadim, even if, even with the new labor deal coming, you still feel good about labor inflation, overall inflation slowing. I do. I think we've, you know, we've been accruing at what we anticipate a fair ruling and a fair kind of win-win situation between us and labor. And so I'm not concerned about that. I mean, on near term, you know, we're going to have a bit of a headwind. We had a significant casualty cost that we face in July that we're going to feel in the third quarter.

Niall Carlos: Naith Karloos

Niall Carlos: And just so I understand your point, Nadeem, even with the new labor deal coming, you still feel good about...

Speaker Change: Overall inflation slowing.

Nadeem S. Velani: I think we've, you know, we've been accreting to what we anticipate a fair ruling and a fair kind of win-win situation between us and labor. And so I'm not, I'm not concerned about that. I mean, near term, you know, we're going to have a bit of a headwind; we had a significant casualty cost that we faced in July that we're going to feel in the third quarter. But that being said, you know, there are still two months left in the quarter.

Nadeem S. Velani: I do. I do. I think we've, you know, we've been accruing at what we anticipate.

Speaker Change: A fair ruling and a fair, kind of win-win situation between...

Speaker Change: us in labour and so I'm not I'm not concerned about that. I mean a near-term

Speaker Change: We're going to have a bit of a headwind. We had a significant casualty cost that we faced in July that we're going to...

Nadine Velani: That being said, you know, there's still two months left in the quarter. And we're going to keep them on the rail, and we can help mitigate some of those costs. And I think we've seen some additional stock-based comp costs that we're going to feel in Q3 year over year. Outside of that, the way the network's running and the operating leverage that I see in front of us, I think more than offset some of those costs. And I think we're going to have a very strong back up half of the year. So, you know, perhaps not sequential improvement in the OR and Q3 because of some of those headwinds I just mentioned.

Speaker Change: [inaudible]

Nadeem S. Velani: And, and we're going to keep them on the rail, and we can help mitigate some of those costs. And I think we've seen some additional stock-based compensation costs that we're going to feel in Q3 year over year. Outside of that, the way the network's running, and the operating leverage that I see in front of us, I think it more than offsets, and I think we're going to have a very strong backup half of the year.

Speaker Change: stock-based comp costs that we're gonna feel in Que 3 year-over-year. Outside of that, the way the network is running and the operating leverage that I see in front of us, I think it more than offsets

Nadeem S. Velani: So, you know, perhaps not sequential improvements in the O.R. in Q3 because of some of those headwinds I just mentioned, but I think in Q4 we're set up to have a record operating ratio for CPKC, and I think it's going to be a very strong finish to the year.

Speaker Change: Unknown Speaker Some of those costs I think we're gonna have a very strong backup half of the year. So, you know, perhaps not sequential improvement in the OR in Q3 because of some of those head wounds I just mentioned, but I think in Q4, we're set up to have a record operating ratio for for CPKC and I think it's gonna be a

John Brooks: But I think in Q4, we're set up to have a record operating ratio for CPKC. And I think it's going to be a very strong finish to the year, and it's going to set us up for a 2025 that I think could be a very powerful earnings mall. Scott, I mean, just one of the common on Carlos and RTMs, just to give you an example. Right now, I think Q2, our linked average length of haul was about 6%, but if you look at our domestic intermodal, it was over double digits on an average length of haul.

Nadeem S. Velani: And it's going to set us up for a 20-25 that I think could be a very powerful earnings model. And Scott, just maybe just want to comment on the carloads and RTMs, like, just to give you an example, like, right now, I think Q2, our average length of haul is up about 6%. But if you look at our domestic intermodal, it was up over double digits on an average length of haul.

Speaker Change: A very strong finish to the year and it's going to set us up for a 2025 that I think could be a very powerful earnings model.

John Brooks: And again, that's just indicative of what Keith described as that shift in business. And frankly, as I look out to the second half of the year, as I see some strength in, I think our international franchise, there's a really good chance we can play catch up, and you'll start to see that deviation come closer together as we move through Q4. Very helpful, guys. Thank you. Yeah, please go ahead.

Speaker Change: And Scott, just maybe, just one other comment on the carloads and RTMs, like, just to give you an example, like, right now, I think Q2, our average length of haul is up about 6%, but if you look at our domestic intermodal...

John Brooks: And again, that's just indicative of what exactly keep described on that shift in business. And frankly, as I look out to the second half of the year, as I see some strength in I think our international franchise, there's a really good chance we can play catch up and kind of you'll start to see that that deviation come closer together as we move through Q4.

Scott H. Group: It was over double digits on an average length of haul, and again, that's just indicative of what exactly Keith described on that shift in business. And frankly, as I look out to the second half of the year,

Speaker Change: As I see some strength in I think our international franchise, there's a really good chance we can play catch up and kind of you'll start to see that deviation come closer together as we move through Q4.

Boe: Very helpful, guys. Thank you.

Brandon Oglinski: Yeah, we'll go next now to Brandon Oglinski at Barclays. Thanks for taking the question. And again, condolences to Pat and family friends. Keith or maybe John, I guess, you know, when you speak about the radio bridge expansion, maybe we're overemphasizing how much capacity that adds to the system. But how do you approach that, you know, with a balanced, you know, I look for growth with customers, but also balancing the need to keep consistent service. And where do you think we're going to see the results from that expansion, most immediately in 2025? You're going to see the results to me would be about train speed and train velocity.

Speaker Change: Very helpful, guys. Thank you.

Brandon Robert Oglenski: I'll go next now to Brandon Oglenski at, Thanks for taking the question. And again, condolences to Pat and family and friends. Keith, or maybe John, I guess, you know, when you speak about the Laredo bridge expansion, maybe we're overemphasizing how much capacity that adds to the system. But how do you approach that, you know, with a balanced outlook for growth with customers but also balancing the need to keep consistent service? And where do you think we're going to see the results from that expansion most immediately in 2025?

Speaker Change: We'll go next now to Brandon Oglenski at Barclays.

Speaker Change: Thanks for taking the question, and again, condolences to Pat and family and friends.

Brandon Robert Oglenski: Keith or maybe John , I guess, you know, when you speak about the Laredo Bridge expansion, maybe we're overemphasizing how much capacity that adds to the system.

Speaker Change: But how do you approach that, you know, with a balanced outlook for growth with customers, but also balancing the need to keep consistent service? And where do you think we're going to see the results from that expansion most immediately in 2025?

Brandon Robert Oglenski: Well, you're going to see the results, which would be about. Trainspeed and Train Velocity, you know, it's going to be singles and doubles. There's not going to be any big home runs. But if you think about it today, you're running four hour windows.

Keith: Well, you're going to see the results to me would be about...

John Brooks: You know, it's going to be singles and doubles. There's not going to be any big home runs. You think about it today. You're running four-hour windows. So it's suboptimal when it comes to trains. You've got a number of trains that are going to be in queue; could be in queue for an hour, could be in queue for four hours before it gets to change. All that goes away. The queue disappears. We get to make meats on the bridge. We'll work well with the UV. He's going to work well with us. It's going to be a smooth transition.

Speaker Change: Trainspeed and Train Velocity, you know it's it's going to be singles and doubles there's not going to be any big home runs you think about it today you're running four-hour windows

Keith E. Creel: So it's suboptimal when it comes to trains. You've got a number of trains that are going to be in queues, could be in queue for an hour, could be in queue for four hours before it gets to change. All that goes away. The queue disappears.

Speaker Change: So it's sub-optimal when it comes to trains, you've got...

Speaker Change: A number of trains are going to be in queue, could be in queue for an hour, could be in queue for four hours before it gets to change. All that goes away. The queue disappears. We get to make meats.

Keith E. Creel: We get to make meat on the bridge. We'll work well with UP. UP is going to work well with us. It's going to be a smooth transition. We're working out the details now for UP to have a crossover coming off that second bridge. So again, we're both co-located on the bridge.

Speaker Change: On the bridge. We'll work well with UP. UP is going to work well with us. It's going to be a smooth transition. We're working out the details now for UP to have a crossover coming off that second bridge. So again, we're both co-located on the bridge. We both will do better. The velocity is going to improve and our assets are going to turn faster.

John Brooks: We're working out the details now for UV to have a crossover coming off that second bridge. So again, we're both co-located on the bridge. We both will do better. The velocity is going to improve, and our assets are going to turn faster. So again, it'd be baked into the metrics. There won't be any home runs that it makes a meaningful difference in today's operation and most especially in tomorrow's growth. And Brandon, it's a differentiator in the marketplace. It it is what my team is using to sell to the customers expanding down in Mexico and really feeding that cross border service.

Keith E. Creel: We both will do better. The velocity is going to improve, and our assets are going to turn fast. So again, it'll be baked into the metrics. There won't be any home runs.

Keith E. Creel: It makes a meaningful difference in today's operation and, most especially, in tomorrow's growth. And Brandon, it's a differentiator in the marketplace. It is what my team is using to sell to customers expanding down in Mexico and really feeding that cross-border service. It's about security.

Speaker Change: So, again, it would be baked into the metrics, there won't be any home runs, but it makes a meaningful difference.

Speaker Change: in today's operation and most especially in tomorrow's growth. And Brandon, it's a differentiator in the marketplace. It is what my team is using to sell.

Speaker Change: to the customers expanding down in Mexico and really feeding that cross-border service. It's about security. It's about service. It's about capacity. And the second bridge...

John Brooks: It's about security. It's about service. It's about capacity in the second bridge. Honestly, just adds to that capability that differentiates us against other routes in and out of Mexico. And that's a strong selling point to our customers.

John Brooks: It's about service. It's about capacity, and the second bridge, honestly, just adds to that capability that differentiates us against other routes in and out of Mexico. And that's a strong selling point for our customers. Thank you both.

Speaker Change: Honestly, just adds to that capability that differentiates us against other routes.

Speaker Change: in and out of Mexico. And that's a strong selling point to our customers.

Boe: Thank you both.

Jonathan Chappell: We'll go next now to John Chappell at Evercore ISI. Thank you. Kind of staying with that team, John. We're getting a lot of, I think, concern or maybe even excitement depending on who you are on potential terrorists and what that means, especially in Mexico. What are your customers telling you about potentially front-end loading or being more proactive as it relates to import to the West Coast of Canada or to Mexico? And then also, where does the service stand right now? I know there were some maybe hiccups at the initial stages of the integration. I know Mark and his team made a lot of progress there.

Speaker Change: Thank you both.

Speaker Change: We'll go next now to John Chappell at Evercore ISI.

Jonathan Chappell: Sticking with that theme, John, we're getting a lot of, I think, concern or maybe even excitement, depending on who you are about potential tariffs and what that means, especially in New Mexico. What are your customers telling you about potentially front-end loading or being more proactive as it relates to imports, either to the West Coast of Canada or to Mexico? And then also, where does the service stand right now? I know there were some hiccups at the initial stages of immigration.

Jonathan Chappell: Thank you. Can I stay with that theme, John ? We're getting a lot of, I think, concern or maybe even excitement depending on who you are on potential tariffs and what that means, especially in New Mexico. What are your customers telling you about potentially front-end loading or being more proactive as it relates

Jonathan Chappell: I know Mark and his team made a lot of headwinds, a lot of progress there. But where does service stand in Mexico if there is a surge in the coming months? Service has never been better. What about you, John?

Speaker Change: to import to the west coast of Canada or to Mexico? And then also, where does the service stand right now? I know there were some maybe hiccups at the initial stages of the immigration. I know Mark and his team made a lot of headwinds or a lot of progress there. Where does the service stand on Mexico if there is a surge in the coming months?

John Brooks: Where does the service stand on Mexico if there is a surge in the coming months? Service has never been bad. What would you judge? Yeah, honestly John, we just ran a number of test loads, imports through Lazaro up into the Houston market. You know, I think they're on our rails for three and a half days, you know, that excludes time at the port in that, a really good customer experience. I would say it's been, up to your point, it's been a flood; it's been educating about, you know, what import export freight can look like through Mexico. So, it's been a pretty big learning curve with the customers, but we're starting to produce some results. And I just give you an example, and you've probably seen some of this, but we've actually had five new service calls recently announced at Lazaro, a couple of new mayor services, a ONE, MSC, a CMA, and I think what we're seeing is we're building confidence. The service level is, as Keith said, is strong, and we're demonstrating that, and frankly, there's good demand in for Mexico, but that intramexico demand brings with it the opportunity for space on those boats to then flourish and provide capacity for cross-border.

Keith E. Creel: Yeah, honestly, John, we just ran a number of test loads, imports through Lazaro, into the Houston market. You know, I think they're on our rails for three and a half days. That excludes time at the port and that. Really good customer experience. I would say it's been, to your point, it's been a slug.

Speaker Change: Service has never been better, over to you, John .

Speaker Change: Honestly, John , we just ran a number of test loads, imports through Lazaro up into the Houston market.

John: You know, I think they're on our rails for three and a half days.

John: You know, that excludes time at the port and that really good customer experience. I would say it's been, to your point, it's been a slug. It's been educating about, you know, what import export trade can look like through Mexico.

John Brooks: It's been educating me about, you know, what the import-export trade can look like through Mexico. So, it's been a pretty big learning curve with the customers, but we're starting to produce some results. And I'll just give you an example, and you've probably seen some of this, but we've actually had five new service calls recently announced at Lazaro. A couple of new MERS services, O&E,

John: So it's been a pretty big learning curve with the customers, but we're starting to produce some results. And I'll just give you an example, and you've probably seen some of this, but we've actually had five new service calls.

John: recently announced

John: at Lazaro, a couple of new merit services, an O&E, an MSC, a CMA.

John Brooks: And I think what we're seeing is that we're building confidence. The service level, as Keith said, is strong, and we're demonstrating that. And frankly, there's good demand intra-Mexico, but that intra-Mexico demand brings with it the opportunity for space on those boats to then flourish and provide capacity for cross-border. And you're right, you know; we certainly have some pending labor issues that could take place on the East Coast. And combined with these new services, we think it sets us up well for, you know, continuing to grow that Lazaro opportunity in the back half of this year into 2025. Thanks, John. I'm going to go next now to Ken Hoexter at, Hey, great.

John: and I think what we're seeing is we're building confidence, the service level, as Keith said, is strong and we're demonstrating that.

Speaker Change: And frankly, there's good demand intra-Mexico, but that intra-Mexico demand brings with it the opportunity for space on those boats.

Speaker Change: to then flourish and provide capacity for cross-border and you're right, you know, we certainly have some pending labor issues that could take place.

John Brooks: And you're right, you know, we certainly have some pending labor issues that could take place on the East Coast, and combined with these new services, we think it sets us up well for, you know, continuing to grow that Lazaro opportunity, the back half of this year in the 2025.

Speaker Change: on the East Coast, and combined with these new services, we think it sets us up well for continuing to grow that Lazaro opportunity, the back half of this year into 2025.

Ken Hoxter: Thanks, John.

Ken Hoxter: We'll go next now to Ken Hoxter at Bank of America. Hey, great.

Speaker Change: We'll go next now to Ken Hoexter at Bank of America.

Ken Hoexter: Good afternoon. And again, my condolences to the CPKC and Pat's family. I've known Pat for over 20 years, and she always brought smiles to the room.

Nadine Velani: Good afternoon, and again, my condolences to the CPKC and Pat's family. Known Pat for over 20 years and always brought definitely smiles to the room. Just to clarify, Nadim, on your OR improvement, where I guess you're not looking for OR improvement in the third quarter, and I think you said a significant improvement, is that like maybe 300 plus basis points to get to sub-60 in the fourth quarter, to get to your double-digit earnings, does that sound right? And then is there clarification on the level of stock-based comfort turn that comes back?

Ken Hoexter: Hey, great. Good afternoon. And again, my condolences to the CPKC and Pat's family. I've known Pat for over 20 years and always brought definitely smiles to the room.

Ken Hoexter: Just to clarify, Nadeem, on your OR improvement, or I guess you're not looking for OR improvement in the third quarter. And I think you said significant improvement. Is that like, maybe 300 plus basis points to get to sub-60 in the fourth quarter to get to your double digit earnings? Does that sound right?

Ken Hoexter: Just to clarify, Nadeem, on your O.R. improvement, or I guess you're not looking for O.R. improvement in the third quarter, and I think you said significant improvement. Is that like maybe 300-plus basis points to get to sub-60 in the fourth quarter to get to your double-digit earnings? Does that sound right?

Nadeem S. Velani: And then, is there clarification on the level of stock-based comp return that comes back? And then lastly, just a quick one for John, it looks like the grain crop, I think you've got an average crop built in. It looks like we've got a decent one shaping up. Any thoughts on the size scale of the market at this point? So Ken, just sequentially, I don't see any necessarily improvements in the OR just given, like I said, some derailment costs in July and some additional stock-based comp in this quarter relative to a year ago and higher versus Q2.

Nadine Velani: And then lastly, just a quick one for John. It looks like the grain crop. I think you've got an average crop built in; it looks like we've got a decent one shaping up. Any thoughts on the size scale of the market at this point? Yes, so Ken, just sequentially, I don't see necessarily improvements in the OR, just given, like I said, some Zorella, McCaw, some July, and some additional stock-based confidence in this quarter, relative to a year ago, and higher versus Q2. As far as Q4, we had a very strong Q4 operating ratio in 2023, and I see year-over-year improvements in the OR, Q4, 2024 versus 2023, which puts you at a very, very good operating ratio.

Speaker Change: Is there clarification on the level of stock-based comp return that comes back? And then lastly, just a quick one for John . It looks like the grain crop, I think you've got an average crop built in. It looks like we've got a decent one shaping up. Any thoughts on the size scale of the market at this point?

Speaker Change: So Ken, just sequentially, I don't see...

Ken: necessarily improvements in the OR just given like I said some derailment costs in July and some some additional stock-based comp in this quarter relative to a year ago and higher versus Q2.

Nadeem S. Velani: As far as Q4, you know, we had a very strong Q4 operating ratio in 2023, and I see year-over-year improvements in the OR Q4 2024 versus 2023, which puts you at a very, very good operating ratio. Yeah, Ken, you know, being a grain guy, it's never made till it's in the bin.

Speaker Change: As far as Q4, we had a very strong Q4 operating ratio in 2023, and I see year-over-year improvements in the OR, Q4 2024 versus 2023, which puts you at a very good operating ratio.

John Brooks: Yeah, Ken, you know, being a grain guy, it's never made till it's in the bin, but we are pretty optimistic in Canada, and I think what we're particularly optimistic about is, you think about last year's crop and even going back to the 21-22 drought crop. Yeah, you know, our growing territory felt more of the effects of that. And as we sit here today, we certainly see significant improvement in the CPKC growing territory in the southern part of the provinces. You know, in terms of projections, you know, we've kind of settled in it in our mind and are modeling at about a 73 million metric ton or so.

Speaker Change #100: Yeah, Ken, you know, being a grain guy, it's never made until it's in the bin, but...

John Brooks: But we are pretty optimistic in Canada, and I think what we're particularly optimistic about is if you think about last year's crop and even go back to the 21-22 drought crop. Our growing territory felt more of the effects of that, and as we sit here today, we certainly see significant improvement in the CPKC growing territory in the southern part of the provinces. In terms of projections, we've kind of settled in, in our minds, in our modeling, at about 73 million metric tons or so.

Speaker Change #101: We are pretty optimistic in Canada, and I think what we're particularly optimistic about is, if you think about last year's crop, and even going back to the 21-22 drought crop,

Speaker Change #102: You know, our growing territory felt more of the effects of that.

Speaker Change #102: And as we sit here today, we certainly see significant improvement in the CPKC growing territory in the southern part of

Ken Hoexter: But, you know, customers are talking about possibly 75 to 78 million metric tons of crop. So, we'll see. We got a little bit of time left to go, but certainly optimistic that it could be a strong rainfall. Great. Thanks for the Hudson time. Appreciate it. Yeah. Thanks, Ken. We'll go next now to Brian Ossenbeck at, Hey, afternoon.

Speaker Change #102: of the Provinces.

Speaker Change #102: You know, in terms of projections...

Speaker Change #102: You know, we've kind of settled in, in our mind, in our modeling, at about a 73 million metric ton or so.

John Brooks: But you know, I'm a customer. Our customers are talking about possibly 75 to 78 million metric ton type crop. So, so we'll see we got a little bit time left to go. And, but certainly optimistic that it could be a strong rainfall. Great.

Speaker Change #102: But, you know, customers are talking about possibly $75 to $78 million.

Speaker Change #102: We'll see. We've got a little bit of time left to go, but certainly optimistic that it could be a strong rainfall.

Boe: Thanks for that some time. Appreciate it.

Brian Ossenbeck: Yep, it's Ken. We'll go next month to Brian Austin Beck at JP Morgan. Hey, afternoon. Thanks for taking the question. Maybe Nadeem, just to follow up on the OR commentary. I mean, that seems pretty reasonable that it would deteriorate if you're expecting a labor disruption, you know, here in the quarter.

Speaker Change #103: Great. Thanks for the thoughts and time. Appreciate it. Yep. Thanks again.

Speaker Change #103: We'll go next now to Brian Ossenbeck at J.P. Morgan.

Brian Ossenbeck: Thanks for taking the question. Maybe, Nadeem, just to follow up on the OR commentary, I mean, it would be reasonable that it would deteriorate if you're expecting a labor disruption, you know, here in the quarter. So I just wanted to clarify that or maybe the derailment is a bit bigger.

Brian Ossenbeck: Hey, afternoon. Thanks for taking the question. Maybe, Nadeem, just to follow up on the OR commentary. I mean, that seems

Brian Ossenbeck: Pretty reasonable that it would deteriorate if you're expecting a...

John Brooks: Or they just wanted to clarify that, or maybe the real mess that bigger than than we thought. And then just for John, if you can give us some context around the end markets that are potentially affected by the pace. So, you know, we've seen a pretty big swing both selections, probably a little bit more volatile in the coming quarter. So to have an impact on those calls at Lazarus, be able to offset that with other, maybe cost improvements or maybe praise it on a dollar basis. Like how do you how do you work for that volatility and what are the customers looking for?

Brian Ossenbeck: , and I think we have a little bit of a delay in the labor disruption here in the quarter. I just wanted to clarify that. And for John , if you can give us some context around the end markets that are potentially affected by the pandemic.

Brian Ossenbeck: And then just for John, if you can give us some context around the end markets that are potentially affected by the peso. You know we've seen a pretty big swing post-elections, probably going to stay a little bit more volatile in the coming quarter. So that impact on those calls at Lazaro, be able to offset that with other, maybe cost improvements or maybe price it on a dollar basis. Like how do you work through that volatility?

Brian Ossenbeck: The peso, you know, we've seen a pretty big swing.

Brian Ossenbeck: Post-selections. Thank you.

John: Probably going to stay a little bit more volatile in the coming quarter or so.

John: The impact on those calls at Lazaro, be able to offset that with

Speaker Change #105: with other maybe cost improvements or maybe price it on a dollar basis like how do you how do you work through that volatility and what are the customers looking for?

John Brooks: Well, Brian, you know, honestly, I don't know if we felt the whole lot of effect at this point or at least I can differentiate what would be, you know, just sort of broader macro softness in some of the areas in and out of Mexico that Carlo business, particularly like some of our steel business. Down in that area, you know, I honestly, because we don't have a what I would consider a regular cross border import export business at this point in Lazarus, I haven't really felt much on that. And frankly, I would say just the opposite, the customers.

John Brooks: Well, Brian, honestly, I don't know if we've felt a whole lot of effect at this point, or at least I can differentiate what would be, you know, just sort of broader macro softness in some of the areas in and out of Mexico that carload business, particularly like some of our steel business, down in that area. You know, I honestly, because we don't have what I would consider a regular cross-border import-export business at this point in Lazaro, I haven't really felt much on that. And Frankly, I would say just the opposite.

Speaker Change #106: Well, Brian , you know, honestly, I don't know if we felt a whole lot of effect at this point, or at least I can differentiate.

Speaker Change #107: What would be, you know, just sort of broader macro softness in some of the areas in and out of Mexico, that carload business, particularly like some of our steel business.

Speaker Change #107: I honestly, because we don't have what I would consider a regular cross-border import-export

Speaker Change #108: Business at this point, and Lazaro, I haven't really felt much on that, and frankly, I would say just the opposite. The customers...

John Brooks: The customers, the seamstress lines we're working with, because of the strength of intramexico that we're seeing right now, have actually been pretty excited about what the cross-border opportunity could present. You know, I don't know if that's just forward thinking, Brian, in terms of, you know, expectations on the peso to moderate some or not. But there is nothing I can really call out to you right now that has materially impacted our cross-border flows.

Nadine Velani: There's the seam ship lines we're working with because of the strength with Intramexico that we're seeing right now have actually been pretty excited about what the cross border opportunity could present. You know, I don't know if that's just forward-thinking Brian in terms of, you know, expectations on the peso to moderate some or not. But nothing I can really call out to you right now that has materially impacted our cross-border flows. And Brian, just reiterate on the OREA, we had, you know, near term digital costs associated with some casualty that is going to be a step up in costs in the quarter.

Speaker Change #109: The Steamship Lions we're working with.

Lazaro: because of the strength with Intra-Mexico.

Lazaro: that we're seeing right now have actually been pretty excited about what the cross-border

Lazaro: Opportunity could present. You know, I don't know if that's just forward thinking, Brian , in terms of, you know, expectations on the peso to moderate some or not.

Brian Ossenbeck: But nothing I can really call out to you right now that has materially impacted our cross-border flows.

Brian Ossenbeck: And Brian, just reiterate on the OR. Yeah, we had, you know, near-term additional costs associated with some casualty, that is going to be a step up in costs in the quarter. And then, yeah, I mean, reasonably, we think we're going to have a labor disruption, and that's going to have an impact on the OR. So, from our perspective, I think it's important to highlight the fact that there are going to be costs associated with what we think is going to occur.

Lazaro: and Brian just

Speaker Change #111: Reiterate on the OR, yeah, we had, you know, near-term additional costs associated with some casualty that is going to be a step up in costs in the quarter. And then, yeah, I mean, reasonably, we think we're going to have a labor disruption, and that's going to have an impact on the OR. So I think from our perspective, I think it's responsible to highlight the fact that there's going to be costs associated with what we think is going to occur.

Nadine Velani: And then, yeah, I mean, reasonably, we think we're going to have a labor disruption, and that's going to have an impact on the OREA. So I think from our perspective, I think it's responsible to highlight the fact that there's going to be costs to see what we think is going to occur near certain keeps mentioned that's maybe end of August that that's a likely event. And so factoring that into what we think is going to be our margins in Q3 is response.

Brian Ossenbeck: Near term, Keith mentioned that maybe the end of August, that that's a likely event. And so factoring that into what we think is going to be our margins in Q3 is responsible. You're going to get me in trouble with Tony Hatch for talking about the OR so much.

Speaker Change #111: Keith mentioned that's a maybe end of August that that's a likely event and so factoring that into what we think is going to be our margins in Q3 is responsible.

Nadine Velani: You're going to get me in trouble with Tony Hans for talking about the OR, so might be.

Speaker Change #112: You're going to get me in trouble with Tony Hatch for talking about the OR so much.

Boe: Alright guys, thanks very much. Thank you.

Brian Ossenbeck: All right, guys, thanks very much. Thank you. We'll go next now to Kevin Cheung at CIBC. Hey, thanks for taking my question. Good afternoon, everyone. I'm just wondering, with the FMC halting this Gemini alliance, does that have any near or medium-term implications in terms of some of the growth you envisioned, either later this year or into 2025? Yeah, you know, it's a really good question, Kevin.

Speaker Change #112: Alright guys, thanks very much.

Kevin Chiang: We'll go next now to Kevin Chiang at CIBC. Hey, thanks for taking my question. You're going to have to meet everyone.

Speaker Change #112: Thank you.

Speaker Change #114: We'll go next now to Kevin Cheung at CIBC.

John Brooks: I'm just wondering, with the FNC halting this Gemini Alliance, does that have any near or medium term implications in terms of some of the growth you envisioned? And either later this year or into 2025? Yeah, you know, it's a really good question, Kevin. You know, since, frankly, since COVID, the international business unit is the volatility in some of those traits and pork flows, as Keith spoke to earlier, that we experienced in March, April, has presented more challenges. And I can tell you, we are strategically, as much as we say, very much into picking our partners and how we align, rethinking in a lot of areas.

Kevin Cheung: Hey, thanks for taking my question here. Good afternoon, everyone. I'm just wondering, with the FMC halting this Gemini alliance, does that have any near or medium term implications in terms of some of the growth you envisioned, either later this year or into 2025?

Kevin Cheung: You know that since Frankly, since COVID, the International Business Unit has experienced volatility in some of those. Freights and port flows, as Keith spoke about earlier, that we experienced in March and April have presented more challenges. And I can tell you we are strategically, as much as we say, very much into picking our partners and how we align, rethinking in a lot of areas, how we think about that international space. Certainly, HAPAG is one of our largest customers and our most trusted partners.

Speaker Change #116: Yeah, you know, it's a really good question, Kevin. You know, since, frankly, since COVID, the International Business Unit is the volatility in some of those

Speaker Change #116: Freights and Port Flows as Keith spoke to earlier that we experienced in event in very different ways, you know a

Speaker Change #117: has presented more challenges, and I can tell you, we are strategically, as much as we say, very much into picking our partners and how we align, rethinking in a lot of areas, how we think about that international space. You know, certainly, HAPAG is one of our largest customers, the most trusted partners.

John Brooks: How do we think about that international space? You know, certainly HAPAG is one of our largest customers, the most trusted partners. We also have a significant business with Merisk. So I would tell you, generally speaking, I'm excited about it. I think it presents opportunities from us, for us coast to coast, both Vancouver and in Port of St. John. And certainly then with APM Terminals operating down at Lazaro and, frankly, Merisk announcing two services or actually a new service and revised service where they're calling on Lazaro. We had a man's meal. I think presents a really good opportunity for us.

John Brooks: We also have a significant business with Maersk, so I would tell you, generally speaking, I'm excited about it. I think it presents opportunities for us, coast to coast, both Vancouver and the Port of St. John. And certainly then with APM Terminals operating down at Lazaro, and Frankly, Maersk announcing two new services, or actually a new service and revised service where they're calling on Lazaro ahead of Manzanillo, I think it presents a really good opportunity for us.

Speaker Change #117: We also have a significant business...

Speaker Change #117: with Maersk. So I would tell you, generally speaking, I'm excited about it. I think it presents opportunities for us coast to coast, both Vancouver and in Port of St. John .

Speaker Change #117: And certainly then with APM Terminals operating down at Lazaro, and frankly, Maersk announcing two new services, or actually a new service and revised service where they're calling on Lazaro ahead of Manzanillo.

John Brooks: Now, we'll see that it's not all done yet. I know they're working through a lot to get that completed. But if in fact that does what we think it could, it could present a good opportunity in the international space in 2025. That's great. Thank you for taking my question. Go next to Stephanie Moore.

John Brooks: Now, we'll see that it's not all done yet. I know they're working through a lot to get that completed, but if in fact, that does what we think it could, it could present a certainly good opportunity in the international space in 2025. That's great.

Speaker Change #117: I think presents a really good opportunity for us. Now, we'll see.

Speaker Change #117: It's not all done yet.

Speaker Change #117: I know they're working through a lot to get that completed, but...

Speaker Change #117: If in fact that does what we think it could, it could present a certainly a good opportunity in the international space in 2025.

Stephanie Moore: Thank you for taking my question.

Speaker Change #118: That's great, thank you for taking my question.

John Brooks: We'll go next now to Stephanie Moore with Jeffries. Hi, guys, and thanks for the question. I apologize that this is that earlier, but it's just kind of looking at the most recent weekly kind of RTN data. It does look like you're standing apart from maybe some of your peers as of late. So just curious if you're seeing anything kind of specific, maybe having to do with some new return dynamics, fire strikes, the like. Just kind of curious who does seem to stand out a little bit or just have to do with maybe a big jump in Mexico. But maybe if anything, you can speak to just some of the early 3Q performance and RTM.

Speaker Change #118: We'll go next now to Stephanie Moore with Jeffreys.

Kevin Cheung: Hi, good afternoon. Thanks for the question. I apologize that this was asked earlier, but I'm just kind of looking at the most recent weekly kind of RTM data. It does look like you're standing apart from maybe some of your peers as of late.

Stephanie Moore: Hi, good afternoon. Thanks for the question.

Stephanie Moore: I apologize that this was asked earlier, but just kind of looking at the most recent weekly kind of RTM data, it does look like you're standing apart from maybe some of your peers as of late. So just curious if you're seeing anything kind of specific, maybe having to do with some near-term dynamics.

Stephanie Lynn Benjamin Moore: So just curious if you're seeing anything kind of specific, maybe having to do with some near-term dynamics, fire strikes, the like. Just kind of curious because it does seem to stand out a little bit, or it just has to do with maybe a big jump in Mexico. But maybe, if anything, you can speak to just some of the early 3Q performance on the RTM front. Thank you.

Stephanie Moore: Fire Strikes, the like. I'm just kind of curious because it does seem to stand out a little bit or it just have to do with maybe a big jump in Mexico, but maybe if anything you can speak to just some of the early 3Q performance on the RTM front. Thank you.

John Brooks: Thank you. Yeah, I mean, we are lapping the port strikes from a year ago. That's been beneficial, but certainly, I mean, we're seeing strength across the board. And what have been some macro challenges, if you think about it's a mosquito model, for example, that's turned into a positive. We're starting to see confidence in the new grain crops of grain is strong year over year. So I think across the board. You know, I think we're up almost 14% for TM quarter to date. Now, that's going to slow a little bit as we lap this strike benefit year over year or strike comp.

John Brooks: Yeah, I mean, we are lapping the port strike from a year ago, and that's been beneficial. But certainly, I mean, we're seeing strength across the board. And what have been some macro challenges, if you think about domestic intermodal, for example, that's turned into a positive.

Speaker Change #120: Yeah, I mean, we are lapping the port strike from a year ago, that's been beneficial, but certainly, I mean, we're seeing strength across the board and what have been some macro challenges, if you think about domestic intermodal, for example.

Speaker Change #121: That's turned into a positive. We're starting to see confidence in the new grain crops. Grain is strong year over year. So I think across the board.

John Brooks: We're starting to see confidence in the new grain crops is strong year over year. So I think across the board, You know, I think we're up almost 14% RTMs quarter to date. Now that's going to slow a little bit as we lap this strike benefit year over year or strike comp, but I think we're still set up for a very strong Q3 and back half of the year. So I agree with you.

Speaker Change #121: You know, I think we're up almost 14% RTMs quarter to date. Now that's going to slow a little bit as we lap this strike benefit year-over-year or strike comp. But I think we're still set up.

John Brooks: But I think we're still set up for a very strong Q3 and back half of the year. So I agree with you. We are kind of setting ourselves apart from some of our peers. And if you think about it. This transaction and what it provided, we kind of did things a little bit backwards. We saw the benefits of synergies on the front end in an environment where the macro was weak. Now we're going to continue to see the synergies ramp up. John talked about the exit rate closer to 800 million on the top line. But now we're also starting to see the base business that was weak in the, you know, last year and a half, start to rebound.

Speaker Change #121: for a very strong Q3 and back half of the year. So I agree with you. We are kind of setting ourselves apart from some of our peers. If you think about...

Nadeem S. Velani: We are kind of setting ourselves apart from some of our peers. If you think about this transaction and what it provided, we kind of did things a little bit backwards. We saw the benefits of synergies on the front end in an environment where the macro was weak. Now we're going to continue to see the synergies ramp up. John talked about the exit rate closer to $800 million on the top line.

Speaker Change #122: This transaction and what it provided, we kind of did things a little bit backwards. We saw the benefits of synergies.

Speaker Change #122: on the front end in an environment where the macro was weak. Now we're going to continue to see the synergies ramp up. John talked about the exit rate closer to $800 million.

Nadeem S. Velani: But now we're also starting to see the base business that was weak in the last year and a half start to rebound. So Canadian grain is a big part of our franchise. We're starting to see that recover. On the immobile side, we're starting to see the benefits of our domestic franchise and some of our market share wins, and we're starting to see the macro improve. So that's going to start being a tailwind.

John: On the top line, but now we're also starting to see the base business that was weak in the, you know, last year and a half start to rebound.

John Brooks: So, you know, Canadian grain is a big part of our franchise. We're starting to see that recover on the near modal side, we're starting to see the benefits of our domestic franchise and some of our market share wins, and we're starting to see the macro improve. So that's going to start being a tailwind. So some of the base business and I can go on with coal and polish is starting to recover. And so, as that base comes on with synergies, you're seeing kind of that double effective of outsize growth that we talked about at our investor day last year.

John: So, you know, Canadian grain is a big part of our franchise.

John: We're starting to see that recover.

Speaker Change #123: And on the immobile side, we're starting to see the benefits of...

Speaker Change #123: of our domestic franchise and some of our market share wins and we're starting to see the macro improve.

Nadeem S. Velani: So some of the base business, and I can go on with coal and potash, is starting to recover. And so as that base comes on with synergies, you're seeing kind of that double effect of outsized growth that we talked about at our investor day last year. And I think that is going to create a lot of operating leverage and allow us to get that growth to the bottom line. That's why we're so excited about 2025 and beyond. I got it.

Speaker Change #123: So, that's going to start being a tailwind. So, some of the base business.

Speaker Change #123: and I can go on with Cole and Potash.

Speaker Change #123: is starting to recover. And so as that base comes on with synergies.

Speaker Change #123: You're seeing kind of that double effect of outsized growth that we talked about at our investor day last year. And I think that is going to create a lot of operating leverage and allow us to get that growth to the bottom line. That's why we're so excited about 2025 and beyond.

John Brooks: And I think that is going to create a lot of operating leverage and allow us to get back growth to the bottom line. That's why we're so excited about, you know, 2025 and beyond. Got it. So you wouldn't necessarily call out any kind of short-term dynamics that you're seeing in the last couple of weeks because of some kind of some kind of outside event. So to speak, this is kind of you're running the playbook as you outlined. Yeah, a little bit of the comps you're over your easy comps from the strike that occurred a year ago at West Coast port in Canada.

Stephanie Lynn Benjamin Moore: So you wouldn't necessarily call out any kind of short-term dynamics that you're seeing the last couple weeks because of some kind of, some kind of outside event, so to speak; this is kind of you running the playbook as you Yeah, a little bit of the comps year over year, easy comps from the strike that occurred a year ago at West Coast Sports in Canada. That's, that's the benefit. But outside of that, I really appreciate the time. Thanks, guys. Thanks. We'll go next to Cherilyn Radbourne now. Thanks very much. Good afternoon.

Speaker Change #124: Got it. So you wouldn't necessarily call out any kind of short-term dynamics that you're seeing the last couple weeks because of some kind of...

Speaker Change #125: Some kind of outside event, so to speak. This is kind of, you're running the playbook as you outlined.

Boe: That's the benefit. But I said that no. Okay, really appreciate the time. Thanks, guys. Thanks.

Speaker Change #126: Okay, I really appreciate the time. Thanks, guys.

Cherilyn Radbourne: One next now to Sheryl and Radborne of PD Cowan. Thanks very much.

Speaker Change #126: Thanks, everyone.

Speaker Change #126: We'll go next now to Cherilyn Radbourne of TD Cowen.

John Brooks: Good afternoon. Thanks for squeezing me in. John, I was just hoping that we could dig in a little bit more on the exit run rate on the revenue synergies, which sound like it could be up to $100 million higher than originally expected. Could you talk about where you're seeing that outperformance from an end market perspective and whether that's is evenly balanced as synergies overall. Yeah, Sheryl. So a couple of things: you know, when we originally built this two, three years ago, like the world has changed. And evolved now as we sit here today, and I've talked a lot about that. You know, autos was an area initially we thought would be a longer-term story, but actually is, with our widely compound and some of the opportunities out of Mexico, is actually pulled ahead to be.

Cherilyn Radbourne: Thanks for squeezing me in, John. I was just hoping that we could dig in a little bit more on the exit run rate on the revenue synergies, which sounds like it could be up to $100 million higher than originally expected. Could you talk about where you're seeing that outperformance from an end market perspective and whether that's as evenly balanced as synergies overall? Yeah, Cherilyn.

Cherilyn Radbourne: Thanks very much. Good afternoon.

Cherilyn Radbourne: Thanks for squeezing me in. John , I was just hoping that we could dig in a little bit more on the exit run rate on the revenue synergies, which sound like it could be up to $100 million higher than originally expected. Could you talk about where you're seeing that outperformance from an end market perspective, and whether that's as evenly balanced as synergies overall?

John Brooks: So a couple things. You know, when we originally built this two, three years ago, the world had changed and evolved now, as we sit here today, and I've talked a lot about that. Autos was an area that, initially, we thought would be a longer-term story, but actually, with our Wiley compound, and some of the opportunities out of Mexico have actually pulled ahead to be an early story. If you think about the intermodal business, and I'm going to say largely domestic intermodal and autos, that's making up roughly, I'm going to say about half, slightly below half of the synergies.

John: Yeah, Cherilyn. So, a couple things.

John: You know, when we originally built this two, three years ago, like, the world has changed.

John: and evolve now as we sit here today. And I've talked a lot about that.

John: Autos was an area, initially, we thought would be a longer-term story, but actually is, with our Wiley compound and some of the opportunities out of Mexico, has actually pulled ahead to be.

John Brooks: In an early story, if you think about the modal business, and I'm going to say largely domestic in a modal and autos, that's making up roughly, I'm going to say about half, slightly below half of the synergies. And then the other half is split between our bulk in our merchandise, ECP franchises now. You know, in area I'll call out that we didn't expect to be quite as strong at this point with some of our grain into Mexico. But I'll give you an example last this month in July here. We've run, I think, 15 trains between corn, wheat, soybeans off of our traditional legacy, CP franchise, whether it be Southern Canada, North Dakota, Minnesota, down into Mexico.

John: In an early story, if you think about the intermodal business, and I'm going to say largely domestic intermodal, and autos, that's making up roughly, I'm going to say about half, slightly below half

John Brooks: And then the other half is split between our bulk in our merchandise, ECP franchises. Now, you know, an area I'll call out that we didn't expect to be quite as strong at this point, with some of our grain into Mexico, but I'll give you an example. This month in July here, we've run, I think, 15 trains between corn, wheat, soybeans, off of our traditional legacy CP franchise, whether it be southern Canada, North Dakota, Minnesota, down into Mexico. I think the prior month was nine, and the prior month of that was six, if my memory serves.

John: of the Synergies, and then the other half is split between our bulk and our merchandise ECP franchises.

John: Now, you know, an area I'll call out.

John: that we didn't expect to be quite as strong at this point.

John: with some of our grain into Mexico.

John: This month in July here.

John: We've run, I think, 15 trains between corn, wheat, soybeans.

John: Off of our traditional legacy CP franchise, whether it be Southern Canada, North Dakota, Minnesota.

John Brooks: I think the prior month with nine, the prior month of that was six, if my memory calls. So we're seeing a nice ramp up in that bulk franchise that may be coming on a little, little stronger than I initially had anticipated. Thank you. I hope that helps.

John: down into Mexico. I think the prior month was nine, the prior month of that was six, if my memory calls. So we're seeing a nice ramp up in that bulk franchise that may be coming on a little stronger than I initially had anticipated.

John Brooks: So we're seeing a nice ramp-up in that bulk franchise that may be coming on a little stronger than I initially anticipated. I hope that helps. That's perfect.

John Brooks: That's perfect.

Speaker Change #128: I hope that helps. That's perfect. Thank you.

Cherilyn Radbourne: Thank you. Thank you. Konark Gupta at, Thanks, and good afternoon.

Konark Gupta: We'll go next now to Konark Gupta at Scotia Capital. Thanks, and good afternoon. Thanks for squeezing me in.

Speaker Change #129: Thank you. We go next now to Konark Gupta at Scotia Capital.

Konark Gupta: Thanks for squeezing in. John, I think you alluded earlier in the call about some international intermodal shifts. There was some market share shift as well as some new wind. Can you please elaborate?

John Brooks: John, I think you alluded to earlier on the call about some international multimodal shifts. There was some market shares shipped as well as some new ones. Can you please elaborate? And then, Nadeem, I think you mentioned about some constant factors.

Konark Gupta: Thanks, and good afternoon. Thanks for squeezing in. John , I think you alluded to earlier on the call about some international intermodal shifts. There was some market share shift as well as some new win. Can you please elaborate? And then, Nadeem, I think you mentioned about some cost impact in Q3. Any early sense on the magnitude of those two items, casualty and stock-based firm? Thanks.

John Brooks: And then, Nadeem, I think you mentioned some cost impact in Q3. Any early sense on the magnitude of those two items, casualty and stock-based farm? Thanks.

Nadine Velani: You see an early sense on the magnitude of those two items: casualty and small based form. Thanks. Yes, Kar, just on the share piece, just call it like it is. We shifted Costco partially out of our franchise at Vancouver. And we brought on, you know, a corresponding piece of O&E business. And again, this goes back to what I was talking around. Really right sizing our partners at the Port of Vancouver. And also with an eye to what these partners can do with us across our entire franchise. So, San John Lazaro.

Nadeem S. Velani: Yeah, just on the share piece, just call it like it is. We shifted Costco partially out of our franchise in Vancouver, and we brought on, you know, a corresponding piece of O&E business. And again, this goes back to what I was talking about, really right-sizing our partners at the Port of Vancouver and also with an eye to what these partners can do with us across our entire franchise. So St. John, Lazaro.

Konark Gupta: Yeah.

Speaker Change #131: Just on the share piece, just call it like it is, we shifted Costco partially out of our franchise at Vancouver, and we brought on, you know, a corresponding piece of O&E business. And again, this goes back to what I was talking around, really right sizing our partners

John Brooks: And as we kind of rework this, this book, you know, there might be more to come in how we do that. But rest assured, we're grading the overall franchise value of the book with those shifts and doing it with an eye toward using our entire network. Now that we have the leverage of CPKC. In Konark, just on the stock-based comp, I mean, as you know, we mark to market each month.

Speaker Change #131: at the Port of Vancouver, and also with an eye to what these partners can do with us across our entire franchise, so St. John , Lazaro, and as we kind of rework this

Nadine Velani: And as we kind of rework this book, you know, there might be more to come in how we do that. But rest assured, we're hydrating the overall franchise value of the book with those shifts and doing it with an eye towards using our entire network now that we have the leverage of CPC. In Coronark, just on the stock-based comp, I mean, you know, we mark to market each month. So that that amount is still to be determined. We'll see what occurs on September 30th when the quarter ends. And on the casualty side, you know, we have one incident alone that was in July, earlier this month, that was in the neighborhood of $45, $50 million worth of cost.

Speaker Change #131: This book, you know, there might be more to come in how we do that, but rest assured we're high-grading the overall franchise value of the book.

Speaker Change #131: with those shifts and doing it with an eye towards using our entire network now that we have the leverage of CPKC.

John Brooks: So that's, that amount is still to be determined. We'll see what occurs on, you know, September 30, when the when the quarter ends. And on the casualty side, you know, we have one incident alone that was in July earlier this month, that was in the neighborhood of 45-50 million worth of costs.

Speaker Change #132: And Konark, just on the stock-based comp, I mean, as you know, we mark-to-market each month, so that's...

Speaker Change #132: That amount is still to be determined. We'll see what what occurs on, you know, September 30th when the when the quarter ends.

Speaker Change #133: And on the casualty side, you know, we have one incident alone that was in July earlier this month that was

Speaker Change #132: in the neighborhood of.

Nadine Velani: So that's why I highlight just how this is going to be a headwind. And so, you know, like I said, there's an opportunity to maybe avoid costs in the main part of the quarter. That's our goal and intent to keep them on the rails. But, but just given this cost of growth, I wanted to make sure I highlighted it. Thank you. Welcome.

Speaker Change #132: $45 million, $50 million.

Nadeem S. Velani: So that's why I highlight just how this is going to be a headwind. And so, you know, like I said, there's an opportunity to maybe avoid costs in the main part of the quarter. That's, that's our goal and intent to keep them on the rails. But, but just given this cost occurred, I wanted to make sure I highlighted it. Thank you. You're welcome. Next now is Ravi Shanker.

Speaker Change #132: Um, with the cost, so that's why I highlight just how.

Speaker Change #132: This is going to be a headwind and so you know just like I said there's an opportunity to maybe avoid costs in the remaining part of the quarter. That's our goal and intent to keep them on the rails. But just given this costs occur I wanted to make sure I highlighted it.

Speaker Change #134: Thank you.

Ravi Shanker: We'll next now to Robbie Shanker at Morgan Stanley. Thanks for not very one, and our thoughts are also at the CPC company as well. Just come on that point and be in thank you for clarifying the size of those two items. If I can ask you as well, you said there are some strike-related cost items in the guidances or in the or walk as well. Is that purely going to cost thing, or are you also trying to quantify any diversion of volumes away that you're seeing right now and to come? And also on that diversion, is that something that snaps back in a right after you have resolution, or does that take longer, like it was last year, but the port strikes are how do you see that playing out?

Speaker Change #135: You're welcome.

Ravi Shanker: Thanks enough, everyone, and our thoughts are also with the CBGC family as well. Just kind of on that point, Nadeem, thank you for clarifying the size of those two items. If I can ask you as well, you said there are some strike-related cost items in the guidances or in the OR walk as well. Is that purely kind of a cost thing, or are you also trying to quantify any diversion of volumes away that you're seeing right now and in the future?

Speaker Change #135: We'll go next now to Ravi Shanker at Morgan Stanley .

Ravi Shankar: Thanks enough everyone and our thoughts are also with the CBJC family as well. Just kind of on that point, Nadeem, thank you for clarifying the size of those two items. If I can ask you as well, you said there are some strike related cost items in the guidance or in the OR walk as well. Is that purely going to cost

Ravi Shanker: And also on that diversion, is that something that snaps back in a right after you have resolution, or does that take longer like it was last year with the port strikes, or how do you see that playing out? No, so we've already faced some revenue headwinds in May before the labor disruption was delayed, if you will. You know, I'm not factoring necessarily into the commentary about an OR sequential headwind related to that. Anything tied to revenues, I think, you know, it's going to be a delayed revenue, if anything. So I think it's a cost element.

Speaker Change #137: Are you also trying to quantify any diversion of volumes away that you're seeing right now and to come and also on that diversion, is that something that snaps back in a right after you have resolution or does that take longer like it was last year with the port strikes or how do you see that playing out?

Ravi Shanker: No, so we've already faced some revenue headwinds in May before the labor disruption was delayed, if you will. You know, I'm not factoring necessarily into the commentary about a no-wire sequential headwind related to that. Anything types of revenues, I think, you know, it's going to be a delayed revenue if anything. So I think it's a cost element. I think we're going to start, you know, we will see the network be brought to a halt. And then to ramp back up, it takes some costs. It takes time. You know, you have these inefficiencies over a period of whatever, you know, the 72-hour notice and then whatever period that the company is out.

Speaker Change #138: No. Sorry.

Speaker Change #139: We've already faced some some revenue headwinds in May before the

Speaker Change #140: The labour disruption was delayed, if you will. You know, I'm not factoring necessarily into the commentary about an OR sequential.

Speaker Change #140: had been related to that, anything tied to revenues, I think, you know, it's going to be a delayed revenue, if anything. So I think it's a, it's a cost element. I think we're going to start you know, we will see the network

Nadeem S. Velani: I think we're going to start, you know, we will see the network brought to a halt. And then to ramp back up, it takes some cost, it takes time. You know, you have these inefficiencies over a period of whatever, you know, the 72-hour notice period and then whatever period that the company is out. So that's how I would highlight the cost headwind associated with the strike. I can't put a number to it.

Speaker Change #140: be brought to a halt and then to ramp back up. It takes some cost. It takes time.

Speaker Change #140: You know, you have these inefficiencies over a period of whatever.

Ravi Shanker: So that's how I would highlight the cost of headwind associated with the strike. Ravi, and that, you can't put a number to it to me, Dean's point, domestic intermodal, right, can be trucked, and certainly we'll face some of that. But the rest is kind of, as he said, delayed, and you know, it'll push volume, certainly into Q4, and likely into Q1 of next year, depending on how long the stuff it would be. And the uniqueness of this time is that we've got both railroads, right? That creates a very different scenario than we've faced over the last 20 years.

Speaker Change #140: the 72-hour notice, and then whatever period that the company is out. So that's how I would highlight the cost had been associated with the strike.

Nadeem S. Velani: To Nadeem's point, you know, domestic intermodal, right, can be trucked, and certainly we'll face some of that. But the rest is kind of, as he said, delayed. And, you know, it'll push volume certainly into Q4 and likely into Q1 of next year, depending on how long the stoppage would be. And the uniqueness of this time is that you've got both railroads, right?

Speaker Change #140: You can't put a number to it, to Nadeem's point.

Nadeem S. Velani: Domestic and mobile, right, can be tracked and certainly we'll face some of that.

Speaker Change #141: But the rest is kind of, as he said, delayed. And, you know, it'll push volume certainly into Q4 and likely into Q1 of next year, depending on how long the stoppage would be.

John Brooks: That creates a very different scenario than we've faced over the last 20 years. And so it puts different pressure on the supply chain, and it has a different dynamic as far as the recovery for the supply chain and for Canada as a whole, post-labor disruption. Understandable. Thank you. Thanks, Ravi, to Ben Nolan.

Speaker Change #142: And the uniqueness of this time is that you've got both railroads, right? That creates a...

Keith Creel: And so it puts a different pressure on the supply chain, and it has a different dynamic as far as the recovery for the supply chain as per Canada as a whole, post labor disruption.

Speaker Change #142: A very different scenario than we've faced over the last 20 years and so.

Speaker Change #142: It puts a different pressure on the supply chain and it has a different dynamic as far as the recovery.

Speaker Change #142: for the supply chain and for Canada as a whole.

Keith Creel: Hunter, so thank you.

Speaker Change #142: Post-labor disruption.

Boe: Thanks, Ravi.

Speaker Change #143: Understood. Thank you.

Robbie Shanker: And we're going now to Ben Nolan with Spifle. Oh, thanks. I appreciate you guys getting in. I wanted to go back a little bit to pricing. I know that it had, and you alluded to this a little bit ago, but there were still some legacy contracts, pre-merger, that were set to be reprised. And I think you were doing some of that in the third quarter, curious. If all of that has been more thorough, if there might be a little bit more, more juice to squeeze on some of those contracts. You know what? We are getting into the late endings of the base book.

Speaker Change #144: Thanks, Ravi.

Benjamin Joel Nolan: I appreciate you guys getting in. I wanted to go back a little bit to pricing. I know that it has, and you alluded to this a little bit ago, but there were still some legacy contracts pre-merger that were set to be repriced. And I think you were doing some of that in the third quarter.

Speaker Change #144: And we'll go next now to Ben Nolan with Stifle.

Benjamin Joel Nolan: Oh, thanks. I appreciate you guys getting in.

Speaker Change #146: and he alluded to this a little bit ago, but there was still some legacy.

Benjamin Joel Nolan: contracts pre-merger that were set to be repriced. And I think you were doing some of that in the third quarter. Curious if all of that has been worked through, if there might be a little bit more juice to squeeze on some of those contracts.

John Brooks: Curious if all of that has been worked through, if there might be a little bit more juice to squeeze out of some of those contracts. You know what? We are getting into the late innings of the base book. There's probably one big one out there that remains. But for the most part, we have worked through just timing wise; they didn't have a lot of multi-year contracts. Most of them are annual; we've been at this now for now going on close to a year and a half or whatever, since April 23.

Nadine Velani: There's probably one big one out there that remains. But for the most part, we have worked through just timing-wise. They didn't have a lot of multi-year contracts. Most of them were annual. We've been at this now going on close to a year and a half or whatever since April of 23. So we've rolled a lot of that over. Now is the direct answer. All right. Thank you.

Speaker Change #147: You know what, we are getting into the late innings of the base book. There's probably one big one out there that

Speaker Change #148: That remains, but for the most part, we have worked through, just timing-wise, they didn't have a lot of multi-year contracts.

Speaker Change #149: Most of them are annual. We've been at this now going on close to a year and a half or whatever since April of 23. So we've rolled a lot of that over now is the direct answer.

John Brooks: So we've rolled a lot of that over now, and now is the direct answer. All right, thank you. Yeah. We'll go next to Benoit Poirier of Desjardins. Yeah, thanks very much.

Boe: Yep. It's been.

Speaker Change #150: All right, thank you.

Ben Nolan: And we'll go next now to Ben Wapourier of Deschartons Capital Markets. Yeah, thanks very much. Good afternoon, everyone.

Speaker Change #150: Yep, that's it.

Benoit Poirier: And we'll go next now to Benoit Poirier of Desjardins Capital Markets.

Benoit Poirier: Good afternoon, everyone. Could we maybe cut back on the overall labor issues and whether you believe it puts Canada's reputation at risk? And do you feel that there's a lot of business on the sidelines that could come back in light of the labor resolution? And also, if we look in the US, there's the port workers, the contract with the ILA port workers that is set to expire in September 2024. And I was just curious to see whether you see any potential benefits in light of the positive cargo diversion. Benoit, I'll take the reputational damage.

Keith Creel: Could we maybe cut back on the overall labor issues and whether you believe it puts Canada's reputation at risk. Do you feel that there's a lot of business on the sideline that could come back in like the labor resolution? And also, if we look in the US, there's the support workers that contract with the ILA for workers that is set to expire in September 2024. And I was just curious to see whether you see any potential benefits in light of a positive cargo diversion. Thank you.

Benoit Poirier: Yeah, thanks very much. Good afternoon, everyone. Could we maybe come back on the overall labor issues and whether you believe it puts Canada's reputation at risk? And do you feel that there's a lot of business on the sideline that could come back in light of the pandemic?

Speaker Change #152: labor resolution, and also if we look in the U.S., there's the Port Workers, the contract with the ILA, Port Workers

Speaker Change #153: that is set to expire in September 2024. And I was just curious to see whether you see any potential benefits in light of the positive cargo diversion. Thank you.

Keith Creel: And then we'll all take the reputational damage. It's undeniably present. You know, you think about what Canada is going through: the port strike last year. How long that lasted and how much pain and suffering that calls for customers how much credibility impact some of that traffic's not came back to the west coast. So undeniably fast forward to this. You have both railroad shutdown. At some point, customers as much as they need our products in Canada, they're going to get. Labor unrest to T. We've got to get beyond this. I don't have a magic bullet for this.

Keith E. Creel: That's undeniably present. You know, you think about what Canada's going through, the port strike last year. How long that lasted and how much pain and suffering that caused for customers, how much credibility impact. Some of that traffic's not coming back to the West Coast. So undeniably, fast forward to this.

Speaker Change #154: Benoit, I'll take the reputational damage. That's undeniably present. You know, you think about what Canada's going through, the port strike last year.

Keith E. Creel: You have both railroads shut down at some point. Customers, as much as they need our products in Canada, they're going to get labor unrest fatigue. So we have to get beyond this. You know, I don't have a magic bullet for this. I don't know what the secret answer is.

Speaker Change #155: How long that lasted, how much pain and suffering that caused for customers, how much credibility impact, some of that traffic's not came back to the West Coast. So, undeniably, fast forward to this, you have both railroads shut down. At some point, customers, as much as they need our products in Canada,

Keith E. Creel: All we can do is continue to be at the table. We have figured out how to negotiate successfully with every other collective agreement we have in Canada. This is the only group, TCRC, that we just can't get there. So we're going to not give up, remain cautiously optimistic, but we're not going to do a bad deal either. I'm not going to punish this company and let this company suffer because we don't have the discipline to say no and do what's in the best long-term interest for all employees that's fair across all employees, including the TCRC.

Speaker Change #155: They're going to get labor unrest fatigue.

Keith Creel: I don't know what the secret answer is. All we can do is continue to be at the table. We had figured out how to negotiate successfully with every other collective agreement we have in Canada. This is the only group TCRC that we just can't get there. We're going to not give up, remain cautious of the optimistic, but we're not going to do a bad deal either. I'm not going to plan this company and let this company suffer because we don't have the discipline to say no and do it's in the best long term interest for all employees that's fair across all employees, including the TCRC.

Speaker Change #155: So, we've got to get beyond this. You know, I don't have a magic bullet for this. I don't know what the secret answer is. All we can do is continue to be at the table. We have figured out how to negotiate successfully with every other collective agreement we have in Canada. This is the only group, TCRC, that

Speaker Change #155: We just can't get there. So we're going to not give up, remain cautiously optimistic, but we're not going to do a bad deal either. I'm not going to...

Speaker Change #155: Punish this company and let this company suffer because we don't have the discipline to say no and do what's in the best long-term interest for all employees that's fair across all employees

John Brooks: Benoit, I'd say the answer is yes to your question there regarding the East Coast potential strike. There's ongoing dialogue with Disneyanship lines on alternatives and frankly direct with BCOs that are that are looking for. I say we're, we're kind of early ining, but some of these tests that I talked about over Lazaro were specifically designed with the intent of traffic that is going through the canal. And using the East Coast today, that could this be an opportunity to do something a little more permanent at Lazaro. And I also do believe it presents the potential opportunity of the Port of St.

Keith E. Creel: Benoit, I'd say the answer is yes to your question there regarding the East Coast, you know, potential strike. There's ongoing dialogue with the steamship lines on alternatives, and frankly, direct with VCOs that are looking for. I'd say we're kind of in the early innings, but some of these tests that I talked about for Lazaro were specifically designed with the intent of traffic that is going through the canal and using the East Coast today. Could this be an opportunity to do something a little more permanent at Lazaro? And I also do believe it presents a potential opportunity up at Port of St. John. So we'll have to see how that plays out.

Speaker Change #155: including the TCRC.

Speaker Change #155: Benoit, I'd say the answer is yes to your question there regarding the East Coast.

Speaker Change #156: you know, potential strike, there's...

Speaker Change #157: Unknown Speaker I'm going dialogue with with the with the steamship lines on alternatives and frankly directly with VCOs that are that are looking for. I'd say we're, we're kind of early inning, but some of these tests that I talked about over.

Speaker Change #157: or Lazaro were specifically designed with the intent of traffic that is going through the canal and using the east coast today that, you know, could this be an opportunity to do something a little more permanent at Lazaro? And I also do believe it presents a potential opportunity up at Port of St. John .

John Brooks: John. So we'll have to see how that plays out. Thank you very much for the time.

John Brooks: Thank you very much for the time. Ladies and gentlemen, we have reached our allotted time. I would now like to turn the conference back on.

Speaker Change #157: So we'll have to see how that plays out.

Keith Creel: Thank you, and ladies and gentlemen, we have reached our lot of time for Q&A.

Speaker Change #157: Thank you very much for the time.

Keith Creel: I would not like to turn the conference back to Mr. Keith Creel. Listen, let me close by thanking you for your time. I hope the comments provided some color on this unique network and this unique value creation that we're unlocking. I think back especially now in light of past passing. I think about what we committed to and what we agreed to do. Pat and I combine these networks to enable growth and to create competition and unlock unique value for all stakeholders across the entire supply chain. That means good paying jobs for our employees. That means great service for our customers.

Speaker Change #158: Thank you. And ladies and gentlemen, we have reached our allotted time for Q&A. I would now like to turn the conference back to Mr. Keith Creel.

Hey, listen, let me close by thanking you for your time. I hope the comments provided some color on this unique network and this unique value creation that we're unlocking. You know, I think back, especially now in light of Pat's passing, I think about what we committed to and what we agreed to do.

Speaker Change #159: Okay, well, listen, let me close by thanking you for your time. I hope the comments provided some color on...

Speaker Change #160: This unique network and this unique value creation that we're unlocking, you know, I think back, especially now in light of past passing, I think about what we committed to and what we agreed to do.

Pat and I combined these networks to enable growth and create competition and unlock unique value for all stakeholders across the entire supply chain. That means good-paying jobs for our employees. That means great service for our customers. That means real network capacity for our nation to grow, for all three nations to enjoy prosperity, and for trade to increase together. And we're doing exactly that. So we look forward to sharing another chapter in that growth story when we report our Q3 results. And until then, stay safe. Thank you, Mr. Creel. Ladies and gentlemen, that does conclude today's CPKC second quarter earnings call. Again, thanks so much for joining us, everyone, and we wish you all a great evening.

Speaker Change #160: Pat and I combine these networks to enable growth and to create competition.

Speaker Change #160: and Unlocked unique value for all stakeholders across the entire supply chain. That means good paying jobs for our employees.

Keith Creel: That means real network capacity for our nation to grow for all three nations to enjoy prosperity and to increase trade together, and we're doing exactly that.

Speaker Change #160: That means great service for our customers, that means real network capacity for our nation to grow, for all three nations to enjoy prosperity and to increase trade together. And we're doing exactly that. So we look forward.

Keith Creel: So we look forward to sharing another chapter in that growth story when we report our Q3 results. And until then, stay safe.

Speaker Change #160: to sharing another chapter in that growth story when we report our Q3 results, and until then, stay safe.

Boe: Thank you, Mr. Creel.

Boe: Ladies and gentlemen, that does conclude today's CPKC second quarter earnings call. Again, thanks so much for joining us, everyone, and we wish you all a great evening.

Speaker Change #161: Thank you, Mr. Creel. Ladies and gentlemen, that does conclude today's CPKC second quarter earnings call. Again, thanks so much for joining us, everyone, and we wish you all a great evening. Goodbye.

Boe: Goodbye.