Q2 2025 Canadian Pacific Kansas City Ltd Earnings Call

Margo (Conference Operator): Thank you. Please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero.

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Speaker 6: Good afternoon. My name is Margo, and I'll be your conference operator today. At this time, I'd like to welcome everyone to CPKC's second quarter 2025 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. 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, then two. I would like to introduce Chris de Bruyn, Vice President, Capital Markets, to begin the conference call.

Good afternoon. My name is Margo and I'll be your conference operator. Today at this time, I'd like to welcome everyone to CP KC's second quarter 2025 conference call

The slides accompanying today's call are available at investor.pdf.

I would like to introduce Chris De bruan, vice president Capital markets to begin the conference call.

Chris de Bruyn: Thank you, Margo. 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 may differ materially. 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 file with Canadian and US regulators. This presentation also contains non-GAAP measures outlined on slide three. With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, our Executive Vice President and Chief Financial Officer; John Brooks, our Executive Vice President and Chief Marketing Officer; and Mark Redd, our Executive Vice President and Chief Operating Officer. The formal remarks will be followed by Q&A. In the interest of time, we would appreciate if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr.

Thank you Margot. Good afternoon everyone. And thank you for joining us today.

Before we begin, I want to remind you. This presentation contains 4 looking information, actual results May differ materially

the risks uncertainties and other factors that could influence actual results are described on slide 2 in the press release and in the mdna file with Canadian and US regulators,

This presentation also contains non-gaap measures outlined on slide 3.

With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, our Executive Vice President and Chief Financial Officer; John Brooks, our Executive Vice President and Chief Marketing Officer; and Mark Redd, our Executive Vice President and Chief Operating Officer.

Chris de Bruyn: Keith Creel.

Keith Creel: Okay. Thanks, Chris. I want to thank everyone for joining us here today. As always, do let me start by thanking the 20,000-strong family of railroaders we have across our three-nation network that delivered the results that we get the honor to share with you today. As a leader, it's always my honor with these folks that I work and serve with on behalf of their body of work to represent that. So speaking to the results, you know, for the quarter, the team delivered volume growth to 7%. Revenues were up 3% at 3.7 billion, 110 basis point improvement on operating ratio to a 60.7%, and earnings of $1.12, which is an increase of 7% versus last year. From an outlook on the balance of the year perspective, I'm very pleased with where we stand midway through the year.

The former remarks will be followed by a Q&A in the interest of time. We would appreciate it if you limit your questions to one. It is now my pleasure to introduce our president and CEO, Mr. Keith Creel. Okay, thanks, Chris. Um, I want to thank everyone for joining us here today. As I always do, let me start by thanking the 20,000-strong family of railroaders we have across our three-nation network that delivered the results that we get to honor and share with you today. It is a leader; it's always moderate, uh, with these folks that I work and serve with on behalf of their body of work to represent that. So, speaking to the results,

you know, for the quarter of the team delivered, volume growth to 7% revenues were

Up 3% at 3.7 billion 110 basis, point Improvement on the operating ratio to a 60.7% and earnings of a12, which is an increase of 7% versus last year.

Keith Creel: Certainly see a clear line of path to our year-end guidance with opportunities before us the second half of 2025. So despite all the headlines, all these evolving trade policies, the challenges that we've all faced as an industry, we continue to drive differentiated, sustainable, and profitable growth at CPKC. And as you all know, this is not just a 2025 story. This franchise continues to be positioned to deliver a unique outcome for years to come. that said, let me share a couple of exciting developments in the quarter that underpin some of that forward-looking thinking. continued ramp-up of our Gemini partnership, something we're extremely excited about that's creating meaningful, international growth for us. 180.181 premium domestic intermodal service, which again grew 40% versus last year.

Uh, from an outlook on the balance of the year perspective, I'm very pleased with where we stand. Midway through the year, I certainly see a clear line of path to our year-end guidance, with opportunities that lie before us in the second half of the year.

2025. So despite all the headlines, all these evolving, trade policies, the challenges that we've all faced is an industry. We continue to drive differentiated sustainable.

And profitable growth at cpkc. And as you all know, this is not just a 2025 story. This franchise continues to be positioned to deliver a unique outcome for years to come.

Keith Creel: Continued increase in our traffic flows between Canada and Mexico via our CPKC land bridge that we have spoken to, uniquely enabled by this North American network. And then lately, the momentum behind our newly named Southeast Mexico Express service, which is our partnership with the CSX over the Meridian Speedway through our new gateway, to the Southeast, again creates an unraveled network, bringing new solutions to the market. So now, maybe a couple of comments on maybe the proverbial elephant in the room, or maybe better said, the one that wants to come into the room. Obviously, there have been some recent developments in our industry with yesterday's announcements of this proposed combination between UP and NS. let me start by saying this team remains focused, as it always has been, on our fiduciary responsibility to maximize our shareholders' value. our value proposition is unchanged from yesterday's news.

Uh, that said, let me share a couple of exciting developments in the quarter that underpin some of that forward-looking thinking. We continued to ramp up our Gemini partnership, something we're extremely excited about that's creating meaningful international growth for us. Our 18/181 premium domestic intermodal service, which again grew 40% versus last year.

Continued increase in our traffic flows between Canada and Mexico, VR cpkc, landbridge that we have spoken to uniquely enabled by this North American Network and then lately the momentum behind our newly named Southeast Mexico express service which is our partnership with the CSX over the Meridian Speedway through our new Gateway, uh, to the southeast again, creates an unraveled Network, bringing new solutions to the market.

So now, uh, maybe a couple of comments on...

Keith Creel: this is a unique and powerful network, the only network that connects all three nations in US, Canada, and Mexico, a network that will continue to drive differentiated growth, and a management team that certainly has the track record of execution to back up our actions with our words. The value and the position and strength of this network that we've created, puts us in a very unique position that's allowed us to produce what we've produced the last two years. That does not change. And similarly, our multi-year outlook and the value proposition is unchanged. The team and the network will continue to deliver differentiated results.

Maybe the proverbial elephant in the room, or maybe better said, the one that wants to come into the room. Um, obviously there have been some recent developments in our industry, with yesterday's announcements of this proposed combination between UP and NS. Uh, let me start by saying this team remains focused, as it always has been, on our fiduciary responsibility to maximize our shareholders' value. Um, our value proposition is unchanged from yesterday's news. Uh, this is a unique and powerful network—the only network that connects all three nations: the U.S., Canada, and Mexico. A network that will continue to drive differentiated growth and a management team that certainly has the track record of execution to back up our actions with our words. The value and the position and strength of this network that we've created, uh, puts us in a very unique position that's allowed us to produce what we have produced over the last two years. That does not change. Similarly, our multi-year outlook and the value proposition is unchanged.

Keith Creel: on the regulatory front, we'll be actively engaged, as you can imagine, in the regulatory process to ensure, number one, that our customers and our industry interests are protected in this proposed combination; number two, that the high standards that have been set around mergers are defined in these new, untested 2001 merger rules, which require the applicants to demonstrate enhanced competition and consider downstream effects. That standard is met. Rest assured, we'll be a loud voice in the room to ensure that the facts are known, the facts are understood, fully understood, and weighed on by the SDB when they come to their conclusions in their decisions. the other part, in the meantime, when it comes to the regulator, I can say this from experience. We're dealing with a regulator, that they take their job very seriously. they will be pragmatic. They will be diligent. They will be fact-based.

Work will continue to deliver differentiated results.

Uh, on the regulatory front.

We will be actively engaged, as you can imagine, in the regulatory process to ensure, number one, that our customers and our industry interests are protected. And this proposed combination, number two, that the high standards that have been set around mergers, as defined in these new 2001 merger rules, require the applicants to demonstrate enhanced competition.

And consider the downstream effects that the standard is met. Rest assured, there will be a voice in the room to ensure that the facts are known. The facts are fully understood and weighed on by the STB when they come to their conclusions and their decisions.

Keith Creel: They will base their decisions, I believe, on the facts that are developed, the truths that are represented and presented, and debated and discussed in a very fulsome way to lead to the right outcomes. that said, in the meantime, outside of that process, you can imagine this network is uniquely positioned, as I've said in the past, to compete or to partner with any class one. we literally were two and a half years old. We've been working hard to develop these alliances and to create these new revenue streams and these new customer solutions, not only uniquely in our network, but also uniquely in the partnerships, as evidenced in what we've done with the CSX less than a year after we came into existence. I can tell you, in this world, that list of opportunities is not exhausted.

That they take their job, very seriously, they will be pragmatic, they will be diligent, they will be fact-based, they will base their decisions, I believe on the facts that are developed.

The truths that are represented and presented.

And debated and discussed in a very Wholesome Way to lead to the right outcomes. Uh that said in the meantime outside of that process you can imagine this network is uniquely positioned as I've said in the past.

To compete or to partner with any class 1. Uh, we literally were 2 and a half years old. We've been working hard to develop these alliances and to create these new revenue streams. And these new customer Solutions, not only uniquely in our network, but also uniquely in the Partnerships.

Keith Creel: The list of potential partners still exists, and I can tell you those other partners not involved in this combination are more motivated than ever to have those discussions. And rest assured, we're well into having those discussions. This isn't something we just started. This is something, that will only enhance and gain momentum. so in closing, let me say this. whether short-term and continued uncertainties from the macro trade policies, we're going to continue to deliver a differentiated outcome. The network, the team, the opportunity is unique. We'll continue to deliver value for our stakeholders. so with that, let me hand it over to Mark. He's going to speak to the operations. John will bring a little color on the markets. Nadeem will elaborate on the numbers, and we look forward to the Q&A.

As evidenced in what we've done with the CSX less than a year ago, after we came into existence, I can tell you that in this world, the list of opportunities is not exhausted. The list of potential partners still exists, and I can tell you that those other partners not involved in this combination are more motivated than ever to have those discussions. And rest assured, we're well into having those discussions. This isn't something we just started; this is something that will only enhance and gain momentum.

Uh, so in closing, let me say this, um,

Mother, short-term and continued uncertainties from the macro trade policies.

We were going to continue to deliver a differentiated outcome. The network, the team, the opportunity is unique; we'll continue to deliver value for our stakeholders. Uh, so with that, let me hand it over to Mark. He's going to speak to the operations, John to bring a little color on the markets, and Nadine will elaborate on the numbers. We look forward to the Q&A.

Mark Redd: Okay. thank you, Keith, and good afternoon. I'd like to start by thanking our employees for their hard work and dedication in the quarter and for their efforts toward the integration of our operating systems in the US and Canada. This is a major merger milestone and a complex undertaking. While not without challenges, we have a lot of we have made a lot of progress over the last two months. I'm very pleased with how the team has pulled together to restore service to customers in the southern region of the US network who were impacted the most by the change. The rest of the network continued to perform well through the quarter, and we are carrying operating momentum into the third quarter. I look at the results, turning the results up. We saw 1% improvement in both train weights and train lengths.

Hey uh, thank you, Keith and good afternoon. I'd like to start by thanking our employees, for their hard work and dedication in the corner and for their efforts toward the integration of our operating systems in the US and Canada.

This is a major merger milestone in the complex; we're taking.

Well, not without challenges that we have a lot of. We have made a lot of progress over the last two months. I'm very pleased with how the team has pulled together to restore service to customers in the southern region of the U.S. network who are impacted the most by the change. The rest of the network continues to perform well through the quarter, and we are a caring operator operating momentum into the third quarter.

Mark Redd: System-wide, DUAL increased by 7% in the quarter, driven by the increase in the DUAL on the legacy KCSR southern US terminals. Terminal DUAL in the region peaked in early June but largely recovered to pre-cutover levels. DUAL on the legacy, KCSR improved 42% over this two-month time period, and car miles per car day improved 38% as well. Although with regret to the disruption to the customers during this time period, I'm extremely encouraged by the progress we have made delivered over the last two months. As those improvements continue to take hold, we are our service largely back to pre-cutover levels. We're expected improvement of efficiency and of fluidity, to flow through the network and metrics in the second quarter. I look at safety, taking a look at, FRA personal injuries were a 0.77, which is an 8% year-over-year improvement.

I look at the results, turning the results. I've got um we saw 1% Improvement in both trained weights and train lynx.

Systemwide dwell increased by 7% in the quarter, driven by the increase in dwell on the Legacy KCSR Southern US terminals. Terminal dwelling in the region peaked in early June but largely recovered to pre-COVID levels.

Dwell on the Legacy.

Um, kcsr improved 42% over this 2-month time period. A car miles per carve improved 38% as well.

Although with great regret to the the disruption through the customers. During this time period, I'm extremely encouraged by the progress. We have made delivering over the last 2 months as those improvements continue to take hold. We are our our service, largely back to pre-cut or uh levels that were expected.

Improvement of of efficiency and the fluidity, uh, to flow through the network and metrics in the second quarter.

Mark Redd: FRA train accidents a 0.97, which continues to be a year-to-date record performance. We posted another notable reduction to personal injuries, a testament to the team's dedication to our home-safe culture. While our industry-leading train accident frequency increased from weather-related incidents in the quarter, namely our engineering and mechanical-related train accidents continue to decline year over year. This improvement is being driven in part by our increased use of geometry cars and also the wheel bearing management technology we have. Now, looking at the resources and capital, now as I look for the second part of the year, we continue to have control of our resources and invest in our unique growth that this merger has enabled. From our resource perspective, we are selectively managing headcount to backfill attrition to support the volume growth we're bringing onto this network.

But look at safety, uh, taking a look at fra personal injuries or a 0.77, which is an 8% year-over-year Improvement. Uh, fra train accidents are 0.97, which continues to be a year to date record performance.

We posted another notable reduction to personal injuries, The Testament to the team's dedication to our home. Safe culture. While our industry-leading train accident frequency increased from weather related incidents. In the quarter, uh, namely our engineering and mechanical related train accidents, continue to decline year-over-year, this Improvement is being driven in part by our

Increased use of geometry cars and also the well of the wheel bearing management technology. We have.

Now looking at the resources and capital. Now, as I look for the second part of the year, we continue to have control of our resources and invest in our unique growth uh that this merger has enabled.

Mark Redd: Our resources remain well in line with the growth outlook, and headcount slightly down on 7% of RTM growth is driving strong labor productivity. I'm encouraged by the progress that we continue to see from FRA on initiatives to enhance safety and network efficiencies. We're also making good progress with combining crew districts still today, most recently between Kellington, Texas, and Laredo, Texas, so we can improve cycle times and deliver more resilient customer service to the, key cross-border corridor. As we look at the capital perspective, in addition to the safety investments across our network and capital improvements in this area, we have received the first 40 of the Tier 4 locomotives. These locomotives are supporting our strong growth and improving the reliability and the fuel efficiency of our fleet. So in closing, we have operational momentum heading into the second half.

From our resource perspective, we're selectively managing headcount to backfill attrition for the volume growth we're bringing onto this network. Our resources remain well in line with the growth outlook, and headcount is slightly down. A 7% increase in RTM growth is driving strong labor productivity. I'm encouraged by the progress that we continue to see from FRA on initiatives to enhance safety and network efficiency.

Deliver more resilient customer service to the uh key cross border.

Corridor.

Mark Redd: Our network is prepared to safely and efficiently deliver strong growth over our plan. We have resources in place and certainly the management team to deliver and execute on the growth. With that, I'll turn it over to John. All right. Thank you, Mark, and good afternoon, everyone. Let me say I'm extremely pleased that we delivered another quarter of record volumes in revenue, and I certainly want to thank all of our customers for their ongoing support and collaboration over the last few months. The strength and the diversity of this franchise is reflected in our results, and I'm proud of the team for what they do every day to deliver sustainable, profitable growth. Now, despite continued uncertainty from the macro and trade policy, Q3 is off to a solid start, and we are well positioned for continued differentiated growth.

As we look at the capital perspective in addition to the safety Investments across our Network and Capital Improvements in this area, we have received the first 40 of the tier 4. Locomotives, these locomotives are supporting our strong growth, and improving the reliability, and the fuel efficiency of our Fleet. So in closing, we have operational momentum heading into the second half. Our network is prepared to to safely and efficiently deliver strong growth over our plan. We have resources in place and certainly the management team to deliver and execute on the growth with that. I'll turn it over to John. All right. Uh, thank you, Mark and good afternoon everyone. Uh, let me say I'm extremely pleased that we delivered another quarter of record volumes in Revenue.

And I certainly want to thank all of our customers for their ongoing support and collaboration over the last few months. The strength and diversity of this franchise. The reflected in our results and I'm proud of the team for what they do every day to deliver sustainable profitable growth.

Mark Redd: Now, looking at our Q2 results, this quarter we delivered freight revenue growth of 3% on a 7% increase in RTMs. Our pricing results remain strong, as my team is achieving renewal pricing in excess of our long-term outlook of 3 to 4 percent. Yields in the quarter were impacted by lower fuel surcharge, the removal of the carbon tax in Canada, as well as negative business mix. Now, taking a closer look at our second quarter revenue performance, I'll speak to FX-adjusted results. Starting with bulk, grain revenues were up 11% on 13% volume growth, a record Q2 performance. Grain volumes were up 16%. Canadian grain volumes were up 16%, driven by increased grains to Vancouver, Thunder Bay, and down into the US markets.

Now, despite continued uncertainty from the macro and and trade policy, Q3 is off to a solid start. And we are well, positioned for continued differentiated growth. Now, looking at our Q2 results,

This quarter, we delivered freight revenue growth of 3%.

On a 7%, increase in rtms, our pricing results, remain strong as my team is achieving, renewal pricing in excess of our long-term Outlook of 3 to 4%.

Yields in the quarter were impacted by lower fuel surcharge. The removal of the carbon tax in Canada as well as negative business mix.

Now, taking a closer look at our second quarter revenue performance, I'll speak to FX-adjusted results.

Starting with bulk grain revenues were up, 11% on 13%, volume growth, a record Q2 performance.

Mark Redd: For July and August, our volume growth has decelerated as the remaining stocks in Canada are starting to get low, and the farmers have become more reluctant to sell. Now, looking ahead at the upcoming harvest, our outlook is positive, and we currently expect crop size to be in the 70 to 75 million metric ton range, which is in line with the five-year average. We also had a strong quarter in US grain with volumes up 11% over prior year. We continue to move more grain into Mexico as our network matches our strong areas of production with the demand in the South. While we are watching the impact from potential tariffs on soybean exports this fall, the upcoming crop across all portions of our US network looks very strong and we're well positioned for a strong grain season. Potash revenues were down 8% on 7% volume growth.

Grain volumes are up 16%. Canadian grain volumes are up 16%, driven by increased grain to Vancouver, Thunder Bay, and down into the U.S. markets.

For July and August, our volume growth is decelerated as the remaining stocks in Canada, are starting to get low and the farmers have become more reluctant to sell.

Now, looking ahead at the upcoming Harvest, our Outlook is positive. And we currently expect crop size to be in the 70 to 75 million metric ton range, which is in line with the 5-year average,

We also had a strong quarter in the U.S., green with volumes up 11% over the prior year. We continue to move more grain into Mexico. As our network matches, our strong areas of production with the demand in the south.

Well, we are watching the impact from potential tariffs on soybean exports this fall the upcoming crop across all portions of our us Network, looks very strong and we're well positioned for a strong grain season.

Mark Redd: With positive demand fundamentals, Campotex is fully committed at record levels. We expect a strong second half with a more normalized mix. And to finish out bulk, we closed out the first quarter with coal revenue up 8% on 5% volume growth. This strength was driven by higher US thermal coal and higher Canadian met coal as we moved more volume, driven by production improvements at the mine sites and continued inventory drawdowns. Moving to the merchandise business, energy chemicals and plastics revenue grew 2% on a 5% volume decline. Our base ECP franchise continues to deliver revenue and diverse volume growth across multiple commodities from synergies, self-help, and market share gains. That growth this quarter was offset by lower crude volumes, primarily due to an outage at our Hardesty terminal.

Hot ass revenues were down 8% on 7% volume growth.

With positive demand fundamentals Camp attacks is fully committed at record levels. We expect the strong second half with a more normalized mix.

And to finish out bulk, we closed out the first quarter with coal Revenue up 8% on 5% volume growth.

This strength was driven by higher us thermal coal and higher Canadian met coal. As we move more volume driven by production improvements at the mine sites and continued inventory. Draw Downs.

Moving to the merchandise business energy, chemicals and Plastics Revenue grew 2% on a 5% volume decline.

Our base ECP franchise continues to deliver revenue and diverse. Volume growth across multiple Commodities from synergies self-help and market share gains.

Mark Redd: We delivered strong growth from LPGs and plastics in the quarter as our network continues to connect Canadian production with destinations in Mexico, using our network as a land bridge and facilitating new trade. Forest products revenues were down 5% on flat volumes. Volumes in this space continue to be impacted by macro softness to the base demand. However, the team remains laser-focused on what we can control to driving synergies and extended length of haul, which is helping to offset some of these headwinds. Metals, minerals, and consumer products revenue was down 3% on a 1% volume decline. Increased tariffs on cross-border steel impacted volumes in the quarter, partially offset by higher frac sand. We continue to be encouraged by industrial development projects in this space, with new aggregate and steel business ramping up the second half of the year.

That growth, this quarter was offset by lower crude volumes primarily due to an outage at our Hardesty terminal.

We delivered strong growth from lpgs and Plastics in the quarter. As our Network continues to connect. Canadian production, with destinations in Mexico using our Network, as a landbridge and facilitating new trade.

Forest Products for revenues were down 5% on flat volumes.

Volumes in this space continue to be impacted by macro softness to the base demand.

however, the team remains laser focused on what we can control to driving synergies and extended length of haul which is helping to offset some of these headwinds

Medal of minerals and consumer products Revenue was down, 3% on a 1.

Border steel impacted volumes in the quarter, partially offset by higher Frac sand.

We continue to be encouraged by industrial development projects in this space, with new aggregate and steel business ramping up in the second half of the year.

Mark Redd: Moving to automotive, revenue was down 5% on 8% volume growth. This continues to be an area of unique growth for CPKC, driven by our advantaged footprint serving production plants and auto compounds across North America, along with our closed-loop service solution. While evolving trade policy resulted in some choppy volumes early in the second quarter, we are staying close to our customers, and we have recent wins in this space that continue to support our conviction and growth in another record year in automotive. On the intermodal side of the business, revenue was up 8% on 18% volume growth, another record quarter. Starting with international intermodal, volumes are up 28% on strong growth from Gemini, as this alliance continues to ramp up volumes through our CPKC serve ports at Vancouver, Port of St. John, and Lazaro Cardenas.

Moving to Automotive Revenue was down 5% on 8% volume growth. This continues to be an area of unique growth for cpkc driven by our advantage footprint. Serving production, plants plants, and auto compounds across North America along with our closed loop service solution.

While evolving trade, policy resulted in some choppy volumes early in the second quarter.

We are staying close to our customers and we have a recent wins in this space that continue to support our conviction and growth in another record year in Automotive.

On the intermot side of the business Revenue was up 8% on 18%, volume growth, and other record quarter.

Mark Redd: So although there is ongoing volatility within international intermodal volumes, we continue to see upside for CPKC in the second half of the year. We also delivered strong growth for domestic intermodal with volumes up 8%. Momentum on our MMS continues with volumes on this service up 40% year over year and 20% sequentially from Q1 to Q2, as more and more customers take advantage of the fastest, most efficient cross-border rail solution between Canada, the US, and Mexico. Now, looking ahead, there's still a lot to be excited about in this space. We have a strong line of sight to domestic intermodal growth with our partner, Schneider, as they continue to outperform in the marketplace. Second, we have new auto part lanes ramping up, and volumes out of AmeriCoL's cold storage warehouse co-located in Kansas City will start moving in August.

International intermodal volumes are up 28% on strong growth from Gemini, as this alliance continues to ramp up volumes through our CPKC-served ports at Vancouver, Port of St. John, and Lesro Cardinals.

So although there was ongoing volatility within International or Moto volumes, we continue to see upside for cbkc in the second half of the year.

We also deliver strong growth for domestic Intermodal, with volumes up 8%.

Momentum on our MMX continues with volumes on this service up, 40% year-over-year and 20% sequentially from q1 to Q2 as more. And more customers, take advantage of the fastest, most efficient cross-border rail solution between Canada, the US and Mexico.

Now looking ahead, there's still a lot to be excited about in this space. We have a strong line of sight to domestic intermodal growth with our partner, Schneider, as it continues to outperform in the marketplace.

Mark Redd: And finally, I'm also excited about our SMX service that Keith spoke about with the CSX. This is our newest east-west service product that connects shippers between Mexico, Texas, and the US Southeast. To close, while the macro and trade policy remains uncertain and creates certainly some choppiness across many of our customers' supply chains, our unique franchise is proving its resilience, and we continue to produce new volume growth. Now, looking forward, we are confident in our self-help growth initiatives, the strong fundamentals that underpin our bulk business, and our disciplined pricing strategy. And I feel good about our volume outlook as I look toward the full year. So with that, I'll hand it over to Nadeem. All right. Thanks, John, and good afternoon. I'd like to start by thanking our railroaders for their hard work as well and dedication in producing this quarter's strong results.

Second, we have new Auto Part Lanes ramping up and volumes out of a Miracle's Cold Storage Warehouse co-located in Kansas City. We'll start moving in August.

And finally, I'm also excited about our SMX service that Keith spoke about with the CSX.

This is our newest East-West service product that connects shippers between Mexico, Texas and the US Southeast.

Mark Redd: Our systems integration was a major merger milestone, and having combined systems in Canada and the US will make this organization stronger and more efficient, while also creating opportunities for efficiencies and savings as we have better visibility to data and the ability to optimize workflow. Now, turning to our second quarter results on slide 12, CPKC's reported operating ratio was 63.7%, and the core adjusted operating ratio came in at 60.7% of 110 basis point improvement over last year. Diluted earnings per share was $1.33, and core adjusted diluted earnings per share was $1.12, up 7% versus last year. Taking a closer look at our expenses on slide 13, I will speak to the year-over-year variances on an FX-adjusted basis. Comp and benefits expense was 659 million or 652 million adjusted for acquisition costs.

The clothes, the clothes. While the macro and trade policy remains uncertain and create, certainly some choppiness across many of our customers' supply chains, our unique franchise is proving its resilience, and we continue to produce diverse new volume growth. Now looking forward, we are confident in our self-help growth initiatives, the strong fundamentals that underpin our bulk business, and our disciplined pricing strategy, and I feel good about our volume outlook as I look towards the full year. So with that, I'll hand it over to Nadine. Alright, thanks John, and good afternoon. I'd like to start by thanking our railroaders for their hard work and dedication in producing this quarter's strong results.

Our systems integration was a major merger Milestone and having combined systems in Canada and the US will make this organization stronger and more efficient while also, creating opportunities for efficiencies and savings, as we have better visibility to data and the ability to optimize workflow.

Now, turning to our second quarter results on slide 12.

Cpkc is reported operating ratio with 63.7% and the core adjusted operating ratio came in at 60.7% of 110 basis, point improvement over last year.

Diluted earnings per share was $1.33, and core adjusted diluted earnings per share was $1.12, up 7% versus last year.

Taking a closer look at our expenses on slide 13. I will speak to the year-over-year variances on an FX-adjusted basis.

Mark Redd: The year-over-year increase was driven by higher stock-based compensation, inflation, and volume-driven increases from higher GTMs. That increase was partially offset by lower incentive compensation, efficiency gains from workforce optimization, and improved train weights. As we look to the rest of the year, we continue to expect our average headcount to be roughly flat, driving strong labor productivity gains against our expectation for mid-single-digit volume growth. Fuel expense was 405 million, down 12% year over year. The decline was driven by lower fuel price, including the removal of the Canadian federal carbon tax effective April 1st. That decline was partially offset by higher GTMs from increased volumes. Overall, changes in fuel prices were a 2-cent headwind to EPS in the quarter. Materials expense was 124 million, up 29% year over year.

Comp and benefits expense was $659 million, or $652 million adjusted for acquisition costs. The year-over-year increase was driven by higher stock-based compensation, inflation, and volume-driven increases from higher GPMS.

That increase was partially offset by lower incentive compensation efficiency, gains from Workforce optimization, and improved trained weights.

As we look to the rest of the year, we continue to expect our average headcount to be roughly flat, driving strong labor productivity gains against our expectation for mid-single-digit volume growth.

Fuel expense was 415 million down, 12% year-over-year. The decline was driven by lower fuel price, including the removal of the Canadian Federal carbon tax effective April 1st.

Gpms from increased volumes.

Overall changes in fuel prices were a 2-cent headwind to EPS in the quarter.

Mark Redd: The year-over-year increase was driven primarily by the long-term parts agreement that was put in place last year, driving higher materials expense with a favorable offset within purchase services and other for net savings in the quarter. Additionally, we saw higher spend on safety materials and volume-driven increases in materials expense. Equipment rents were 103 million, up 23% year over year. The increase was driven primarily by higher car payments from increased DUAL. Depreciation and amortization expense was up 4%, resulting from a larger asset base. Purchase services and other expense was 560 million adjusted for acquisition costs, down 5% year over year. The decline was driven primarily by savings from the long-term parts agreement and other productivity improvements. These savings were partially offset by cost inflation and volume-driven increases. Overall, we delivered strong financial results this quarter, despite systems integration challenges that impacted earnings by 3 to 4 cents.

Materials expense was 124 million up 29% year-over-year.

Increase was driven primarily by the long-term Parts agreement that was put in place last year.

Driving higher materials expense, with a favorable offset within purchase services and other for net Savings in the quarter.

Additionally, we saw higher. Spend on safety, materials and volume driven increases in materials expense.

Equipment. Rents were 103 million up 23% year-over-year. The increase was driven primarily by higher car payments from increased dwell.

Its appreciation and amateur expense were up 4%, resulting from a higher amount from a larger asset base.

Purchase services and other expense was 560. Million adjusted for acquisition costs down 5% year-over-year. The decline was driven primarily by savings from the long term Parts agreement and other productivity improvements.

These savings were partially offset by cost inflation and volume driven increases.

Mark Redd: Looking forward with operations largely restored, we expect a second half that fully recaptures the financial and operational momentum that we had prior to the systems integration. Moving below the line on slide 14, other income was up 16 million in Q2, driven by lower equity income year over year. Other components of net periodic benefit recovery were 107 million, reflecting the effect of favorable pension plan asset returns in 2024. Net interest expense was 208 million or 203 million, excluding the impact of purchase accounting. The year-over-year increase was driven by interest occurred on new long-term notes. In the quarter, we also recognized a 333 million pre-tax gain on sale of our 50% equity investment in the Panama Canal Railway Company, which was excluded from core adjusted results. Income tax expense was 357 million or 336 million, adjusted for significant items in purchase accounting.

Overall, we delivered strong financial results this quarter, despite systems integration challenges that impacted earnings by $0.03 to $0.04.

Looking forward, with operations largely restored, we expect a second half that fully recaptures the financial and operational momentum that we had prior to the systems integration.

Moving below the line on slide. 14. Other income was up 16 million in Q2 driven by lower Equity income year-over-year.

We're $107 million, reflecting the effect of favorable Pension Plan asset returns in 2024.

Net interest expense was $208 million or $203 million, excluding the impact of Purchase County.

The year-over-year increase was driven by interest accrued on new long-term notes.

In the quarter, we also recognize a pre-tax gain of $333 million on the sale of our 50% equity investment in the Panama Canal Railway Company, which was excluded from core adjusted results.

Mark Redd: For 2025, we continue to expect CPKC's core adjusted effective tax rate to be approximately 24.5%. Turning to slide 15 and cash flow, Q2 cash provided by operating activities increased 6% to 1.36 billion. We continued our strategic investments in the network for safety and growth with a CapEx spend of 743 million in the quarter. Cash flow remains strong as we delivered 605 million in adjusted free cash for the quarter. As we continue to generate strong top line and earnings growth for the next several years, while holding CapEx relatively flat, we expect continued strong cash flow generation as we reduce the capital intensity in the business. Turning to our share repurchase program, we continue to take advantage of the volatility in the market to reward shareholders with disciplined and opportunistic returns.

Income tax expense was $357 million, or $336 million adjusted for significant items.

For 2025, we continue to expect CPP. Casey's core, adjusted effective tax rates to be approximately 24.5%.

Turning to Slide 15 and cash flow.

22 cash provided by operating activities. Increased 6% to 1.36 billion.

We continued our strategic investments in the network for safety and growth with capex, spend of 743 million in the quarter.

Cash flow remains strong, as we delivered $605 million in adjusted free cash for the quarter.

As we continue to generate strong top-line and earnings growth for the next several years while holding capex relatively flat, we expect continued strong cash flow generation as we reduce the capital intensity in the business.

Mark Redd: At the end of the second quarter, we repurchased 16.4 million shares, or approximately 44% of the current program. As we look to the second half of the year, John and his team are delivering strong growth, and we are well on track to deliver mid-single-digit volumes for the year. The network is running well, and we continue to deliver discipline on price and cost control, with more opportunities on that front in the second half. We feel very good about our guidance, and CPKC remains well positioned to once again lead the industry with double-digit earnings growth this year. With that, let me turn things back over to Keith.

Turning to our share repurchase program, we continue to take advantage of the volatility in the market, to reward shareholders with disciplined and opportunistic returns.

At the end of the second quarter, we repurchased, 16.4 million shares or approximately 44% of the current program.

As we look to the second half of the Year, John and his team are delivering strong growth and we are well on track to deliver. Mid single digit volumes for the year. The network is running well and we continue to deliver discipline on price and cost control with more opportunities on that front. The second half, we feel very good about our guidance and cbkc remains well positioned to. Once again, lead the industry with double digit earnings growth this year.

Keith Creel: Okay. Thank you for the color, gentlemen. Now, let's open it up for questions.

With that, let me turn things back over to Keith.

Okay, thank you for the call, gentlemen. Let's open it up.

For questions.

Speaker 6: Thank you. 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. As previously highlighted, please limit yourself to one question. And our first question comes from Chris Weatherby with Wells Fargo. Please go ahead.

Thank you. 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 as previously instructed. Please limit yourself to 1 question. Our first question comes from Chris Weatherbee with Wells Fargo. Please go ahead.

Chris Weatherby: Hey, thanks. Good afternoon, guys. You know, Keith, I just want to maybe address, like you said, the sort of elephant in the room. Maybe you could expand a little bit on your thoughts here. I guess maybe the question is, as you see these industry dynamics playing out, I guess, how do you or what do you view CP's sort of role in this process? Is there something to do from a strategic perspective? Are there commercial, you know, things that you can try to accomplish? And is this something that you sort of push back against? I guess, how do you think about it from a regulatory perspective? So just sort of broad comments on your view of what's happening.

Hey thanks. Good afternoon guys. Um, you know Keith I just want to maybe address like you said this, or the elephant in the room. Maybe you could expand a little bit on your thoughts here. I guess maybe the question is,

Do you see these industry Dynamics playing out? I guess, how do you, or what do you view, CPS sort of role in in this process? Is there something to do from a strategic perspective? Are there commercial, you know, uh, uh, things that you can try to accomplish and is this something that you

You sort of push back against, I guess. How do you think about it from a regulatory perspective? So just sort of broad comments on your view of what's Happening.

Keith Creel: Yeah, I think the answer is yes. Commercially, there's opportunity that's undeniable. This network that we've created, again, the way we connect with and partner with all railroads across all three nations, right down the middle of kind of the heart of America, gives us a chance to create unique partnerships and alliances. That's what we've been about doing. That's what we'll continue to do. You know, again, the CSX example is but one example. So rest assured, this gives us an opportunity and, obviously, the other party's motivation, where we can help them win in marketplaces and compete to create new revenues or to protect existing revenues, to provide better service for customers, or to win new customers that may or may not be concerned or might, I'd say in this case, might be concerned about the risk that this proposed combination entails. It creates opportunities for us.

yeah I think the answer is is yes, commercially, there's opportunity that's undeniable this network that we've created again the way we connect

with and partner with all railroads, across, all 3 Nations, right down the middle of

Kind of the heart. The heart of America gives us a chance.

To create unique Partnerships and alliances. Uh, that's what we've been about doing. That's what we'll continue to do. You know, again, the CSX example is, but 1 example. Uh, so rest assured. This gives us an opportunity and obviously, uh, the other parties motivation, uh, where we can help them win a marketplaces and compete.

Keith Creel: So we're going to be hard at working those opportunities. You know, I know with the best of intentions, the applicants would say they're not going to be distracted, but the reality of it is, having gone through this, the gravity of what they're pursuing is undeniably enormous. The complexity of it is undeniably enormous. There's going to be some distraction. And even if there were not, I guarantee there's some customers out there that they're sitting on the edge of their seats, looking at their existing supply chains, trying to hedge their bets, thinking, "What's at risk?" And what do they know? Their memories are not certainly clear from perhaps the condition the industry was in, specifically in the US, undeniably three years ago.

To create new revenues or to protect existing revenues to provide better service for customers or to win new customers. Uh, that may or may not be concerned. Or might I'd say, in this case, might be concerned about the risk that this proposed combination entails. Uh, it creates opportunities for us, so we're going to be hard at working those opportunities. Um,

You know, I I know with the best of intentions. Um the applicants would say they're not going to be distracted.

But the reality of it is having gone through this. The gravity of what they're um pursuing uh is undeniably enormous. The complexity of it is undeniably enormous. Uh there's going to be some distraction and even if there were not, I guarantee there's some customers out there that they're setting on the edge of their seats looking at their existing Supply chains.

Trying to hedge their bets, thinking, what's at risk and what do they know?

Keith Creel: You know, it was a world where UP was in trouble, BNSF was having challenges, NS was having challenges, CSX was having challenges, all coming out of the pandemic and all the associated kind of quasi-meltdown of the industry as a result of all those things. And those customers experienced a lot of pain and suffering. So to think about a combination and the risk that's going to unfold before them, consolidating with an industry, and I would suggest undeniably, they said it themselves, two railroads that have part in that problematic history of less than ideal integrations, they'd be irresponsible not to start looking at alternatives. So we're going to help in those discussions. It's our responsibility to. We owe that to our customers. We owe that to our shareholders.

Their memories are not, uh, certainly clear from perhaps the condition of the industry was in specifically in the US. Um, undeniably 3 years ago.

You know, it was a world where up was in trouble.

BNSF was having challenges.

And that's, was having challenges. CSX is having challenges, all coming out of the pandemic and all these associated, kind of quasi, meltdown of the industry, as a result of all those things. And those customers experience a lot of pain and suffering.

Uh so to think about a combination in the risk, that's got to unfold before them um consolidating with an industry.

and I would suggest undeniably, they said it themselves, uh, 2 railroad that have part in that problematic history of

Keith Creel: And I think the partners that we'll talk to that can play a part in that will feel the same way. And in fact, I've already had a couple of conversations, and I can tell you the sentiment is aligned with mine. That said, on the regulatory front, here's the other piece, Chris. This is not a standalone proposal. This does not just affect UP and NS. UP and NS both know this. The regulator knows this. We all know this. This could well be the trigger. If this is approved and their facts fully represented, and it's our job to make sure they're fully represented before the SDB, lead them to a decision that says this serves the public interest best. That could well and might likely trigger additional industry consolidation, an endgame scenario.

Less than ideal Integrations, they'd be irresponsible, not to start looking at Alternatives. Um, so we're going to help in those discussions. It's our responsibility to, we owe that to our customers. We owe that to our shareholders. And I think the partners that we'll talk to, um, that can play a part in that will feel the same way. Uh, and in fact, I've already had a couple of conversations and I can tell you the sentiment is aligned with mine.

Uh that said on the regulatory front. Here's the other piece. Chris, this is not a standalone proposal. This does not just affect UPN NS up and NS. Both know this, the regulator knows this. We all know this. Uh, this could well be the trigger if this is approved and their facts fully represented. And that's our job to make sure they're fully represented before the sdb. Lead them to a decision that says this serves the public interest best

Keith Creel: So this downstream analysis that the rules require is taken into consideration, the new rules, which are new to UP, new to NS. They're untested. They're new to all of us. This downstream effect, when you're talking about enhancing competition, that's going to be a fulsome and a broad review. So that application, when it comes to the regulator, has to speak to all those points. Again, it's not speaking to just the isolation and the benefits and the considerations of UP and NS. They're speaking to the entire industry. They're speaking to every customer that ships on any rail network in North America, and it is a North American rail network. So the gravity of this is not to be taken lightly. Jim Venna said yesterday, and I believe Jim, to his word, he hasn't taken this lightly.

Um, that could well and might likely trigger additional industry consolidation and an endgame scenario.

so, this downstream analysis that the rules require.

Just take it into consideration, the new rules which are new to up new to NS the Run tested. They're new to all of us.

This downstream effect, when you're talking about enhancing competition, that's going to be a wholesome and broad review.

So that application when it comes to the regulator has to speak to all those points. Again, it's not speaking to just the isolation and the benefits and the considerations of up and NS. They're speaking to the entire industry.

They're speaking to every customer that ships on any rail network in North America, and it is a North American rail network.

Uh, so the gravity of this

Is not.

Keith Creel: But at the same time, we have a responsibility to make sure that their view aligns with what our view is. And I'm sure the other railroads would speak for themselves. They would feel the same, that the view is wholesome and full, and the case and the evidence is fully represented. So a lot to be said about that. I kind of think it boils down to thinking about that public interest test. The core public interest question will get down to a point of whether or not this two duopoly structure truly serves the public interest because it is the trigger that leads us to that potential outcome. The regulator knows that. The regulations have anticipated that. That's the reason they were written in the first place in 2001. And quite frankly, again, I go back to taking people at their word.

To be taken lightly. Um, Jim Venice said yesterday, and I believe Jim to his word, he hasn't taken this lightly

uh, but at the same time, we have a responsibility to make sure that their View

aligns with

what our view is, and I'm sure the other railroads would speak for themselves. They would feel the same that the view is wholesome and full in the case in the evidence is fully represented. Um, so a lot to be said about that, I kind of kind of think it boils down

To.

Thinking about that public interest test.

The core public interest question.

Truly serves the public interest.

Because it is the trigger.

That leads us to that potential outcome.

Keith Creel: UP was very active in those comments. They said they believed it to be true then in their comments in opposition to other proposed transactions at that time. So if it was true for UP then, and it was factual then, again, how can you deny that it's not factual now? So more to follow. We're going to be active participants. And again, the truth matters. And we've got a little experience making sure that the truth is understood and heard. And we're going to continue to we're going to apply that muscle memory in this case as well.

The regulator knows that the regulations have anticipated, that that's the reason they were written in the first place in 2001 and quite frankly. Again, I go back to taking people at their word up was very active in those comments.

They said they believed it to be true then in their comments in opposition to other proposed transactions at that time. So if it was true for you then, and it was factual then.

Again, how can you deny that? It's not factual now?

To more to follow. We're going to be active participants. And again, the truth matters in. We've got a little experience, making sure that the truth is understood and heard. And we're going to continue to we're going to apply that muscle memory in this case as well.

Chris Weatherby: Appreciate the comments, Keith. Thank you.

Appreciate the comments. Keep, thank you.

Speaker 6: And your next question comes from Fadi Shamoun with BMO. Please go ahead.

And your next question comes from fatty shamoun with BMO. Please go ahead.

Fadi Chamoun: Yeah. Good evening. Thanks for that perspective, Keith. Just maybe a quick follow-up, just trying to make sure I and others take the proper takeaway. Through a regulatory process and assuming we have an endgame with TransCon networks in the US, is the commercial opportunities for CP neutral or potentially better than they are today? And my main question is, you know, I wanted to ask, like, when you look at the pipeline of opportunity that I think John highlighted and you highlighted kind of early in the call going into H2 and into 2026, is this mid-single-digit volume of run rate that we're seeing and it looks like you can potentially sustain going into '26? Can that be achieved even in a scenario where the economy is stable, not really gaining any momentum from where we are today?

Yeah good evening. Uh thanks for that perspective Keith. Um just maybe a quick follow-up, just trying to make sure I and others take the proper takeaway that

Um, through regulatory process and assuming we have an end game with transcon.

Uh, networks in the US is the commercial opportunity for CP.

Neutral or potentially better than they are today. And uh, my main question is, you know, I wanted to ask like when you look at the uh pipeline of of uh opportunity that St, John highlighted and you highlighted can early in the call, going into uh, H2 and into 2026. Um,

it is, is this mid single digit volume run rate that we're seeing and you looks like you can potentially sustained going into 26. Can that be achieved even in a scenario where the economy?

Fadi Chamoun: Is the pipeline sufficient to kind of say, you know, we can get this level of growth on a sustained basis, you know, going into the next two quarter plus 2026?

Is stable, not really gaining any momentum from where we are today is is is the pipeline insufficient to kind of say, you know, we can get this level of uh growth on a sustained basis. Um, you know, going into the next to

Keith Creel: Yeah, so I'll start with answering that. The answer is yes. We see an ability to be able to do that, Fadi. And then let me go back to the question about the merger. Kind of the way I see this as the only way one or two major mergers get accomplished is if they meet and exceed the public interest test, which means they've enhanced competition, not just preserved competition, which means they've adequately considered downstream impacts, which means to do that, the only way to meet that standard in my mind is a definition that will ultimately be defined by the SDB that involves concessions.

Water plus? Yeah. Let me

I'll start with answering that. The answer is yes. We see an ability to be able to do that Friday, and then let me go back to the question about...

Um, the merger.

Kind of the way. I see this.

As the only way.

1 or 2 make and mergers. Get accomplished, is if they meet

And exceed the public interest test which means they've enhanced competition. Not just preserve competition.

Which means they've added quickly considered downstream impacts, which means to do that.

The only way to meet that standard in my mind is a definition that will ultimately be defined by the sdb that involves concessions.

Keith Creel: Concessions that when you have a network, again, that uniquely connects north to south, right down the spine of America, connects US, connects Canada, connects all these different markets, we have a network and a foundation that with the right concessions, and rest assured we'll be arguing the case and the need to meet the enhanced competition, perhaps a Houston that we don't have unfettered access to compete into today. We don't have an ability to sell into or sell directly out of Houston. In a world tomorrow, what markets might open up as a result of that that we could uniquely see with other partners in our network? That's enhanced competition. And you could apply that same definition, go up our railroad to the network, go to Kansas City. What about the industry in Kansas City? Go to St. Louis. What about the industries in St. Louis?

Concessions. That when you have a network again, that uniquely connects

North to south.

Right down the spine of America. Connects us connects Canada connects, all these different markets, we have a network in a foundation.

That.

With the right concessions? In rest assure will be arguing the case in the need to meet the enhanced competition.

Perhaps a Houston that we don't we don't have unfettered access to compete into today.

We don't have an ability to sell into or sell directly out of Houston.

In a world tomorrow.

What markets might open up as a result of that, that we could uniquely feed with other partners in our Network.

That's enhanced competition.

And you can apply that same definition to our railroad network, going to Kansas City.

Keith Creel: Go to Baton Rouge. Go to Shreveport. Go to these common locations which have significant industry bases which today are not open to our network in an unfettered way, which become unfettered, which have whatever the final definition of open access is, interswitching to our network, to use our length of haul, to use our reach, to bridge to another railroad, to bridge into Mexico, to bridge into Canada. So again, our network, the strength of this network we put together allows us to compete and win in any of these scenarios. It's that unique that certainly there's going to be puts and takes. Certainly, we're going to have to compete. But when you have a great service and a great team and a great network, that should never and will never intimidate this railroad. And we're proud to be able to say that.

What about the industry in Kansas City? Go to St. Louis. What about the industries in St? Louis.

Go to Baton Rouge, go to streetport. Go to these common locations, which have significant industry bases.

which today are not open to our network in an unfettered way, which become unfettered.

which have whatever the final definition of Open Access is

enter switching.

To our Network.

To use our length to follow to use our reach.

To bridge to another Railroad.

To bridge in New Mexico to bridge into Canada. So again our Network, the strength of this network we put together allows us to compete and win in any of these scenarios.

It's that unique.

Never intimidate this Railroad.

Keith Creel: We worked hard to create this to be able to say that. And we don't say that just for the benefit of ourselves, but equally as important for the benefit of all stakeholders we partner with. And that's our partnering railroads. That's our customers today and tomorrow, and that's our employees and our shareholders.

And we're proud to be able to see that we worked hard to create this, to be able to say that, and we don't say that just for the benefit of ourselves, but equally as important for the benefit of all stakeholders we partner with. And that's our partnering railroads

That's our customers today and tomorrow and that's our employees and our shareholders.

Fadi Chamoun: Thank you.

Thank you.

Speaker 6: Thank you. And your next question comes from Jonathan Chappelle with Evercore ISI. Please go ahead.

Thank you and your next question comes from Jonathan Chappelle with evercore, isi, please go ahead.

Jonathan Chappell: Thank you. Good afternoon. I'm going to bring it back to CPKC. Nadeem, thanks for the 3 to 4 cent impact from the system crossover. From a cost revenue OR perspective, is there a way to quantify that for the second quarter? And then was it fully ring-fenced to that period, or is there going to be some overhang into July? And just how do we think about that sequential impact moving from 2Q to 3Q?

Thank you, good afternoon. Um, going to bring it back to cpkc, uh, Nadine. Thanks for the 3 to 4 Cent impact from the system. Uh, crossover from a cost Revenue. Oh perspective. Is there a way to quantify that for the second quarter. And then was it, fully ring fence to that period? Or is there going to be some overhang into July? And just how do we think about that sequential impact moving from 2 to 3 Q?

Mark Redd: Yeah. So I'd say it was about 30 to 40 million dollars of revenue impact overall. So, and then a bit of you saw that some of our operating metrics that were hampered during that post-the-day end period where we had additional DUAL. We had some impacts from overall velocity as well, and it impacted fuel efficiency. So the remainder kind of operating income is tied to higher expenses and missed efficiency opportunities. I'd say there's a small carryover into July, but not significant as far as some of the on the cost side, limited on the revenue side. So we'll start Q3 pretty fresh, I'd say.

Yeah. So I'd say, is what 30 to 40 million dollars of of Revenue impacts overall. So, um, and then a bit of you saw that some of our operating metrics that were were hampered during that, uh, post the day end period, where we had additional dwell, um, we had some, um, some impacts from from overall velocity as well, and, and impacted fuel efficiency. So, um, the, the remainder kind of operating income is, is tied to, uh, hi.

Higher expenses and and missed efficiency opportunities. I'd say there's a small carryover into July but not significant as as far as some some of the on the cost side. Uh limited on the revenue side. So um we'll we'll start Q3 pretty fresh, I'd say.

Jonathan Chappell: Great. Thank you.

Great. Thank you.

Mark Redd: Thank you.

Speaker 6: Thank you. And your next question comes from Tom Wadowitz with UBS. Please go ahead.

Thank you. Thank you.

And your next question comes from Tom Witts with UBS. Please go ahead.

Tom Wadewitz: Yeah. Good afternoon. So, Keith, you I mean, you have in kind of a different setting expressed a pretty favorable view on single line service. And I think even looking at the success of the 180, 181, you know, relative to your competitors, single line is important. Do you think that there, I guess when you look at it, you know, you're taking a seemingly a pretty strong position, you know, or a strong view on, you know, versus a UP-NS? Do you think that there are kind of opportunities they have on single line intermodal that would not affect CP? Or I guess I just want to understand a little bit better why it, you know, you're, you know, there's some things that seem like they could be good for rail service, good for rail markets that wouldn't necessarily be harmful to you.

Uh yeah, good afternoon. So Keith you. I I mean you have in you know, kind of a different setting Express to pretty favorable view on single line service. And I think even looking at the success of the 1801 181, you know relative to your competitors. Single line is is important, do you think that they're, I guess when you look at it, you know, you're taking a seemingly, a pretty strong position, um you know, we're a strong view, you know, versus the up NS

Do you think that there are kind of opportunities they have on sink line? Intermodal, that that would not affect, uh, CP or I guess I'm, I just want to understand a little bit better.

Tom Wadewitz: So is the concern about market power, is the concern about, you know, just want to understand that a little bit better, recognizing that it seems like there is a case for single line service and broadening rail markets?

Why it, you know, you're, you know, there's some things that seem like they could be good for rail service. Good for rail markets, it wouldn't necessarily be harmful to you. Um, so is the concern about Market power is a concern about you know, just want to understand that a little bit better.

Recognizing that it seems like there is a case for single line service and broadening rail markets.

Keith Creel: Yeah. Well, let me start with this. In isolation, I'm never going to argue against the benefits of single line service for any railroad and any customer. If a railroad can operate their network appropriately and manage their capacity and their service and produce the benefits of a single line move for a customer, I mean, that's the gold standard. So I'm not going to say that suggest that what UP and NS has proposed or what any combination will propose that enables that outcome, if it's exercised and produced the right way, is not a superior product. It's tough to compete against. I stand by that statement. But the reality is this isn't just a standalone isolated review of single line service.

Let me start with this in isolation. I'm never going to argue against the benefits of single line service for any Railroad and in any customers, if a railroad can operate their Network appropriately and manage their capacity and their service,

And produce the benefits of a single line. Move for a customer. I mean, that's the gold standard. Uh, so I'm not going to say that suggests.

That, what’s up, and NS is proposed, or what any combination will propose that enables that outcome. If it's exercised and produced the right way, as not a superior product, it's tough to compete against. I stand by that statement.

Keith Creel: There are so many more multiple facets and complexities that get created by this combination that have to be weighed into this that will be in our analysis. So if I look specifically at intermodal, their single line service intermodal doesn't threaten my single line service intermodal. They don't have a network in Canada. That's where we're strong. We play to the strength of our network. We have the shortest routes and the most key markets, and we do extremely well with a premium service in Canada. With our combination, we've replicated that same model from Chicago to Mexico. This proposal doesn't impact that. It doesn't replicate that. It doesn't replace that. So again, I'm not threatened by that at all. So again, single line service is the gold standard.

But the reality is, this isn't just a standalone isolated review of single line service.

There are so many more multiple facets and complexities to get creative by this combination that have to be weighed into this uh that will be in our analysis. Uh so if I looked specifically at Intermodal, their single line service center model doesn't thread. My single line service center model

They don't have a network in Canada; that's where we're strong. We played as a strength of our network. We had the shortest routes and the most key markets, and we do extremely well with a premium service in Canada.

With our combination, we've replicated that same model from Chicago to Mexico, this proposal doesn't impact that it doesn't replicate that, it doesn't replace that. So again, I'm not threatened by that at all.

Keith Creel: If you can do it and execute it the right way and manage your railroad to deliver a service that allows the customer to benefit from reliable service, efficient service, that it lets you turn assets and take out handlings and car savings, all those are to be true in a formula. I agree completely with Jim in that. We're aligned on that. It's undeniable truth. But again, this isn't just about single line service. This is about a whole lot more than that. And again, all the facts have to make sure that they're known and understood as it relates not only to UPNS and their customers that would benefit from that, but also as it relates to a duopoly system of railroads in this North American network. That's potentially what we're going to. That's what this triggers, most likely.

Uh, so again, single line service is the gold standard. If you can do it and execute it the right way and manage your railroad.

To deliver a service that allows the customer to benefit from reliable.

Uh but again this isn't just about single line service, this is about a whole lot more than that. Uh and again all the facts have to be, make sure that they're they're known and understood as it relates. Not only to

Keith Creel: And they know that, and we know that, and you know that. How that all shakes out, I don't know. The outcome of that will be determined by the regulator. We'll all be watching closely, and we'll all be participating intently to, again, make sure that the best decision, the best facts are presented to the SDB that are fulsome and allows them to serve that public interest test. In the end, if they say, "Yes, this is in the public interest," and this being a likely duopoly system, based on what conditions, which will define the concessions, which will allow me to fine or tune how much we might benefit with this network as it relates to those combinations.

Railroads in this North American network, that's potentially what we're going to, uh, that's what this triggers, most likely. And they know that, and we know that, and you know that.

How that all shakes out? I don't know, the outcome of that will be determined by the regulator. Uh it will all be watching.

Closely, and we'll all be participating intently to again make sure that the best decision and the best facts are presented to the STB. These should be wholesome and allow them to serve that public interest test in the end. If they say yes, this is in the public interest and this being a likely D.U.E.Y. system.

Um, based on what conditions?

Which will define the concessions which will tell allow me to find or tune. How much.

We might benefit with this network is a real as it relates to that comment those combinations.

Tom Wadewitz: Right. Okay. Great. Thanks for the thoughts. Appreciate it.

Right. Okay great. Thanks for the thoughts, appreciate it.

Speaker 6: Thank you. And our next question comes from Brian Osenbeck with JP Morgan. Please go ahead.

Thank you. Our next question comes from Brian Osbeck with JP Morgan. Please go ahead.

Jonathan Chappell: Hey, good afternoon. I just wanted to ask a little bit more. Keith, you covered the public interest aspect of all this, but you know they also have to prove that the only way to get these benefits is through a merger. So I just wanted to see if you can elaborate on some of the partnerships and JVs that you're talking about here. Obviously, it's hard to compete with single lines, so maybe that's the answer. And then clearly, as you mentioned, long history and long memories of service problems and integration challenges. I mean, yourself had one here in the southern US. Do you think that's a read-through to what could happen with maybe more complicated mergers and integrations?

Hey, good afternoon.

Jonathan Chappell: And how do you think they would be able to address that credibly and say, "You know, we won't have a wide system-wide issue here if we go down this route"? Thank you.

Just wanted to ask a little bit more. Uh, Keith, you covered the public interest aspect of all this, but you know they also have to prove that the only way to get these benefits is through a merger. So I just wanted to see if you can elaborate on some of the partnerships and JVs that you're talking about here. Obviously, it's hard to compete with single lines, so maybe that's the answer. And then clearly, they mentioned a long history and long memories of service problems and integration challenges. I mean, yourself had one here and something us. Um, do you think that's read through to what could happen with maybe more complicated mergers and integrations? And how do you think they would be able to address that credibly and say, you know, we won't have a wide system-wide issue here if we go down this route?

Keith Creel: Yeah. I would say, let me start there. The gravity of the challenges we had integrating that were isolated to the most southern part of our network pales in comparison to the complexity and gravity of getting this wrong. So again, not to be taken lightly, not that I would suggest they would, but it can be overwhelming. And the complexity of it, with the best of intentions, I know how much effort we put at it. I know how much money we spent. I know how much time we took. But you know, knowing and integrating a system seamlessly that you replace on your old network is uniquely different than taking that same system and applying it to somebody else's network with a different system. The complexity is thousands fold, not to be underestimated.

Thank you. Yeah, obviously, yeah, I would say let me start there. The the gravity of

The challenges we had integrating were isolated to the most southern part of our network, and pale in comparison to the complexity and gravity of getting this wrong. So again, not to be taken lightly—not that I would suggest they would—but it can be overwhelming, and the complexity of it, with the best of intentions. I know how much effort we put into it. I know how much money we spent. I know how much time we took.

uh, but you know, knowing an integrating a system

seamlessly that you replace on your own network is uniquely different than

Taking that same system and applying to somebody else's network with a different system, the complexity.

Keith Creel: So if you get that wrong, and that's the challenge of this, and that's what these reviews and all these assessments have to take into effect, a network that big, if it gets sick, it's not isolated to a particular geographic region in the nation. The entire nation is going to get sick. That's the magnitude of this. So then back to if you think about what you could do in exhausting alliances before you entertain a merger or the risks that are associated with these types of mergers, I would say it's our responsibility to make sure that we've exhausted all of those opportunities. And I can't answer for UP or NS; have they? I can tell you that we haven't. I can tell you that our network that's been created is just beginning to get busy doing those things.

Thousands fold is not to be underestimated.

Um, so if you get that wrong and that's the challenge of this and that's what these reviews and all these assessments have to take into effect.

A network that big, if it gets sick, it's not isolated.

To a particular geographic region in the nation, the entire nation is going to get sick.

That's the magnitude of this.

um so then back to if you think about what you could do in exhausting alliances before you entertain a merger uh or the risk that are associated with these type of mergers, I would say, it's our responsibility to make sure that we've exhausted

All of those opportunities and I can't answer.

Keith Creel: Now, a year from now, two years from now, three years from now, we'll be further along, yes. But I would suggest I know that UP and NS understand the benefits of some of those alliances. They're benefiting from it now over the Meridian Speedway. You've got UP running big trains that are coming out of Western US that go straight to the Southeast markets over our LLC, which is in partnership with the NS. So they know the benefits now. I would ask and challenge, "Have you done that in other parts of the network? If you're so aligned together, have you exhausted that?" And only they can answer that question. I know different I heard some rhetoric or discussions yesterday, which I agree with, over the benefits of step-on, step-off interchange trains.

For up or NS, have they? I can tell you that we have it. I can tell you that our Network that's been created is just beginning to get busy doing those things. Now a year from now 2 years from now 3 years from now will be further along. Yes. Uh but I would suggest

I know that up in NS.

Understands the benefits.

Of some of those alliances their benefited from it. Now, over the Meridian, Speedway

You've got up running big trains that are coming out of Western us that go straight to the southeast markets over our LLC, which is in partnership with NS. Uh, so they know the benefits. Now, I would ask

And challenge. Have you done that in other parts of the network? If you're so aligned together, have you exhausted? That and only they can answer that question.

Keith Creel: We call those direct hit trains in our industry, much better than going into Chicago, for instance, or for a perfect example and illustration, going to one of the Belt Railroads or one of our terminals and switching cars out and all that associated delay. I believe in it so much that we do it today with NS in Chicago. It's a step-on, step-off both ways. We don't go into the Belt. They don't.Into

It's a step on step off, both ways.

Margo (Conference Operator): the belt. We switch in our terminals, they switch in their terminals. And when we get to Chicago, it's a handoff. Power runs through, crews change. It's as if you're merged together. So again, I would ask, if you believe in that, have you exhausted all those avenues? Have you looked at, in this case, the potential proposed network, which is NUP, and looked at these gateways that, as they propose, will eventually be connected? Why not do it now? What are you waiting on? If the gains are there and the benefits are there for your customers, don't we have a responsibility to go mine those opportunities? And that's true and applies the responsibility to the entire industry. So to me, that is a great question to ask. And only the applicants can answer the question. Have they exhausted all those opportunities? I know we haven't.

We don't go into the belt, they don't go into the belt, we switch in our terminals. They switch in their terminals. When we get to Chicago, it's a handoff.

Power runs through Cruise change it's as if your merged together. So again, I would ask if you believe in that have you exhausted all those Avenues have? You looked at in this case,

the potential proposed Network, which is in,

Up and look at these gateways that as they propose will eventually be connected. Why not do it now? What are you waiting on?

If the gains are there and the benefits are there for your customers, don't we have a responsibility to go find those opportunities?

And that's true and applies.

Your responsibility to the entire industry.

So to me, that is a great question to ask.

And only the applicants can answer the question.

Margo (Conference Operator): I can only speak for us.

Had they exhausted all those opportunities? I know we have it. I can only speak for us.

Speaker 2: Thanks very much, Keith, for that perspective. Appreciate it.

Thanks very much Keith for that perspective. Appreciate it.

Speaker 3: Thank you. And your next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead.

Speaker 4: Thanks very much. Can we just do a kind of a hypothetical where, let's say, the TransFund mergers do go ahead? In that scenario, Keith, what are the options? Are you suggesting that commercial options are the main and only course of action for you? Or would you consider as well going to a round two of consolidation and looking to involve yourself, CP, with one of the TransFund railroads from a consolidation standpoint? You know.

Thank you. And your next question comes from Walter. Spracklin with RBC Capital markets, please go ahead.

Uh, thanks very much. Uh, C. Can we uh just do a, a um, kind of a hypothetical where, let's say the transcon ra mergers, do go ahead, uh, in that scenario. Keith, what are what are the options? Where are are, you suggesting that commercial options, are the main and only uh, course of action for you, or would you consider as well? Going to around 2 of of consolidation and looking to involve yourself uh uh CP with 1 of the Trends on railroads,

From a consolidation standpoint.

Margo (Conference Operator): I think the simplest way to answer that is our responsibility at CPKC is to make sure we remain in the best position to create shareholder value and all stakeholder value. That's what our obligation is. So as that plays out, as this unfolds, we certainly will be active participants, but we're going to be active observers as well. This team and this network represents industry unique value and industry unique strength. So in all these multiple scenarios, you can whiteboard them all, and I'm sure we're going to eventually get to a point where we think and evaluate, consider all. But I could make a case that in any mix that you propose but one, there's one that we never would be able to, for obvious reasons, partner with in that kind of way.

You know, I think the simplest way to answer that is is our responsibility at cpkc is to make sure we remain in the best position to create shareholder value and all stakeholder value. That's that's what our obligation is. Um, so

As that plays out as this unfolds.

we certainly will be active participants but we're going to be active observers as well, this team, and this network represents

Industry unique value in Industry unique strengths.

So in all these multiple scenarios, you can whiteboard them all. And I'm sure we're going to eventually get to a point where we think and evaluate consider all, uh, but I could make a case that in any

Margo (Conference Operator): This industry and this team, this network within this industry, this team and this network represent compelling value. And it's our job to make sure it's realized.

Mix that you propose. But 1 there's 1 that we never would be able to from obvious for obvious reasons, partner with and that kind of way. Uh this industry and this team, this network within this industry, this team and this network represent compelling value

And it's our job to make sure it's realized.

Speaker 2: That's excellent. Thank you. Thank you, Keith.

That's that's excellent. Thank you. Thank you.

Margo (Conference Operator): Thank you.

Speaker 3: Thank you. And our next question comes from Scott Group with Wolfe Research. Please go ahead.

Thank you.

Thank you, on our next question comes from Scott group, with wolf research. Please go ahead.

Speaker 4: Hey, thanks. So Keith, when you talk about enhanced competition and concessions, if you just think about your wish list of what you'd want to get, like what's the opportunity for CP? Is this tens of millions of dollars, hundreds of millions of dollars? I don't know if there's a way to quantify it, but any you know thought on it? And then maybe just back to just like the the quarter and earnings, Nadeem, any thoughts on how to just think about the the OR progression in Q3 and the the back half of the year?

Hey thanks. Um so Keith when when you talk about

Enhanced competition, and concessions. If you just

Your wish list of what you'd want to get, like, what's the opportunity for CP? Is this?

Tens of millions of dollars hundreds of millions of dollars. I, I don't know if there's a way to quantify it but any you know thought on it and then maybe just back to just like the the quarter and earnings medium and any thoughts on on how to just think about the the oh progression in Q3 and the the back half of the year.

Keith Creel: Sure. Let me just answer that, Scott. I mean, we'll continue to see sequential improvements Q3. And I think we've had Q4 be typically our strongest quarter of the year. And so you'll see a kind of a step function improvement in Q4 versus Q3. And you know we've mentioned this year a couple of times that we see the sub-60 OR for the year. So I think we're not backing off of that. There's no need to. We still see visibility with the strong volumes and the recovery of the network. And I think we can achieve that for the year as well.

Here, let me just answer that Scott. I mean, we'll continue to see sequential improvements, um, uh, Q3 and and I think we've had q4b typically our our strongest quarter of the year. And so you'll see a kind of a step function Improvement in in Q4 versus Q3. And, you know, we've we've mentioned, uh, this year a couple times that that we see the sub 60 or for the year. So I think we we're not backing off of that. Uh, there's no need to, we still see have visibility with the strong volumes and uh, the recovery of the network and I think we can uh, achieve that for the year as well.

Margo (Conference Operator): Okay. And Scott, I'll, you know, hypothetically, and again, this is hypothetically, I can't really give you a good answer until I see what the concessions would be. Now, I've got a list. I've got some ideas. But you know, depending on how successful we are in achieving those outcomes, we'll determine what that number is going to be. And listen, I'm not naive and I'm not going to misrepresent the need to compete. We're going to have to compete. No doubt about it. But again, the reach of this network allows us to create unique outcomes. And what we might lose in one location, perhaps because there might be some single line service created that we can't replicate, either ourselves and/or through a seamless partnership with a motivated partner, then again, we'll have to compete. But I guarantee we'll offset it in other areas.

so, with that,

It's got a.

Um, you know, hypothetically and again this is hypothetically.

I can't really give you a good answer until I see what the concessions would be. Um, now, I've got a list, I've got some ideas but, you know, depending on how successful,

We are in achieving those outcomes, we'll determine what that number is going to be. Uh, and listen, I'm not naive and I'm not going to misrepresent.

The need to compete. We're going to have to compete.

To create unique outcomes and what we might lose in one location, perhaps because there might be some single line service created that we can't replicate.

Either our sales, indoor through a seamless partnership with a motivated partner.

Margo (Conference Operator): You know, I heard something yesterday about, you know, the desire to go after Canadian ports and attack traffic that's convert traffic, maybe attack's a bad word, convert traffic that's destined for the US. Well, I can tell you, and I'll let John provide a bit of color, that's not a lot for us. That's not a place that we have a lot of exposure. So again, the puts and takes, that's not a big one on my take list.

Um, then again, we'll have to compete but I guarantee it will offset it in other areas.

you know, I heard something yesterday about

You know, the desire to go after Canadian ports and attack traffic. That's...

Keith Creel: Scott, I hope they're not banking their business case on that volume. It's, you know, barely 1% of our revenues. And honestly, we feel pretty good about the structural advantage that Vancouver has been able to provide over the years. You can historically look at these volumes, and certainly they move back and forth. You get a trade or you get a labor disruption down in LA Long Beach and it all flows north. You get the same one we had last year in Vancouver, and you saw some of the volume slide back south. And I think the other point is you got to realize the majority of that traffic we haul does not, they don't need a merger to compete against it. It's Chicago, it's Minneapolis is the bottom line.

Convert traffic, maybe attacks a bad word convert traffic that's destined for us. Well I can tell you and I'll let John provide a bit of color that's not a lot for us. That's not a place that we have a lot of exposure. So again the puts and takes that's that's not a a big 1 on my take list.

Scott, I hope they're not banking their business case on that volume. Um, it's barely 1% of our revenues and...

Honestly, we feel pretty good about the structural advantage that Vancouver has been able to provide over the years. You can historically look at these volumes, and certainly they move back and forth. You get a trade or you get a labor disruption down in Long Beach, and it all flows north. You get the same one we had last year in Vancouver, and you saw some of the volume slide backs out.

um, and and I think the the other point is you got to realize

The majority of that traffic we we Haul does not, they don't need a merger to compete uh against it. Uh, it's Chicago. It's Minneapolis.

Keith Creel: NS can haul that direct out of the East Coast ports into Chicago, and UP can obviously hit both of those markets today. That traffic's available. So we feel pretty comfortable with the service product out of Vancouver that we produce, out of St. John that we produce. And at the end of the day, as Keith said, we'll compete. If we need to compete, we're going to compete today. We'll compete tomorrow for that traffic.

Is the bottom line NS Canal that direct out of out of the East Coast ports into Chicago and and up can obviously hit both of those markets today.

Uh, that that traffics available. So, we, we feel pretty comfortable with the service product out of Vancouver that we produce out of St. John, that, that we produce, and at the end of the day, as Keith said, we'll we'll compete if we need to compete, we're going to compete today. We'll compete tomorrow for for that traffic.

Margo (Conference Operator): Scott, I can't resist asking, though, 75%. Scott, I can't resist asking, at 75% odds of getting the deal approved, you must have a pretty meaningful concession list in mind to pass a public interest test. So maybe we take that one offline, but I'm interested in your answer to that one.

Scott I can't resist asking though. Aesthetic. 5% Scott I I can't resist asking it. 75% odds of getting the deal approved.

You must have a pretty meaningful concession list in mind to pass a public interest test. So maybe we take that 1 off line, but I'm very interested in your answer to that 1

Keith Creel: Happy to catch up anytime.

Happy to catch up anytime.

Speaker 4: All right. Thanks, Scott.

All right. Thanks Scott.

Speaker 3: Thank you. And next question comes from Brandon Oleski with Barclays. Please go ahead.

Thank you. And next question. Comes from Brandon. Oleski with Barkley's, please go ahead.

Speaker 4: Hey, good afternoon, guys. Thanks for taking my question. Keith, I recall a pretty epic sell slow. But John, maybe you can speak to the specifics of tariffs on your business and the growth outlook just looking into the back half of the year. You know, how is that impacting the auto business, maybe specifically, but more broadly, should we be thinking about other impacts that may?

Hey, good afternoon, guys. Thanks for uh taking my question.

If I recall pretty Epic.

But John, maybe maybe you can speak to the specifics of tariffs on your business and the growth Outlook, just looking into the back half of the year, you know, how is that impacting the auto business maybe specifically. But more broadly should we be thinking about other impacts that

May here.

Keith Creel: Brandon, you're kind of breaking up a little bit. I think I got the most of this. You know, looking at the back half of the year, you know, undeniable trade uncertainty and macro issues. You know, we're keeping it pretty basic. We're focused on the self-help initiative, the synergies, and frankly, that's what's driven our differentiated growth these last couple of years. The good news is that pipeline remains strong, and we see a good building of that through the second half of the year. The second piece is our bolt franchise. We had a really strong outlook the second half of the year on our bolt franchise. You know, I think I mentioned we got really good grain crops trending up across our US network and also across Canada. We got record potash demand, a relationship with Campatex, and that business has never been stronger.

Brandon, you, you're you're kind of breaking up a little bit. I think I got the most of this, um, you know, looking at the back half of the year and, you know, undeniable trade uncertainty and, and and macro issues. Um, you know, we're keeping a pretty basic, uh, we're we're focused on the self-help initiative, the synergies.

Keith Creel: It's performing quite well. And we got a really strong coal outlook the second half of the year. You couple that with strong pricing and disciplined pricing. We'll continue to deliver. And I feel good about where we're set up. You know, July is roughly 3% RTMs. We're around that 5% number. And we got some favorable comps as we left some of the issues we had the second half of the year last year. You know, on the tariff front, I would boil it down to three areas where, you know, we've seen impact. And we'll, you know, depending on what happens, we'll probably continue to see some impact here. Essentially, our steel business, our cross-border steel business is, for all practical purposes, shut down at this point at a 50% tariff level.

And and frankly that's what's Driven our differentiated growth, these last couple years. Um the good news is that pipeline remains strong and we see a good building of that. Through the second half of the Year. Second piece is our bolt franchise. We had a really strong Outlet the second half of the year on our bulk franchise. Uh, as you know, I think I mentioned, we got really good grain crops framing up, uh, across our us Network and also across Canada, we got record pot, ash demand, uh, relationship with Camp attacks, and, and that business has never been stronger.

Keith Creel: You know, we've had to work hard to sort of back it, fill, and find other opportunities with those customers. And we'll continue to do that. You know, the automotive space, yes, it's been choppy from stops and starts. The good news is we also have created a service product that I would say is industry best and leading. And albeit we've seen choppiness, we continue to see growth with these customers and the desire to convert more and more to our single line haul product and to use our compound. So we've been able to insulate ourselves in that space by, you know, ongoing growth with those customers. And then the last piece is the international space where certainly we've seen pretty significant ebbs and flows. And that's probably going to continue.

Keith Creel: We're going to watch close the back half of the year on sort of what that area looks like. You know, as Keith said in his opening remarks, the good news in that space is, you know, our partnership with Maersk and Hapag through Gemini is as strong as it's ever been with those partners. They're producing the volumes. And as much as Vancouver has been a success, we're seeing, you know, good growth with them at Port of St. John. That's going to continue. And, you know, honestly, we saw a dip in some of our Lazaro traffic here the last couple of months. But I can tell you the bookings here the next couple of months look much stronger. So we're excited to keep pushing that product, you know, as much as we can up into the US market.

To work hard to sort of back hit fill and find other opportunities with those customers. Uh and we'll continue to do that uh you know, the automotive space. Yes. Uh it's been, it's been choppy, some stops and starts. The good news is, we've also have created a service product, uh, that I would say is industry, best and leading and albeit, we've seen choppiness. We continue to see growth with these customers and the desire to convert more and more to our single line, haul product, and to use our compounds. So we've been able to insulate ourselves in that space by, you know, ongoing growth with those with those customers. And then, the last piece is the International Space where certainly we've seen pretty, uh, significant es, and and flows. Um, and that's, that's probably going to continue. We're going to watch close the back half of the year on on, on sort of what that area looks like. You know, as Keith said in his opening,

Marks the good news in that space is, you know, our partnership with merus, can hapag through Gemini is this as strong as it's ever been with those Partners. They're, they're producing the volumes.

Keith Creel: So again, you were kind of breaking up, but I hope that captured most of it.

Um, and and as much as Vancouver has been a success, we, we're seeing, you know, good growth with them at Port of St. John that's going to continue. Uh, and and, you know, honestly, uh, we we saw a dip in some of our Lazaro traffic here, the last couple months, but I can tell you the bookings here, the next couple months look much stronger. Uh, so we're we're excited to keep pushing that product uh, you know, as much as we can up into up into the US market.

So again, you are kind of breaking up, but I I hope that captured most of it.

Speaker 4: Yeah, you got it, John. Sorry. I'm on a train actually right now. So thank you.

Yeah, you got it, John. Sorry, I'm on a train actually right now. So, thank you.

Keith Creel: All right. Good place to be.

Speaker 4: Good choice.

All right, good place to be.

Keith Creel: No problem.

Get you on your travel.

Speaker 3: And your next question comes from Ari Rosa with City Group. Please go ahead.

And your next question comes from Ari Rosa with Citigroup. Please go ahead.

Speaker 4: Hi, good afternoon. Keith, you mentioned you'd had some conversations already, just kind of preliminary conversations. I was hoping you could share some of that. Obviously, you know, nothing that's confidential or anything of that sort. But you know, how are customers responding to the proposal? How are, to the extent you've spoken with any regulators, like how are they thinking about that? Just any color on those kind of preliminary reads would be helpful.

Hi. Good afternoon. Uh Keith you you mentioned you had had some conversations uh already just kind of preliminary conversations I was hoping you could share some of that uh obviously

You know, nothing that's confidential or anything of that sort. But, you know, how how are customers uh responding to the proposal, how are uh to the extent, you've spoken with any Regulators, like how are they thinking about that? Just any caller on those. Those kind of preliminary reads uh would be helpful.

Margo (Conference Operator): With all due respect, the conversations have been direct with other railroad CEOs and two-way conversations. Only one of us is here. I'm not going to represent the conversation. I can just say that they're encouraging and positive. When it comes to customers, John, you want to comment?

Keith Creel: Yeah. So honestly, the phone's been pretty active on that front already. I'd say as much as trying to understand, given that what we've lived through these last few years or leading up to this transaction, trying to get a read, you know, Ari on our feeling around the likelihood of this and can it be done? I don't know. It feels like it's a little bit of a mixed bag. You know, there is certainly the risk of operational performance and integration that I think is looming over everyone. And frankly, nobody knows that better than us coming out of some of the challenges we faced the last couple of months in the southern part of our network.

Keith Creel: And as Keith said, it's just a far grander scale and a whole other level of risk that I think these customers are going to be concerned about or are going to want to really understand what that looks like in a tremendous amount of detail going into that. So look, we'll continue to canvas and make sure the customers are fully, you know, educated in terms of not only what we went through and what they should expect, UP and NS need to deliver and produce to them, you know, through the process that we're going to go through with the STB.

Like, with all due respect, the conversations have been direct with other railroad, CEOs, and 2-way conversations. Only 1 of us is here. I'm not going to represent the conversation. I can just say that they're encouraging and positive. Uh when it comes to customers John, you want to comment? Yeah. So uh honestly the the phone's been pretty active on on that front already. I'd say um, as much as trying to understand given that what we live through these last few years are leading up to this transaction, trying to get a read, you know, re on on our feeling around the likelihood of this and and and, and can it be done? I don't know. It's it, it feels like it's a little bit of a mixed bag. Um, you know, there is certainly the risk of of operational performance and integration that I think is looming over everyone. And and frankly, nobody knows that better than us. Coming out of some of the, the challenges we Face the last couple of months and southern part of our our Network and, and

And as Keith said that it's just a far grander scale in a much whole, another level of risk that I that I think these customers are going to be concerned about are going to want to, really understand what that looks like uh in in in a tremendous amount of detail go going into that.

Um, so look, we'll continue to do Canvas and make sure the customers are fully, you know, um, educated in terms of not only what we went through and what they should expect.

Speaker 4: Great. Thank you for that.

Great, thank you for that.

Keith Creel: Yep.

Yep.

Speaker 3: And your next question comes from Steve Hansen with Raymond James. Please go ahead.

And your next question comes from Steve Hansen with Raymond James, please go ahead.

Speaker 6: Yeah, thanks for the time, guys. Keith, only because you referenced the probability earlier, would you hazard to put a probability on a deal getting done better or greater than 50, better or lower than 50? And then just secondarily, I think just outside of the merger topic, I just wanted to ask about the Gemini process and ramp-up in particular. I think in many cases, that's far out exceeded our expectations thus far. Just curious how you think it's tracking relative to your earlier expectations. I can say February, March when we started to see the volumes coming on. Has it exceeded those expectations thus far? And John, you've already referenced some opportunities still for a little bit ahead, but how do you sort of envision that over the next two to three years? Thanks.

They exceeded those expectations, thus far, and John, you've already referenced some opportunities still for go to the head. But how do you sort of Envision that over the next 2 to 3 years? Thanks?

Margo (Conference Operator): Yeah, I'll let John answer the question on Gemini. I want to make sure I got the question right, Steven, on the merger. You're asking what my view is on the odds of it getting approved?

Speaker 6: Correct.

Yeah, I'll let John answer the question on Gemini. I want to make sure I got the question, right. Stephen on the merger. You ask him what my view is on the odds at the beginning, approved.

Correct.

Margo (Conference Operator): I mean, that answer depends on the concessions that are proposed and the concessions that are willing to be accepted. So it's hard to put odds at it. I'll just say this. They're going to be meaningful. They'll have to be meaningful to address the holistic impacts of a potential in-game scenario. There's no way to deny that. So it's not, again, just in isolation UP and SS. It has to consider the potential in-game. The rules require it. All the parties understand it. So more to come on that. We'll just have to see how this thing plays out. And rest assured, you know, I'm kind of thinking about in history and memory, the comment earlier, a minute ago, about the integration risk.

I mean, that answer depends on the concessions that are proposed and the concessions that are willing to be accepted. Um, so it's, it's hard to put odds at it. I I'll just say this, they're going to be meaningful, they'll have to be meaningful to address the holistic impacts of a potential in-game scenario. Uh, there's no way to deny that. So it's not again, just an isolation UPS. It has to consider the potential end game, the rules required. We all the parties understand it. Um, so more to come on that. We'll just have to see how this thing plays out and rest assured. Um, you know, I'm kind of thinking about in history and memory

Margo (Conference Operator): You know, if I can remember, and I'm still working, and I'm, I mean, this is my 33rd, 34th year in the industry, but as a young operating officer, I lived through the SVUP combination, the two associated industry meltdowns with that. I lived through the Conrail carve-up. I can remember the complexities and the challenges that are created with those combinations. And I would just suggest, if I'm still working, I'm a bit more seasoned than I used to be, but I'm still got a lot of run left in me. There's light scenarios and situations in these large companies where they were too. And they were people that were in entry-level jobs just like I was. And they lived through the realities, undeniable realities of these complex combinations. And they're going to be asking those questions too.

the comment early a minute ago about the integration risk.

you know, if I can remember and I'm still working and I'm, I mean, this is my

In my 33rd and 34th year in the industry, but as a young Operating Officer, I lived through.

the sbup combination, um, the 2

Associated industry, meltdowns with that, I lived through the Conrail carve up.

Uh I can remember the complexities and the challenges that are created with those combinations. Um,

And I would just suggest if I'm still working.

I'm a bit more seasoned than I used to be, but I'm

Still got a lot of run left in me. There's like scenarios and situations in these large companies where they were too and they were people that were in entry-level jobs, just like I was and they lived through the realities.

Uh, undeniable realities of these complex combinations, and they're going to be asking those questions too.

Margo (Conference Operator): Up today, they're in positions perhaps like we are with more increased responsibility to their organizations. So the answers are truly going to matter to them.

It's up to today. They're in positions, perhaps, like we are, with increased responsibility to their organizations. Uh, so the answers are truly going to matter to them.

Keith Creel: And Steve, you know, regarding Gemini, I'd say we're extremely pleased with how it has started up so far. We've recently, you know, met and continue to meet with both partners that are very pleased with the service performance that we've been able to tag on to their vessel and ship performance. I would say the volumes have ramped up faster in Vancouver than I think they expected and we expected, but it's been a good thing. And I would say we're still in the middle innings of the journey with them. So I'm quite pleased with that. And really, you know, as you think about growth over the next 18, 24 months, we haven't really scratched the surface to the level I think all the parties want to, if you think about Lazaro.

And Steve.

You know, regarding Gemini I'd say we're we're extremely pleased with how it, uh, has started up so far. Um, we've recently, you know, met and continue to meet with both partners that are very pleased with the service performance that that we've been able to tag on to their vessel and ship performance. Um, I would say the volumes have ramped up faster. Uh in Vancouver than uh I think they expected in we expect

Keith Creel: So I think there's still opportunity there that has maybe been weighed down by some of the tariff and trade talk. So we're still excited about that. And we got a lot of capacity online now at St. John. So I think there's still some upside with the partners at that port.

Margo (Conference Operator): Yeah. And John, just to add, Steve, this is Mark. The, you know, the dream we had is coming off South Shore with just building service straight out of the facility, being able to go and penetrate into the east market straight from Vancouver. With Gemini, we've been able to do that. We've been able to build trains straight off of that port and go straight to destination. To overlay that with the new locomotives that we're adding to the 100 series fleet in Canada, certainly upside and really just creates that quality service plan we need to give them, and we are.

But it's been a good. It's been a good thing. Uh, and there's, I would say we're still in the, the middle Innings of, of the journey with. Um, um, so I'm, I'm, I'm quite pleased with that. And and really, um, you know, as you think about growth over the next 18, 24 months. Um, we haven't really scratched the surface to the level. I think all the parties want to if you think about Lazaro. Uh so I think there's there's still opportunity there that is maybe been weighed down by by some of the tariffs and and trade talks. So we're we're still excited about that and we got a lot of capacity online now at at St. John, so I think there's still some upside um with the partners at that point.

Yeah, and John, just to add, um, Steve, this is Mark. The, um, you know, the drain we had is coming out in South Shore with just building service straight out of the facility. Uh, we've been able to go and penetrate into the Eastern Market straight from Vancouver. Um, with Jim and I, we've been able to do that. We've been able to build train straight off of that port and go straight to the destination. The overlay that with the new locomotives that we're adding to the 100 Series Fleet in Canada. Uh, certainly upside, and really just creates that quality service plan we need to give them, and we are.

Speaker 6: Appreciate the color. Thanks, guys.

Appreciate the caller, thanks.

Speaker 3: And our next question comes from Stephanie Moore with Jeffries. Please go ahead.

And our next question comes from Stephanie Moore with Jefferies. Please go ahead.

Chris de Bruyn: Hi, good afternoon. Thanks for the question. You know, Keith, really appreciate the insight and time you're spending kind of walking through the puts and takes of the proposed merger here and providing your insight from your own experience. You know, I guess one follow-up to the point you were making earlier in terms of gateway options. But you know, if I recall, you know, I think the official ruling from your own deal here from the STB, it talked about protecting competition and not necessarily competitors. So I wanted to, one, do you think that the board would likely take a similar stance in this deal or has something changed? And then second, maybe talking about, you know, the ability to, you know, ensure existing gateways are still preserved and, you know, if that wouldn't be the case based on the merger proposed or potentially both, the TransCon mergers.

Chris de Bruyn: Thank you.

Margo (Conference Operator): You know, you know, again, I can't speak for the STB. I could imagine a world where some of those solutions are part of the considerations. But you mentioned the key word. Under our consideration and under the rules that we were approved, the STB was governed by a standard that said you had to protect competition. That's not the case anymore. Don't exist anymore. There'll never be another merger that just has to protect competition. They have to enhance competition. So when I hear that there's only 20 customers that go from two to one and we have an answer, then the next question I have is, what does the answer do? Does it preserve or does it enhance? Because if it just preserves, it doesn't meet the public interest test. It must enhance. That's a unique and undeniable material difference that these merger rules represent. They're untested.

You know, if that wouldn't be the case based on the merger proposed or potentially both. Transcon mergers. Thank you.

You know, you know, again, I can't speak for the STV. I could imagine a world where

Some of those solutions are part of,

The considerations, uh but you mentioned the key word.

Under our consideration and under the rules that we approved. The stb was governed by a standard that said you had to protect competition. That's not the case anymore.

Don't exist anymore.

They'll never be another merger. That just has to protect competition. They had to enhance competition.

So when I hear that, there's only 20, customers that go from 2 to 1 and we have an answer then.

The next question I have is, what is the answer do? Does it Preserve?

Or does it enhance? Because if it just preserves,

It doesn't meet the public interest test, it must enhance.

Margo (Conference Operator): And rest assured, the STB will want to get this one right. Because by their own admission and by the industry, including UP's own admission, this very well could trigger total industry consolidation that leads to an end-game scenario where you have two duopolies across this nation. It has to get right. It has to be done right to serve the public interest.

That's a unique and undeniable material difference that these merger rules represent. They're untested and, rest assured, the STB will want to get this one right.

Because, by their own admission, and

by the industry including UPS on admission, this very well could trigger.

Total industry consolidation that leads to an in-game scenario where you have.

2 duopolies across this nation.

It has to get right?

It has to be done, right? To serve the public interest.

Chris de Bruyn: Thank you.

Thank you.

Margo (Conference Operator): Thank you.

Speaker 3: Thank you. And our next question comes from Daniel Embryo with Stevens. Please go ahead.

Thank you. Thank you. And our next question comes from, Daniel embryo with Stevens. Please go ahead.

Speaker 6: Yeah, thanks. It's good to be in, guys. Good evening. John, I want to follow up on actually the pricing back on the CPKC side. I think you talked about three headwinds in the quarter on fuel prices, the carbon tax, and then mixed. Any way to quantify those stents for RTM headwinds as we parse through Q2 and which of those will continue in the back half? And if we heard you right, it sounds like core pricing is staying above that 3 to 4% range. I guess, when should we think about that beginning to flow through the model more to the bottom line and maybe not being masked by some of these other headwinds?

Yeah, thanks for speaking with me guys. Good evening.

John a I want to follow up on, actually the pricing back on the cpkc side. I think you talked about 3 head wins in the quarter on fuel prices, the the carbon tax, and then mixed anyway, to quantify those tenants for RTM headwinds as we parked through to q and and which of those will continue in the back half. And if we heard you write something core pricing is staying above that 3 to 4% range. I guess, once we think about that beginning to flow through the model, more to the bottom line and maybe not being masked by some of these other head ones.

Keith Creel: Well, it flowed through first quarter pretty well. Yeah, Daniel, just to give you a perspective, fuel and the carbon tax, essentially 100% wiped out pricing. And mix was minus 4% is how it broke down. You know, frankly, just you saw the intermodal growth, the international intermodal growth we saw combined with really strong bulk growth. And you know, those average sense for RTM and those business units is slightly below, you know, the corporate average. So hence the mix challenge. You know, looking forward, I think fuel we expect to improve. So we'd see, I think, a better outcome there. We're going to continue to have the carbon tax headwind.

But float through first quarter pretty well. Um, it's, yeah, and that'll just give you a perspective. Um, fuel in the carbon tax, essentially, 100% lifestyle pricing. Um, and mix was minus 4%, um, is how it broke down. Um,

Frankly, just so you saw the intermodal growth, the international and emotional growth.

Keith Creel: And you know, as I look to the second half here volumes, I think mix improves some, but it's probably still going to be a headwind because we are expecting a pretty big bulk back half of the year too with the grain, the potash, and the coal. Hope that helps.

We saw combined with really strong bolt growth and, you know, those uh, average scents for RTM. And those business units is slightly below, you know, the corporate average. So hence, the the mix challenge, you know, looking forward, um, I think fuel, we expect to improve. Uh, so we we'd see uh, I think a better outcome there. We're going to continue to have the carbon tax headwind.

And you know, as I I look to the second half here volumes, I think mix improves some but it's probably still going to be a headwind. Uh, because we are expecting a pretty big bulk. Back half of the year 2 with the grain, the pot ash and the coal.

Speaker 6: Yep. Super helpful. Thanks for the color.

Hope that helps.

Yep. Super, super helpful. Thanks for calling.

Speaker 3: Thank you. And your next question comes from Ken Hixter with Bank of America. Please go ahead.

Thank you. And your next question comes from Ken hexter with Bank of America. Please go ahead.

Speaker 4: Hey, great. Good evening, Keith and team. So I'm sorry, just to clarify, Keith, are you saying that CPCN is now off the table? It was only a couple of years ago, CP tried to make the case for each of the Eastern rails. Sounds like you're saying you're inclined that this is only a duopoly structured process and you're going to now lead the fight for concessions and detailing the risks to the regulators versus you jumping in the round and seeing, you know, dancing with who's left. Is that kind of what you're saying that then the only real realistic option on the table? And then I guess, Nadeem, just to clarify one thing you mentioned on the OR, right? You said the, I just want to understand, given the impact to 2Q OR from the network issues, you mentioned kind of going into the 50s.

Hey, great. Good evening. Uh, Keith and team.

So I'm sorry just to clarify Keith. Are you saying that cpcn is now off the table?

Um, it it was only a a couple years ago. CP tried to make the case for each of the Eastern. Rales sounds like you're saying you're inclined that this is only a duopoly structure process and you're going to now lead the fight for concessions, in detailing the risk to The Regulators versus you jumping in the round and and seeing you know, dancing with who's left, is that, is that kind of what you're saying that?

Speaker 4: I just want to understand, should we see an outsized historical shift from 2Q to 3Q just given the network issues from 2Q?

Then the only real realistic option on the table and then I guess Nadeem just to clarify 1 1 thing you mentioned on the. Oh right? You said the I just want to understand given the impact to 2 qor from the network issues. You mentioned kind of going into the 50s. I just want to understand, should we see an outsized historical shift from 22 to 3 Q. Just given the the network issues from from 2q,

Keith Creel: No, I mean, the OR wasn't greatly impacted in Q2 by the network issue, by the systems integration. There was a 3 to 4 cent EPS, but it didn't affect the OR significantly, Ken. So I would say that though year over year, you'll see probably the best OR improvement in Q3 relative to the other quarters. So I'm giving you a lot of quarterly OR color there, Ken. But I'd just say continued improvement and then continued improvement in Q4 and sub-60 for the year.

um, no, I mean, I the O wasn't greatly impacted in Q2, by the, uh,

Received probably the best though our Improvement in Q3 relative to the other quarters. So giving you a lot of quarterly. Oh color there Ken. Um but I just say continued Improvement and then continued Improvement in Q4 and and sub 60 for the year. So

Margo (Conference Operator): Thanks. Can the best way to answer your question is we're going to consider all scenarios except for one, and you figured out between the lines what that one is. You know, at the end of the day, it's our job to make sure we create and leverage this team and network to create the most value for our stakeholders. And whatever definition allows us to meet that standard, we've got a fiduciary responsibility to consider it. And that's exactly what we'll do. We won't be confined by traditional. So maybe you expect the unexpected. Who knows? I don't know. I don't know what the facts are going to be. I just know that when they're revealed, we're going to understand them and we're going to meet our fiduciary responsibility.

thanks, there's Ken the best way to answer your question is, um,

We're going to consider all scenarios Excel for 1 and you figure. You figured out between the lines with that 1 is um there's end of the day, it's our job to make sure we create and leverage this team and network to create the most value for our stakeholders. And

Whatever that's definition allows us to meet that standard. Uh we got a fiduciary responsibility to consider it.

And that's a deck of what we'll do.

We won't be confined by traditional.

So, maybe you expect the unexpected. Who knows?

I don't know, I don't know what the facts are going to be. I just know that when is there revealed we're going to understand them and we're going to

meet our fiduciary responsibility.

Speaker 6: Thanks, Keith. Thanks, Nadeem.

Thanks.

Margo (Conference Operator): Thanks, Ken.

Speaker 6: Thanks again.

Thanks, thanks again.

Speaker 3: Thanks, gentlemen. Our next question comes from Robby Shanker with Morgan Stanley. Please go ahead.

Thank.

Our next question comes from. Robbie chancre with Morgan Stanley. Please go ahead.

Speaker 6: I agree. Thanks for everyone. If I can squeeze in a non-M&A question here. Apologies if I missed this, but I think you mentioned MMX volumes were up 40% year over year and 20% sequentially. I don't think anything in transport is up 40% year over year. So can you just give us a little more color there? Kind of was this tariff related? Kind of is that any pull forward into 2Q? And kind of where do you see that going in the next couple of quarters?

Uh, good, thank you everyone. Uh, if I can squeeze in a non m&a, question here. Uh, apologies, if I missed this but I think you mentioned, uh, MMX volumes were up 40% year-over-year and 20% sequentially. I don't think anything in transport is up 40% year-over-year. So can you just give us a little more color there? Kind of was this tariff related kind of? Is that any pull forward into doq? Um, and kind of, where do you see that? Going? Next quarters.

Keith Creel: It's a really strong sales effort, Robby. We're growing that product. It's truck-like. It's fastest in the industry. It's seamless, middle Mexico to Chicago and up into Canada. And frankly, between our partnership with Schneider and others, we've just seen really strong and continue to see strong growth. I think I mentioned in my prepared remarks, we've got a really sizable piece of automotive parts business that's ramping up. And now with the AmeriCold facility, you're going to start to see our reefer business ramp up on that product too. So I expect this trajectory to grow and hopefully pretty soon here we're putting pressure on Mark for a second train start.

That's a really strong sales though, for these. Um, we're we're growing. We're growing that product. Um, it's struck, like, it's fastest in the industry. It's, it's, uh, seamless middle Mexico to Chicago and up in Canada and, and frankly, uh, between our partnership with Schneider and and others, we've just seen really strong and continue to see strong growth. I think I mentioned in my prepared remarks, we've got a

A really sizable piece of Automotive, uh, Parts business that that's ramping up.

And um, now with the Americold facility, you're going to start to see our reefer business ramp up on that product too. So I I expect this to directory to to grow and hopefully pretty soon here. We're putting pressure on mark for a track, a second train start.

Speaker 6: That's it.

Margo (Conference Operator): Okay. Thanks, Robby.

That's it. Okay. Thanks Robbie.

Speaker 3: Thank you. And we have reached our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Creel. Please go ahead.

Thank you. And we have reached for a lot of

We have reached the end of our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Creel. Please go ahead.

Margo (Conference Operator): Okay. Thank you. Well, listen, let me close where I started. Thank you for your time today. A lot of robust discussion, certainly more to come. In the meantime, the most important thing we're focused on with this team is executing our plan this year to meet and exceed our objectives. We've laid out guidance. We fully intend to see a path to achieve that as it relates to the year and as it relates to our multi-year plans. That's what we'll do, as well as stay abreast of all these current developments as they progress within the industry. Thanks very much. We look forward to sharing our results next quarter.

Hey, thank you. Well listen, let me uh, let me close where I started. Thank you for your time today. A lot of um,

robust discussion, certainly more to come in the meantime, the most important thing we're focused on with this team is executing our plan this year to meet in a

Exceed our objectives, we've laid out guys, we fully intend to see a path to to achieve that as it relates to the year and as it relates to our multi-year plan, that's what we'll do.

As well as stay a breast of all these current developments as they progress within the industry.

Thanks very much, and we look forward to sharing our results next quarter.

Speaker 3: Thank you. And this concludes today's conference call. You may now disconnect.

Thank you. And this concludes today's conference call, you may now disconnect