CPKC Q4 2025 Canadian Pacific Kansas City Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Canadian Pacific Kansas City Ltd Earnings Call
Operator today at.
At this time I would like to welcome everyone to see Pkc's fourth quarter and full year 2025 conference call.
Speaker #1: I'll remind you that over the past two years, this franchise has led the industry in revenue growth and outperformed the industry in earnings growth.
The slides accompanying today's call are available at Investor Dot C. P. Casey our dot com.
Speaker #1: We've got an exciting setup to continue to generate industry leading performance in 2026, as well. So with that, I'm going to turn it over to Mark for some culinary operations.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
Speaker #1: John will give insight on the you a little markets . Nadeem , on the details . And then we'll open it up for Q&A .
If you would like to ask a question simply press Star then the number one on your telephone keypad.
Speaker #1: To you, Mark. Over.
If you would like to withdraw your question Press Star two.
Speaker #2: Thank you , Keith , and good afternoon . I want to recognizing the operating employees begin by safe , efficient reliable , service continues drive strong the performance of this to network .
I would now like to introduce Chris Debruin, Vice President capital markets to begin the conference call.
Speaker #2: The operating a team did job this quarter , and tremendous delivering these results . Turning to the quarter , our network exceptionally achieved well .
Thank you Angela and 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 the risks uncertainties and other factors that could influence actual results are described on slide two in the earnings release filed with Canadian and U S regulators. This.
Speaker #2: performed across a number of key metrics train , including weight record , locomotive speed , train productivity , and These improvements in velocity .
Operator: Please stand by, your meeting is about to begin. Good afternoon. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to CPKC's Q4 and full year 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 two. I would now like to introduce Chris De Bruin, Vice President, Capital Markets, to begin the conference call.
Q4 2025 Canadian Pacific Kansas City Ltd Earnings Call
Speaker #2: translate to car cycle times , faster network capacity , and greater more reliable faster , customer service . One thing I'm most proud of is proud to ten years in a row announce that , Cpkc earned Amtrak's carrier designation with best A+ performance , we're the only railroad with has , and we distinction appreciate the this recognition valued from our partner .
This presentation also contains non-GAAP measures outlined on slide three.
With me here today is Keith Creel, President and Chief Executive Officer, Bill <unk>, Our executive Vice President and Chief Financial Officer.
John Brooks, our executive Vice President and Chief Marketing Officer, and Mark <unk>, 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.
Speaker #2: Stepping back on progress, we have made substantial operating gains since the merger. Comparing our operational performance versus the time at merger, our network is 13% faster, 13% more productive, or nearly 14% stronger, when compared to the combined time at Q4 2023.
It's a pleasure to introduce our president and CEO, Mr. Keith Creel.
Thanks, Chris and good afternoon.
We thank everyone for joining us to review, our fourth quarter results as well as full year results in <unk>.
Although our team too.
Or how do we see an exciting 2026, playing out now let me Starbucks expressing gratitude and thanks to the 20000 strong CPE Casey family.
Chris de Bruyn: Thank you, Angela. 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. The risks, uncertainties, and other factors that could influence actual results are described on slide 2 in the earnings release filed 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. 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's now my pleasure to introduce our President and CEO, Mr. Keith Creel.
Speaker #2: The improvements at Kansas City are even more pronounced. Looking at speeds for 2025, they're over being 25% better. Locomotives—locomotive productivity improved roughly 20%.
Through their dedication hard work and sacrifice allow us to create the results that we're honored to share today, but I can tell you. This past week of railroading is at the banding way of life, that's consuming way a lot of times like we have navigated through this past weekend in fact navigate data daily in Canada operating in the winter operation.
Speaker #2: Looking forward, our operating systems and processes align across Canada and the US. We expect to deliver additional improvement in 2026. The foundation that we have built is consistent execution and reliable service.
Reminds me of just how much sacrifice that takes.
Speaker #2: As volumes grow, continue to... turning to now safety for the quarter. Freight accident frequency was 0.91, trending 12% better after a prior personal of 1.05, a 22% increase.
Speaker #2: As volumes grow continue to . turning to Now safety for the quarter . Freight accident frequency was 0.91 , train 12% better after a personal of 1.05 injury When I look at full year 2025 , our free train accident was 16% better .
Speaker #2: As volumes grow continue to . turning to Now safety for the quarter . Freight accident frequency was 0.91 , train 12% better after a personal of 1.05 injury When I look at full year 2025 , our free train accident was 0.85 Personal injuries was 0.92 , was I continue to be encouraged by the 3% better , leading performance for the third year in a row .
Rich.
We have the deepest amount of respect and appreciation for.
So onto the results for the fourth quarter revenue of $3 9 billion, which is up 1%.
Versus last year and industry best operating ratio of $55 nine 120.
Basis points of improvement in earnings per share of $1 33 up.
Keith Creel: Thanks, Chris, and good afternoon. Thank you, everyone, for joining us to review our fourth quarter results as well as full year results, and to allow our team to share how we see an exciting 2026 playing out. Now, let me start by expressing gratitude and thanks to the 20,000 strong CPKC family, who, through their dedication, hard work, and sacrifice, allow us to create the results that we're honored to share today. And I can tell you this past week, railroading is a demanding way of life. In fact, a consuming way of life, times like we have navigated through this past week and in fact, navigate daily, on the daily in Canada. Operating in the winter operation reminds me of just how much sacrifice that takes, which I have the deepest amount of respect and appreciation for.
<unk>, 3% versus last year, and particularly proud of the job the team did in the quarter in the face of a demanding.
Demand softening in a number of areas and how they honored our mantra of controlling what we can control controlling our cost structure of the team demonstrated exceptional execution that allowed us to produce the results we reduced the operating ratio side.
Speaker #2: CPKC led, has lowest ever frequency across the Class One railroads, building upon CP's legacy—17 years of consecutive best in class. So, all in, it's all two decades of best in class.
Our setup and carrying momentum well into 2026 as Mark is going to speak to also want to applaud the operating team for producing record results across several of our key operating metrics in the quarter. Most importantly, we produced another year of record safety performance and network shutting wells in great position to execute on the growth.
Speaker #2: These results, the strength that we have in our home, and our investments in technology—which helps prevent failures before they occur—are safe. Turning to labor, we continue to make progress in this space.
Speaker #2: Earlier this month, we announced 16 five-year collective bargaining agreements in the U.S. were ratified, covering several hundred employees in 11 states.
Opportunities that we have clean lying ahead of US now, let's turn our attention to the full year results revenue and $15 1 billion, which is up 4% volume growth of 4% as well.
Speaker #2: Across agreements reflect constructive collaboration with our unions and provide service with confidence, customers with reliability, and for our service network. Now, turning...
Keith Creel: So on to the results. For the fourth quarter, revenue of CAD 3.9 billion, which is up 1% versus last year, an industry best operating ratio of 55.9, 120 basis points of improvement, and earnings per share of CAD 1.33, up 3% versus last year. I'm particularly proud of the job the team did in the quarter in the face of demand softening in a number of areas, and how they honored our mantra of controlling what we can control, controlling our cost structure. The team demonstrated exceptional execution that allowed us to produce the results we produced in the operating ratio side, and we are set up in carrying momentum well into 2026.
Operating ratio at industry best at $59 nine.
A clear industry best improvement of 140 basis points for the year core EPS of $4 61, which is up 8% from.
Speaker #2: We were well aligned with our outlook for growth in 2025. We supported 4% growth with 1% lower average headcount. Expect continued strong operating leverage in 2026, as we did receive the 100 Tier 4 locomotives in 2025.
26 outlook.
As we look forward in 2026, the way we see it unfolding, we fully expect to deliver another year of mid single digit volume growth enabled by the strength of our bulk business, particularly the unique growth drivers. This franchise SaaS, which John will speak to we expect to continue improving margins and ultimately deliver low double digit earnings growth.
Speaker #2: We have an additional 100 scheduled for delivery this year. These locomotives are improving the efficiency and reliability of our fleet, positioning us for continued profitable growth.
For clarity this outlook does not assume that we get much out of the macro our growth drivers are unique to CP Casey and record grain harvest in Canada.
Keith Creel: As Mark's going to speak to, I also want to applaud the operating team for producing record results across several of our key operating metrics in the quarter. Most importantly, we produced another year of record safety performance. Our network's running well. It's in great position to execute on the growth of opportunities that we have lying ahead of us. Now, let's turn our attention to the full year results. Revenue, CAD 15.1 billion, which is up 4%. Volume growth is 4% as well. Operating ratio at industry best at 59.9. A clear industry best improvement of 140 basis points for the year. Core EPS of CAD 4.61, which is up 8%.
Speaker #2: In 2026, we will continue our merger-related expansion and the commitments to the STB. This work includes CTC, additional sidings, the Kansas City to Chicago corridor, but it also includes work towards Shreveport.
In the U S provides strong differentiator base of business.
Our story is about continuing to do what we do best controlling what we can control and executing our ESR model, which remains key to setting <unk> and allows us to shine in times of uncertainty we saw that in the results in the last quarter, you'll continue to see that in 2026 for.
Speaker #2: These upgrades are improving velocity on the south route, which is strengthening our customer service. Closing network is performing at record levels.
Speaker #2: We are properly strange handle resourced to harvest in grain Canada and US . Our investments in capacity , safety and power are driving sustained , meaningful gains position to execute our operating plan , support our customers and deliver on our commitments throughout 2026 .
So the growth outlook there are a lot of things to get excited about uniquely enabled by the <unk> work John will talk about them in more detail, but I'll highlight a few grain harvest and all time record in Canada 85 million metric tons versus the previous record of 78 million metric tons, a significant amount of grain to move it carried into the full year of 2026, that's a record high.
Keith Creel: The 2026 outlook, as we look forward on 2026, the way we see it unfolding, we fully expect to deliver another year of mid-single-digit volume growth, enabled by the strength in our bulk business, and particularly the unique growth drivers this franchise has, which John will speak to. We expect to continue improving margins and ultimately deliver low double-digit earnings growth. For clarity, this outlook does not assume that we get much out of the macro. Our growth drivers are unique to CPKC and record grain harvest in Canada, in the US, provide strong and a differentiating base of business. Our story is about continuing to do what we do best, controlling what we can control and executing our PSR model, which remains key to setting CPKC apart and allows us to shine in times of uncertainty.
Speaker #2: turn it With that , I'll to John . All right . Thank you , Mark , and good afternoon , everyone . this quarter showed the resilience book of with business growth across key segments and traction from new winds offsetting areas of deepening softness despite macro and tariff pressures .
This both in Canada, and the U S grain starting to move now Ingests and again I'm going to be busy through the balance of this year.
You can drink continued growth in intermodal or MMX 180, 181, the fastest and most reliable service in the industry between the Midwest and deep into Mexico continues to grow and do extremely well and we're bringing that same model ticket in Mexico and the U S southeast the partnership with <unk> in our southeast New Mexico.
Speaker #2: We delivered to our customers . We captured synergies . maintained pricing disciplined and advanced initiatives that will support our growth in 2026 . Now , looking at our Q4 results this quarter , we delivered record revenue up 1% on flat rtms cents per RTM , was up 1% .
<unk> service that business is just getting started.
Moving with our partners, we see a ton of opportunity for growth of that corridor.
Speaker #2: Our pricing remained strong, with renewals exceeding our long-term 3% to 4%. Outlook partially offset pricing, as longer length of haul and higher bulk traffic lower our cents per RTM.
Keith Creel: We saw that in the results in the last quarter, and we'll continue to see that in 2026. So the growth outlook, there are a lot of things to get excited about, uniquely enabled by this network. John will talk about them in more detail, but I'll highlight a few. Grain harvest, an all-time record in Canada, 85 million metric tons versus a previous record of 78 million metric tons. A significant amount of grain to move to carry it into the full year of 2026. That's a record harvest both in Canada and the US. The grain's starting to move now in jest, and again, we're going to be busy through the balance of this year, moving grain.
We've created an industry best transit time.
In partnership to CSS from Atlanta to Dallas over the Meridian Speedway and from Atlanta to Monterrey truck competitive Dallas and superior to truck and the Mexico. It can't be replicated by truck and in Mexico. We're also excited about the miracle business Thats ramping up this year along with the continued growth on the international intermodal side with Gemini.
Speaker #2: Now, taking a closer look at our fourth quarter revenue performance, I'll speak to an FX-adjusted result. Starting with bulk, record grain revenues were up 4% on 2%.
And also continued growth in our automotive franchise on the capital side, we're going to continue to invest to support the growth last week, we announced <unk>.
Speaker #2: Volume growth . Our Canadian grain volumes were up 2% on a record harvest . Export volumes , however , lagged expectations rain impacted the loading of vessels in Vancouver in and Vancouver farmers chose to store grain volumes , tempering the pace of shipments through the quarter .
Any divestment with our locomotives.
Keith Creel: Continued growth in intermodal, our MMX 180, 181, the fastest and most reliable service in the industry between the Midwest and deep into Mexico, continues to grow and do extremely well, and we're bringing that same model to Mexico and the US Southeast, the partnership with CSX and our Southeast Mexico Express service. That business is just getting started to moving. With our partners, we see a ton of opportunity for growth over that corridor, as we've created an industry-best transit time in partnership with CSX from Atlanta to Dallas over the Meridian Speedway and from Atlanta to Monterrey. Truck competitive to Dallas and superior to truck into Mexico. It can't be replicated by truck into Mexico.
Hunter New locomotive joining the fleet in 2026 addition to the 100 that we added in 2025.
So the combination of our strong topline growth disciplined investment and our continued cost and efficiency improvements its put us in an advantageous position to return cash.
Speaker #2: US grain volumes were also up 2% , with growth led by higher shipments to the PNW and down to Mexico . Our network continues to uncover new markets , and this is especially visible with record setting Q4 full year and shipments in grain the Mexico .
Cash to shareholders, which you just witnessed as we announced a 5% share buyback program for 2026.
So in closing I'm extremely proud of what we produce the myths a ton of volatility in 2025, and we're super excited about the opportunities ahead I'll remind you over the past two years. This franchise has outperformed the industry in revenue growth outperformed the industry in earnings growth. We've got an exciting set up to continue to generate industry leading performance in 2020.
Speaker #2: Turning to the first half of 2026, the North American crop is shaping up to be a record, both in Canada and the US.
Speaker #2: Keith, as said, estimates point to an 85 million metric ton Canadian harvest, up 20% from last year. We also have a record US corn crop and solid bean production that has recently started to move to market.
Six as well so with that I'm going to turn it over to Mark for some color on the operations John to give you a little insight on the markets Nadeem on the financial details and then we'll open it up for Q&A Mark over to you. Thank.
Keith Creel: We're also excited about the Miracle business that's ramping up this year, along with the continued growth on the international intermodal side with Gemini, and also continued growth in our automotive franchise. On the capital side, we're going to continue to invest to support the growth. Last week, we announced continued investment with our locomotives, 100 new locomotives joining the fleet in 2026, in addition to the 100 that we added in 2025. So the combination of our strong top-line growth, disciplined investment, and our continued cost and efficiency improvements, it's put us in an advantageous position to return cash to shareholders, which you just witnessed as we announced a 5% share buyback program for 2026. So in closing, I'm extremely proud of what we produced amidst a ton of volatility in 2025, and we're super excited about the opportunities ahead.
Speaker #2: Finally, we are encouraged by the recent trade canola settlements and new crush capacity coming online in the first half of the year that are going to further support our positive outlook for grain.
Thank you Keith and good afternoon, I want to begin by recognizing the operating employees, whose commitment to safe reliable and efficient service continues to drive the strong performance of this network.
Speaker #2: Potash revenues were down 2% on 2% volume growth, driven by higher export volumes through Vancouver, with solid demand fundamentals and Canpotex fully committed through the first quarter.
The operating team did a tremendous job this quarter in dollars to delivering these results.
Turning to the corner.
Our network performed exceptionally well and achieved record results across a number of key metrics, including train weight.
Speaker #2: We expect potash burning to be a solid contributor to our overall base this year. To round out, bulk coal revenue increased 2% on a 1% decline in volume.
Train speed locomotive productivity and car velocity these improvements and translate to faster cycle times greater network capacity in faster more reliable customer service thing I'm. Most proud of is proud to announce a 10 years in a row.
Speaker #2: Coal volumes were lower in Canada, largely due to the mix impact of lacking last year's work stoppage and maintenance at Westshore, which ran from August into November.
Keith Creel: I'll remind you that over the past 2 years, this franchise has outperformed the industry in revenue growth, outperformed the industry in earnings growth. We've got an exciting setup to continue to generate industry-leading performance in 2026 as well. So with that, I'm going to turn it over to Mark for some color on the operations. John will give you a little insight on the markets, Nadeem on the financial details, and then we'll open it up for Q&A. Mark, over to you.
<unk> has earned Amtrak's best carrier designation with an eight plus performance. We're the only railroad with this distinction.
Speaker #2: These declines were partially offset by higher volumes of US coal thermal . Moving to our merchandise franchise , energy , Chemicals and plastics down revenue was 3% and a 5% volume decline .
I appreciate the recognition from a valued partner.
Taking a step back on progress we have made substantial operating gain since the merger when comparing our 2025 operators operational performance versus the time that Tom and merger of 2023, our combined network at 13% faster locomotives is 13% more product.
Speaker #2: Decline was driven by lower crude and refined fuel volumes to Mexico, along with a softer base demand that primarily impacted our plastics shipments.
Mark Redd: Thank you, Keith, and good afternoon. I want to begin by recognizing the operating employees whose commitment to safe, reliable, efficient service continues to drive the strong performance of this network. The operating team did a tremendous job this quarter in delivering these results. Turning to the quarter, our network performed exceptionally well. We achieved record results across a number of key metrics, including train weight, train speed, locomotive productivity, and car velocity. These improvements can translate to faster cycle times, greater network capacity, and faster, more reliable customer service. One thing I'm most proud of is, proud to announce that 10 years in a row, CPKC has earned Amtrak's Best Carrier designation with an A+ performance. We're the only railroad with this distinction, and we appreciate the recognition from our valued partner.
Speaker #2: This was partially offset by growth in LPG shipments from Canada to Mexico. As we continue to capitalize and grow our land bridge opportunities.
<unk>.
Car velocity is nearly 14% stronger improvements out the Kansas City is even more pronounced looking at 2025 speeds being over 25% better local locomotive productivity and frame roughly 20%.
Speaker #2: Looking ahead, we expect ECP volumes to stabilize as we move through 2026. Although the base business in this industrial segment continues to be impacted by the softer environment.
Looking forward, our operating systems processes align across Canada, and the U S is expected to deliver.
Speaker #2: Forest products revenue declined 13% on a 12% decrease in volumes. Volumes were pressured by tariffs on Canadian lumber exports to the US, along with ongoing macro softness impacting our pulp and paper business.
Additional improvement in 2026, the foundation that we have built positions us for consistent execution and reliable service.
Volumes continue to grow.
Now turning to safety for the quarter FRE train accident frequency was up <unk> 91, which is 12% better FRE personal lenders 1.0.
Speaker #2: The team remains laser-focused on project development to continue to try to offset base demand softness, and also through extending our length of haul. Metals, minerals, and consumer products revenues and volumes were up 1%.
Mark Redd: Taking a step back on progress, we have made substantial operating gains since the merger. When comparing our 2025 operational performance versus the time of merger of 2023, our combined network is 13% faster, locomotives is 13% more productive. Our car velocity is nearly 14% stronger. The improvement south of Kansas City is even more pronounced, looking at 2025 speeds as being over 25% better, locomotive productivity improved roughly 20%. Looking forward, our operating systems, processes aligned across Canada and the US, we expect to deliver additional improvement in 2026. The foundation that we have built positions us for consistent execution and reliable service as the volumes continue to grow. Now, turning to safety for the quarter, FRA train accident frequency was at 0.91, which is 12% better.
22% increase.
Full year 2025, our FRE train accident was <unk> 80, 560% better personal Andrews was <unk> 92, 3% better.
Speaker #2: Growth in this space was driven by industrial development synergies, with new business coming on in cement and other aggregates, supporting construction projects across our network.
I continue to be encouraged by the industry, leading performance for the third year in a row CP Casey has led lowest FRE reportable train accident frequency across the class one railroads building upon CP legacy 17 consecutive years, so and I'll announce two decades of best in class.
Speaker #2: This strength was partially offset by the continued impact of tariffs on our cross-border steel business. Looking ahead, we remain focused on a number of industrial development opportunities as we continue to navigate the macro tariff and headwinds. Moving to automotive, revenue was down 3% on 1% volume growth.
These results.
That we have in our homesite culture, our investments in technology, which helps prevent failures before they occur.
Turning to labor.
We continue to make progress in this space earlier. This month, we announced 65 year collective bargaining agreements in the U S and ratified covered 700 duplicate employees across 11 states.
Speaker #2: Our auto franchise delivered volume growth again this quarter despite the impact of production along with aluminum slowdowns , supply and a chip challenges shortage , all of which contributed a $30 million revenue headwind in the quarter .
Agreements reflect constructive collaboration with our unions and provide service with confidence to provide customers with service and reliability for our network.
Mark Redd: FRA personal injuries of 1.05, 22% increase. When I look at full year 2025, our FRA train accident was 0.85, 16% better. Personal injuries was 0.92, 3% better. I continue to be encouraged by the industry-leading performance. For the third year in a row, CPKC has led lowest FRA reportable train accident frequency across the Class One railroads, building upon CP's legacy of 17 consecutive years. So when all in all, it's 2 decades of best-in-class. These results reflect the strength that we have in our home safe culture, our investments in technology, which helps prevent failures before they occur. Now, turning to labor, we continue to make progress in this space. Earlier this month, we announced 16 5-year collective bargaining agreements in the US were ratified, covering 700 CPKC employees across 11 states.
Speaker #2: Looking ahead, despite ongoing uncertainty with production and auto sales projections, we expect to continue to outperform, supported by business secured in 2025.
Now turning to resources and capital we provide all remaining well aligned with our growth outlook in 2025, we supported a 4% growth with 1% lower average headcount expect continuous strong operating leverage in 2026 from a capital perspective, we did receive the 100 tier four locomotives in two.
Speaker #2: That will benefit us in 2026 . closing Now with intermodal revenue was up 3% on 4% volume growth intermodal . International volumes , 5% on growth , with our key ocean carrier partners and lapping the impact of last year's work stoppage at the Port of Vancouver , we remain encouraged by the strong performance of the Gemini Alliance and the growth opportunities it is creating across our entire network .
25, we have additional 100 scheduled for delivery. This year. These locomotives are improving the efficiency and reliability of our fleet and positioning us for continued profitable growth.
In 2026, we will continue our merger related expansion commitments to the STB is worth making CTC additional.
Speaker #2: Comparisons will be more challenging in the first half of the year. However, the team is focused on the development of new product offerings at Port Saint John and also down at Lazaro to enable share gains and volume growth to our network.
Additional siding, Kansas City to Chicago quarter, but this also includes towards Shreveport.
Upgrades are improving velocity on the north South route which has strengthened our customer service.
Mark Redd: These agreements reflect constructive collaboration with our unions and provide service with confidence, provide customers with service, and reliability for our network. Now, turning to resources and capital, we remain, remaining well aligned with our growth outlook. In 2025, we supported 4% growth with 1% lower average headcount, expect continuous, strong operating leverage in 2026. From a capital perspective, we did receive the 100 Tier 4 locomotives in 2025. We have additional 100 scheduled for delivery this year. These locomotives are improving the efficiency and reliability of our fleet and positioning us for continued profitable growth. In 2026, we will continue our merger-related expansion commitments to the STB. This work includes CTC, additional sidings, Kansas City to Chicago Corridor, but this also includes towards Freeport. These upgrades are improving velocity on the north-south route, which is strengthening our customer service.
The closing.
The network is performing at record levels Youre properly resource to animal strength grain harvest in Canada, and U S. Our investments in capacity safety and power, our drive and sustain meaningful performance.
Speaker #2: Domestic intermodal volumes are up quarter over quarter, 3%, in the U.S. We continue to deliver strong growth on our Mex train, which is up approximately 40% year over year.
Speaker #2: Keith said, our new AS Miracle business is also gaining traction, with good visibility for a strong ramp up as we continue to move through 2026.
We are well positioned to execute our operating plan and support our customers and deliver on our commitments throughout 2026.
And with that I'll turn it to John Alright, Thank you Mark and good afternoon, everyone.
Speaker #2: I'm also extremely excited about the new SM product with CSX connecting Dallas and Mexico to the US southeast . Like our Midwest , Mexico product , SM train formally launch the pairs will in the and coming months will offer the most fastest , reliable service product in these lanes .
This quarter showed the resilience of our book of business with growth across key segments and traction for new wins offsetting areas of deepening softness.
Macro and tariff pressures, we delivered to our customers. We captured synergies, we maintained disciplined pricing and advanced initiatives that will support our growth in 2026.
Speaker #2: Closing in, with record grain crops, our self-help initiatives, and industrial development projects all online, we are well positioned to, once again, offset tariff and macro headwinds and deliver another year of mid-single digit RTM growth.
Looking at our Q4 results this quarter, we delivered record revenue up 1% on flat rpms.
Per RPM was up 1% our pricing remained strong with renewals exceeding our long term, 3% to 4% outlook.
Mark Redd: In closing, the network is performing at record levels. We are properly resourced to handle strain, grain harvest in Canada and US. Our investments in capacity, safety, and power are driving sustained, meaningful performance gains. We're well positioned to execute our operating plan, support our customers, and deliver on our commitments throughout 2026.
Speaker #2: We remain focused on execution, disciplined pricing, and continuing to capture the full value of our capacity and its network. With that, it is on to Nadine.
Mix, partially offset the pricing is longer length of haul and higher bulk traffic lowered our cents per RPM.
Speaker #2: right . Thanks , John . And All I'll pass afternoon . I'm extremely pleased with the team's strong execution in the we did deal with quarter .
Taking a closer look at our fourth quarter revenue performance I'll speak to in FX adjusted results starting with bulk.
Speaker #2: While temporary demand softness in some areas, the team responded decisively with strong cost control and operational performance, demonstrating the strength and resiliency of our PSR operating-driven model ability to optimize.
Record grain revenue were up 4% on 2% volume growth, our Canadian grain volumes were up 2% on a record harvest.
John Brooks: ... With that, I'll turn it to John.
John Brooks: All right, thank you, Mark, and good afternoon, everyone. This quarter showed the resilience of our book of business, with growth across key segments and traction from new wins offsetting areas of deepening softness. Despite macro and tariff pressures, we delivered to our customers, we captured synergies, we maintained disciplined pricing, and advanced initiatives that will support our growth in 2026. Now looking at our Q4 results. This quarter, we delivered record revenue up 1% on flat RTMs. Cents per RTM was up 1%. Our pricing remained strong, with renewals exceeding our long-term 3% to 4% outlook. Mix partially offset the pricing as longer length of haul and higher bulk traffic lowered our cents per RTM. Now, taking a closer look at our fourth quarter revenue performance, I'll speak to an FX-adjusted result. Starting with bulk.
Export volumes, however, lagged expectations as rain impacted the loading of vessels in Vancouver.
Speaker #2: costs control is operationally deliver assets , in our DNA embedded as The scheduled precision railroading at Cpkc . Now , to our fourth quarter on slide 12 , Tpc's reported operating ratio was 58.9% .
Vancouver, and farmers chose the store grain volumes tempering the pace of shipments through the quarter.
U S grain volumes were also up 2% with growth led by higher shipments to the PNW and down to Mexico our.
Speaker #2: Our core adjusted operating ratio improved points year over 120 basis year to a Cpkc record of Diluted 55.9% . earnings per share was adjusted diluted EPs $1.20 and $1.33 , up was 3% versus last year .
Our network continues to uncover new market and this is especially visible with record setting Q4 and full year grain shipments in the Mexico.
Turning to the first half of 2026, the North American crop is shaping up to be a record both in Canada and the U S.
Speaker #2: Turning to our full year results on slide 13. CPKC's reported operating ratio was 62.8%, and the core adjusted operating ratio improved 140 basis points to 59.9%.
As Keith said estimate at this point to 85 million metric ton Canadian harvest up 20% from last year. We also have a record U S corn crop and solid bean production that has recently started to move the market.
Speaker #2: Earnings per share was adjusted $4.51 and per share was $4.61 , up 8% year over year . Taking a closer look at our expenses on slide 14 , speak to I will the year over year variances on an FX basis adjusted .
John Brooks: Record grain revenues were up 4% on 2% volume growth. Our Canadian grain volumes were up 2% on a record harvest. Export volumes, however, lagged expectations as rain impacted the loading of vessels in Vancouver, and farmers chose to store grain volumes, tempering the pace of shipments through the quarter. US grain volumes were also up 2%, with growth led by higher shipments to the PNW and down to Mexico. Our network continues to uncover new markets, and this is especially visible with record-setting Q4 and full-year grain shipments into Mexico. Turning to the first half of 2026, the North American crop is shaping up to be a record both in Canada and the US. As Keith said, estimates point to an 85 million metric ton Canadian harvest, up 20% from last year.
Finally, we are encouraged by the recent canola trade settlements and new crush capacity coming online in the first half of the year that are going to further support our positive outlook for grain.
Speaker #2: Comp and benefits expense , excluding adjustments , was $626 million flat versus prior year . During the quarter , productivity gains from improved train rates , efficient planning and workforce resource optimization , were offset by wage inflation .
Potash revenues were down 2% on 2% volume growth driven by higher export volumes through Vancouver.
With solid demand fundamentals and canpotex fully committed through the first quarter.
Potash to remain a solid contributor to our overall basis here.
Speaker #2: We expect continued strong labor productivity in 2026, with headcount up slightly on mid-single-digit volume growth. Fuel expense was down $430 million, or 8% year over year.
To round out both coal revenue increased 2% on a 1% decline in volumes.
Canadian coal volumes were lower largely due to mix impact of lapping last year's work stoppage and maintenance at West shore, which ran from August and team November. These declines were partially offset by higher volumes of U S thermal coal.
Speaker #2: The decline was driven primarily by the elimination of the Canadian federal carbon tax on April 1, along with improved efficiency from increased train weights.
Speaker #2: Materials expense was 112 million . The year over year decline primarily driven by an increased focus on capital works . In the quarter , equipment rents were 97 million , up 4% year over year .
Moving to our merchandise franchise energy chemicals, and plastics revenue was down 3% on a 5% volume decline decline was driven by lower crude and refined fuel volumes to Mexico.
John Brooks: We also have a record US corn crop and solid bean production that has recently started to move to market. Finally, we are encouraged by the recent canola trade settlements and new crush capacity coming online in the first half of the year that are gonna further support our positive outlook for grain. Potash revenues were down 2% on 2% volume growth, driven by higher export volumes through Vancouver. With solid demand fundamentals and Canpotex fully committed through Q1, we expect potash to remain a solid contributor to our overall base this year. To round out both, coal revenue increased 2% on a 1% decline in volumes. Canadian coal volumes were lower, largely due to mixed impact of lasting last year's work stoppage and maintenance at Westshore, which ran from August into November.
Speaker #2: The increase was driven by higher intermodal car hire payments, reflecting the ramp-up of Gemini and lapping the prior year's volume and labor disruption at the Port of Vancouver.
Along with a softer base demand that primarily impacted our plastics shipments.
Speaker #2: …was partially offset by these efficiency gains, driven by improved network velocity and car cycle times across the network. Amortization was up 7%.
This was partially offset by growth in LPG shipments from Canada to Mexico, as we continue to capitalize and grow our land bridge opportunities.
Speaker #2: Resulting from larger a asset base . Purchased services and other expense , including excluding adjustments , was 514 million year over Decline was driven by productivity and insourcing initiatives , partially offset by cost inflation higher and casualty moving below the line on slide 15 , other components of net periodic benefit benefit recovery were 94 million or 103 million , excluding acquisition related net costs , interest expense was 230 million , or 225 million .
Looking ahead, we expect ECP volumes to stabilize as we move through 2026.
Although the base business in this industrial segment continues to be impacted by the softer macro environment.
Forest products revenue declined 13% on a 12% decrease in volumes volumes were pressured by tariffs on Canadian lumber exports to the us.
John Brooks: These declines were partially offset by higher volumes of US thermal coal. Moving to our merchandise franchise, energy, chemicals, and plastics revenue was down 3% on a 5% volume decline. Decline was driven by lower crude and refined fuel volumes to Mexico, along with a softer base demand that primarily impacted our plastic shipments. This was partially offset by growth in LPG shipments from Canada to Mexico as we continue to capitalize and grow our land bridge opportunities. Looking ahead, we expect ECP volumes to stabilize as we move through 2026, although the base business in this industrial segment continues to be impacted by the softer macro environment. Forest Products revenues declined 13% on a 12% decrease in volumes. Volumes were pressured by tariffs on Canadian lumber exports to the US, along with ongoing macro softness impacting our pulp and paper business.
Along with ongoing macro softness impacting our pulp and paper business.
The team remains laser focused on project development to continue to try to offset based demand softness and also through extending our length of haul.
Speaker #2: Excluding purchase accounting, the increase was driven by interest on new debt issued earlier in the year. Income tax expense was $400 million, or $407 million adjusted for purchase accounting items. The significant adjusted effective tax rate on the core in the quarter came in at approximately 25%, which is a $40 million headwind versus our Q4 2024 rate. In 2026, we expect a similar impact.
Metals minerals and consumer products revenues and volumes were up 1%.
Growth in this space was driven by industrial development and synergies with new business coming on in cement and other aggregate supporting construction projects across our network.
Speaker #2: We expected . We expect a core adjusted effective tax rate of approximately 24.75% , turning to slide cash flow 2025 net cash provided by operating activities increased 1% to 5.3 billion , while net cash used in financing activities was up 40% , driven by the share repurchase program .
This strength was partially offset by continued impact of tariffs on our cross border steel business.
Looking ahead, we remain focused on a number of industrial development opportunities as we continue to navigate the tariff and macro headwinds.
Speaker #2: CapEx was $3.1 billion above our $2.9 billion outlook, largely due to a pull forward of maintenance capital projects during the quarter. The fourth advantage is taking work off-weather and network conditions.
Moving to automotive revenue was down 3% on a 1% volume growth.
Our auto franchise delivered volume growth again this quarter. Despite the impact of production slowdowns, along with aluminum supply challenges in a chip shortage, all which contributed a $30 million revenue headwind in the quarter.
Speaker #2: To 2026. We are reducing our capital outlook by 15% to $2.65 billion. Now turning to share repurchases. Throughout last year, we took advantage of market volatility to reward shareholders, completing the repurchase of our 37 million share program in late October.
John Brooks: The team remains laser-focused on project development to continue to try to offset base demand softness and also through extending our length of haul. Metals, minerals, and consumer products revenues and volumes were up 1%. Growth in this space was driven by industrial development and synergies, with new business coming on in cement and other aggregates supporting construction projects across our network. This strength was partially offset by continued impact of tariffs on our cross-border steel business. Now looking ahead, we remain focused on a number of industrial development opportunities as we continue to navigate the tariff and macro headwinds. Moving to automotive. Revenue was down 3% on 1% volume growth. Our auto franchise delivered volume growth again this quarter, despite the impact of production slowdowns, along with aluminum supply challenges and a chip shortage, all which contributed a $30 million revenue headwind in the quarter.
Looking ahead, despite ongoing certainty with production and auto sales projections, we expect to continue to outperform supported by business secured in 2025 that will benefit us in 2026.
Speaker #2: The strong value we continue to see in our share price—I'm pleased to announce that our Board has approved a new 5% share repurchase program, allowing us to continue returning cash to shareholders through disciplined and opportunistic capital allocation.
Our clothing with intermodal revenue was up 3% on 4% volume growth.
Speaker #2: Looking ahead , while macroeconomic trade conditions and policy remain uncertain , we are focused on what we can control operating a safe , efficient and disciplined PSR railroad while keeping capitalizing on our unique growth opportunity .
International intermodal volumes were up 5% and growth with our key Ocean carrier partners and lapping the impact of last year's work stoppage at the port of Vancouver.
We remain encouraged by the strong performance of the Gemini Alliance.
Speaker #2: We expect to deliver low double digit earnings growth supported by year of another mid-single digit RTM growth . With industry leading execution a compelling growth pipeline and strong free Free flow .
And the growth opportunities it is creating across our entire network.
Comparisons will be more challenging in the first half of the year. However, the team is focused on the development of new product offerings at the Port St. John and also down in allowed ROE to enable share gains and volume growth to our network.
Speaker #2: cash growth . cash The future is extremely bright . With that , let me turn it back over to Keith .
Speaker #1: Okay , thanks , . gentlemen Operator . We'll open it up for questions .
Domestic intermodal volumes.
Speaker #3: Thank you . If you would like to ask a question , simply press star . Then number one on your telephone the keypad .
Was up 3% in the quarter, we continued to deliver strong growth on our MMX trained which was up approximately 40% year over year.
John Brooks: Now looking ahead, despite ongoing certainty with production and auto sales projections, we expect to continue to outperform, supported by business secured in 2025, that will benefit us in 2026. Now closing with intermodal. Revenue was up 3% on 4% volume growth. International intermodal volumes were up 5% on growth with our key ocean carrier partners and lapping the impact of last year's work stoppage at the Port of Vancouver. We remain encouraged by the strong performance of the Gemini Alliance and the growth opportunities it is creating across our entire network. Comparisons will be more challenging in the first half of the year. However, the team is focused on the development of new product offerings at the Port of Saint John and also down in Lázaro, to enable share gains and volume growth to our network....
Speaker #3: If you would like to withdraw your question , press star two . As previously highlighted , please limit yourself to one question . Our first question comes from Walter Spracklin with Markets .
As Keith said, our numerical business is also gaining traction with good visibility for a strong ramp up as we continue to move through 2026.
Speaker #3: Please go RBC ahead .
Speaker #4: Thanks very much . Good afternoon everyone . I'd to like double click on your volume growth assumption or guidance here . Mid-single digit last .
I'm also extremely excited about the new <unk> product with CF sacks, connecting Dallas in Mexico to the U S southeast.
Like our Midwest, Mexico product <unk> trained pairs will formally launch in the coming months and will offer the fastest most reliable service product and these lanes.
Speaker #4: Year ended a little, obviously, weaker and it hasn't started well off this year. We've got some weather that is going to create
Speaker #4: Perhaps a little leakage . Given that bit of headwind , perhaps , you know , obviously digit mid-single is industry leading . Can you double click a little bit on what sectors give you the confidence that you can achieve mid-single digit and and how much of that is the carryover of integration or carryover of ones that you got from some of the last year and how much is is that you're new wins this year expecting ?
In closing with record grain crops are self help initiatives industrial development projects, all coming online, we are well positioned to again offset tariffs and macro headwinds and deliver another year of mid single digit RPM growth.
We remain focused on execution disciplined pricing and continuing to capture the full value.
John Brooks: Domestic intermodal volumes was up 3% in the quarter. We continue to deliver strong growth on our MMX train, which is up approximately 40% year-over-year. As Keith said, our new Meridian business is also gaining traction, with good visibility for a strong ramp-up as we continue to move through 2026. I'm also extremely excited about the new SMX product with CSX, connecting Dallas and Mexico to the US Southeast. Like our Midwest Mexico product, the SMX train pairs will formally launch in the coming months and will offer the fastest, most reliable service product in these lanes. In closing, with record grain crops, our self-help initiatives, industrial development projects all coming online, we are well-positioned to again offset tariff and macro headwinds and deliver another year of mid-single-digit RTM growth.
Of our capacity of the network with that I'll pass it on to Navy alright, Thanks, John and good afternoon.
Speaker #4: Thanks .
Speaker #2: Thanks , Walter
Speaker #2: .
Speaker #5: A couple of comments. You know, so really, up until last Friday, January was kind of playing out how we expected it to play out.
Extremely pleased with the team's strong execution in the quarter, while we did deal with temporary demand softness in some areas. The team responded decisively with strong cost control and operational performance demonstrating the strength and resilience of our CSR driven operating model.
Speaker #5: Certainly, we got tougher comps. We are ahead on volumes and Air National and automotive and such. And frankly, we knew Q1 was going to be a bit more of a challenge on that, Walter, front.
The ability to optimize assets control costs and deliver operationally is embedded in our DNA as precision scheduled railroading SVP Casey.
Speaker #5: you know , certainly the weather event was a little bit of a setback , but pretty I'm also optimistic on , you know , sort of what in base our plan for for grain in February and March .
Now turning to our fourth quarter on Slide 12, <unk> reported operating ratio was 58, 9% our core adjusted operating ratio improved 120 basis points year over year. So at CP Casey record 55, 9%.
Speaker #5: Gut sense, and what my--and our--customers are telling us is pretty good. There's opportunity for us to exceed, claw some of that back.
Speaker #5: Maybe that that we gave away here . The last week . During that time period . There's there's no doubt , though , I do believe Q2 , Q3 , the balance where of the we'll momentum see the build .
Diluted earnings per share was $1 20, and core adjusted diluted EPS was $1 33 up 3% versus last year.
John Brooks: We remain focused on execution, disciplined pricing, and continuing to capture the full value of our capacity of network. With that, I'll pass it on to Nadeem.
Turning to our full year results on slide 13.
We take these reported operating ratio was 62, 8% and the core adjusted operating ratio improved 140 basis points to 59, 9%.
Speaker #5: You know , specifically , I think grain is , as we've talked about , both sides of the border continues to be an opportunity .
Nadeem Velani: All right. Thanks, John, and good afternoon. I'm extremely pleased with the team's strong execution in the quarter. While we did deal with temporary demand softness in some areas, the team responded decisively with strong cost control and operational performance, demonstrating the strength and resiliency of our PSR-driven operating model. The ability to optimize assets, control costs, and deliver operationally is embedded in our DNA as precision scheduled railroading at CPKC. Now, turning to our Q4 on slide 12, CPKC's reported operating ratio was 58.9%. Our core adjusted operating ratio improved 120 basis points year-over-year to a CPKC record, 55.9%. Diluted earnings per share was $1.20, and core adjusted diluted EPS was $1.33, up 3% versus last year.
Speaker #5: We've got a strong export potash plan. So our bulk, kind of a similar story to 2025, I think. Presents a really good opportunity for us.
Diluted earnings per share was $4 51 and <unk>.
Core adjusted diluted earnings per share was $4 61.
Up 8% year over year.
Speaker #5: And then we kind of shift to the synergies and bulk health initiatives. And, you know, that's where we've got to lean in and create our own bit of luck.
Taking a closer look at our expenses on slide 14, I'll speak to the year over year variances on an FX adjusted basis.
Speaker #5: I think that something we've we've been able to proved we've you do , know , I look at intermodal , we still got a fair growth amount of our on mix train that be that will targeting .
Comp and benefits expense.
Excluding adjustments was $626 million flat versus prior year.
During the quarter productivity gains for improved streamlined efficient resource planning and workforce optimization were offset by wage inflation.
Speaker #5: We're going to be launching the new SM with with CSX in the here coming months . And I can tell you we're looking at transit times out of central Mexico into , markets of Atlanta , Charlotte , Jacksonville , in roughly four days or less .
We expect continued strong labor productivity in 2026 with head count up slightly on mid single digit volume growth.
Fuel expense was $430 million down 8% year over year. The decline was driven primarily by the elimination of the Canadian federal carbon tax on April one.
Nadeem Velani: Turning to our full year results on slide 13, CPKC's reported operating ratio was 62.8%, and the core adjusted operating ratio improved 140 basis points to 59.9%. Diluted earnings per share was $4.51, and core adjusted diluted earnings per share was $4.61, up 8.8% year over year. Taking a closer look at our expenses on slide 14, I will speak to the year-over-year variances on an FX adjusted basis. Comp and benefits expense, excluding adjustments, was $626 million, flat versus prior year. During the quarter, productivity gains from improved train rates, efficient resource planning, and workforce optimization were offset by wage inflation. We expect continued strong labor productivity in 2026, with headcount up slightly on mid-single-digit volume growth. Fuel expense was $430 million, down 8% year over year.
Speaker #5: This is going to be really fast . As Keith said , better than truck like service . And you know , the early bidding prognosis , you know we're looking at current bids of about 80,000 loads a year particular , you know , with client one that we're working on .
With improved efficiencies from increased train weights.
Materials expense was $112 million year over year decline was primarily driven by an increased focus on capital works in the quarter.
Equipment rents were $97 million up 4% year over year increase was driven by higher intermodal car hire payments, reflecting the ramp up of Gemini volumes and lapping the prior year's labor disruption at the port of Vancouver.
Speaker #5: So, I'm pretty optimistic around those opportunities. We haven't scratched the surface on, really, our launch of the Americold building in Kansas City.
This increase was partially offset by efficiency gains driven by improved network velocity and car cycle times across the network.
Speaker #5: that And business that reefer business that just starting to ramp up . remind is And I'll you , up in Canada at Port Saint John , Americold will their open second building on us .
Depreciation and amortization was up 7%, resulting from a larger asset base.
Purchased services and other expense, including excluding adjustments was $514 million year over year decline was driven by productivity and sourcing initiatives, partially offset by cost inflation and higher casualty.
Speaker #5: open up That will around the July time frame . So , you know , in the in just the intermodal sector , Walter , there's no doubt there's going to be headwinds .
Speaker #5: And ongoing, we've had challenges. But we've also created, I think, unique products in the marketplace that I think allow us to go out and sell and do things maybe a little differently than what our competitors do out there.
Moving below the line on slide 15, other components of net periodic.
Nadeem Velani: The decline was driven primarily by the elimination of the Canadian federal carbon tax on April 1, along with improved efficiency from increased train rates. Materials expense was CAD 112 million. The year-over-year decline was primarily driven by an increased focus on capital works in the quarter. Equipment rents were CAD 97 million, up 4% year-over-year. The increase was driven by higher intermodal car hire payments, reflecting the ramp-up of Gemini volumes and lapping the prior year's labor disruption at the Port of Vancouver. This increase was partially offset by efficiency gains, driven by improved network velocity and car cycle times across the network. Depreciation and amortization was up 7%, resulting from a larger asset base. Purchased services and other expense, excluding adjustments, was CAD 514 million.
Benefit recovery were $94 million or $103 million, excluding acquisition related costs.
Speaker #5: And you know, that gives me some confidence, particularly in those areas.
Net interest expense was $230 million or $225 million, excluding purchase accounting.
Speaker #1: I one other point , think Walter , reference . I think one other point of it's important to it's remember going to we're lap that period of time in the second quarter .
The increase was driven by interest on new debt issued earlier in the year.
Income tax expense was $400 million or $407 million adjusted for significant items that purchase accounting the core adjusted effective tax rate on the quarter came out of approximately 25%, which is a $40 million headwind versus our Q4 2024 rate in 2026, we expected it.
Speaker #1: First part of implemented the third quarter, we cut over. And I think, classified it as some of our CP shemozzle time integrated when we, our IT system.
Speaker #1: So, obviously, some were responding to increased that and cost revenue will lap that, some lost given period. The railroad timing, that systems are, and our, and we've humming grown that.
Core adjusted effective tax rate was approximately 24, 75%.
Turning to slide 15 and cash flow.
Speaker #1: Stronger, as that's going to also be a benefit for us as a result in our—
2025, net cash provided by operating activities increased 1% to $5 3 billion, while net cash used in financing activities was up 40% driven.
Speaker #1: 26 results .
Speaker #4: Thank you. Appreciate the time.
Nadeem Velani: Year-over-year decline was driven by productivity and insourcing initiatives, partially offset by cost inflation and higher casualty. Moving below the line on slide 15, other components of net periodic benefit recovery were CAD 94 million or CAD 103 million, excluding acquisition-related costs. Net interest expense was CAD 230 million or CAD 225 million, excluding purchase accounting. The increase was driven by interest on new debt issued earlier in the year. Income tax expense was CAD 400 million, or CAD 407 million, adjusted for significant items at purchase accounting. The core adjusted effective tax rate on the quarter came in at approximately 25%, which is a CAD 40 million dollar headwind versus our Q4 2024 rate. In 2026, we expect a core adjusted effective tax rate of approximately 24.75%. Turning to slide 16 in cash flow.
Speaker #3: Your next question comes from Brian Ossenbeck with J.P. Morgan.
Driven by the share repurchase program.
Capex was $3 1 billion above our $2 9 billion outlook largely due to a pull forward of maintenance capital projects during the fourth quarter to take advantage of works of weather and network conditions.
Speaker #6: Good the . see if you So , could weigh question . I want to in on switching as it's been right now . reciprocal proposed Obviously , yourselves others have grown up and with kind of that .
Speaker #6: afternoon . Thanks for taking
26, we are reducing our capital it looked by 15% to $2 65 billion.
Speaker #6: Canada. Do you think that’s really applicable to the U.S.? Would you be concerned if that were to be extended to the U.S. in terms of how it’s proposed now?
Now turning to share repurchases throughout last year, we took advantage of market volatility reward shareholders, completing our $37 million share repurchase program in late October.
Speaker #6: right And ultimately , do I guess expect the industry to have to deal with this , whether or not there M&A is . Thank you .
Speaker #1: Well , yeah . Number one , your job and you if you do good service , provide you don't have to worry about worry about don't have to .
Speaker #1: Well , yeah . Number one , your job and you if you do good service , provide you don't have to worry about worry about don't have to . it coming into somebody backyard and and being able to do better than you are .
The strong value that would contingency in our share price I am pleased to announce that our board has approved a new 5% share repurchase program.
Im going to continue returning cash to shareholders through disciplined and opportunistic capital allocation.
Speaker #1: That said , what's being proposed now versus in Canada . what's There's still a unique difference with an inner switch in Canada , you've got the other switch to handling the the carrier interchange location , and then you take the linehaul to the to the next destination .
Looking ahead, while macro economic conditions and trade policy remain uncertain. We are focused on what we can control operating a safe efficient and disciplined GSR railroad, while capping capitalizing on our unique growth opportunities, we expect to deliver low double digit earnings growth supported by another year of mid single digit.
Nadeem Velani: 2025 net cash provided by operating activities increased 1% to CAD 5.3 billion, while net cash used in financing activities was up 40%, driven by the share repurchase program. CapEx was CAD 3.1 billion, above our CAD 2.9 billion outlook, largely due to a pull forward of maintenance capital projects during the Q4, take advantage of work, of weather and network conditions. In 2026, we are reducing our capital outlook by 15% to CAD 2.65 billion. Now, turning to share repurchases. Throughout last year, we took advantage of market volatility to reward shareholders, completing our 37 million share repurchase program in late October.
Speaker #1: What they're proposing is literally what started with . I Somebody else coming in and providing service So . that said , again , to happen if it were , we'd respond to it .
Speaker #1: I don't see it as a threat to all of us at Canadian Pacific Kansas City. Ultimately, if a company can't get customers their agreed service, they should have an alternative.
Our Tam growth.
With industry, leading execution compelling growth pipeline and strong free cash flow growth free cash growth with future is extremely bright that let me turn it back over to Keith and thanks, gentlemen, operator, we'll open it up for questions.
Speaker #1: shouldn't kept to captive terrible , deteriorating I just think that service . again , to be fair . It needs to it needs be balanced and think about we need to the unintended consequences .
Speaker #1: not so It's complex go through ends that kind of what we more damage up doing than to the customer good .
Thank you if you would like to ask a question simply press Star then the number one on your telephone keypad.
Speaker #6: Thanks , All right . Keith .
I would like to withdraw your question Press Star two.
Nadeem Velani: Given the strong value that we continue to see in our share price, I'm pleased to announce that our board has approved a new 5% share repurchase program, allowing us to continue returning cash to shareholders through disciplined and opportunistic capital allocation. Looking ahead, while macroeconomic conditions and trade policy remain uncertain, we are focused on what we can control, operating a safe, efficient, and disciplined PSR railroad while capitalizing on our unique growth opportunities.
As previously highlighted please limit yourself to one question.
Speaker #3: Your next Chris from Wetherbee with Wells Please go Fargo . ahead question comes
Speaker #3: .
Our first question comes from Walter <unk> with RBC capital markets. Please go ahead, thanks very much good afternoon, everyone.
Speaker #7: Yeah . Hey , thanks . . I guess guys afternoon Good about mean 2026 , I thinking , you know , if you're obviously finished 25 on a very strong operating note from an .
I'd like to to double click on your volume growth assumptions.
Speaker #7: perspective So 56 or I guess , do you think about sort how of the you're at a mid single algorithm when digit RTM growth ?
<unk> tiered mid single digit.
Obviously last year ended a little weaker than it had been started off well. This year. We got some weather that is going to create perhaps a little bit of leakage.
Speaker #7: I think pre we thought merger , about the potential for that RTM type of to maybe drive or know , improvement decent , potentially , you very high incremental margins .
John Brooks: ... we expect to deliver low double-digit earnings growth, supported by another year of mid-single digit RTM growth. With industry-leading execution, a compelling growth pipeline, and strong free cash flow growth—free cash growth, the future is extremely bright. With that, let me turn it over back over to Keith.
Given that headwind, perhaps you know obviously mid single digit is industry, leading can you double click a little bit on what sectors give you the confidence that you can achieve mid single digit and and how much of that is the key.
Speaker #7: obviously earnings to you're guiding kind of power . And you think that about the And move forward from or potential as you here ?
Speaker #7: for Obviously curious how do But maybe 2026 . bigger also picture ? Are you hitting stride ? like It seems network's running well .
Speaker #7: Just wanted to get your thoughts on how you think about it as we move forward.
Keith Creel: Okay, thanks, gentlemen. Operator, we'll open it up for questions.
Carryover of integration or a carryover of some of the wins that you got from last year and how much is new wins that you're expecting this year.
Speaker #7: .
Speaker #2: Chris , I
Speaker #2: mean , a year sat Yeah , here , we about talked sub to move first . We wanted to get to that level , which we've accomplished .
Operator: 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. Our first question comes from Walter Spracklin with RBC Capital Markets. Please go ahead.
Thanks Oliver.
Speaker #2: Now . And that , beyond obviously the just goal lower isn't to but operating generate earnings generate long term return on and invested capital .
Couple of comments, so really up until last Friday January was kind of playing out how we expected it to play out certainly we realized we've got tougher comps we had pull ahead volumes in international in automotive.
Speaker #2: And so our algorithm kind of in earnings , you know , that mid-single digit RTM growth layer on strong price . price to of our the value service .
[Analyst] (RBC Capital Markets): Yeah, thanks very much. Good afternoon, everyone. I'd like to double-click on your volume growth assumption or guidance here, mid-single digit. Obviously, last year ended a little weaker, and it hasn't started off well this year. Got some weather that is going to create perhaps a little bit of leakage. Given that headwind, perhaps, you know, obviously, mid-single digit is industry leading. Can you double-click a little bit on what sectors give you the confidence that you can achieve mid-single digit? And how much of that is the carryover of integration or a carryover of some of the wins that you got from last year, and how much is new wins that you're expecting this year? Thanks.
And such.
Speaker #2: And generate additional kinds of value, then, through cash. That's going to help bring it to the bottom line, get kind of that, and get digit double EPS growth over time.
And frankly, we knew Q1 was going to be a little bit more of a challenge on that front Walter.
Certainly.
Weather event was a little bit of a setback, but I'm also pretty optimistic on sort of what we had in our base plan for for grain in February and March and my gut sense in what our customers are telling US is there's a pretty good opportunity for us to exceed and claw.
Speaker #2: So, you know, the operating leverage that I think we're going to get, given the strong bulk opportunity we have in front of us.
Speaker #2: You know , we're coming in , as you said , with a with a very solid , footing as far as Q4 , with our with our cost structure we've done some things on the side workforce to , to to , you know , us get a spot resourcing a from point of new We've got locomotives view .
Back maybe some of that that we gave away here in the last week during that time period.
There is no doubt, though I do believe Q2 Q3.
<unk> of the year is where we'll see that momentum build.
Speaker #2: there's coming opportunities I think fuel efficiency on the side and overall efficiency . So , you know , I do back into that 100 basis point type operating ratio improvements of If you're doing things right , generating per year .
John Brooks: Yeah. Thanks, Walter. A couple comments. You know, so really, up until last Friday, January was kind of playing out how we expected it to, to play out. Certainly, we realized we've got tougher comps; we have pull-ahead volumes in international, automotive, and such. Frankly, we knew Q1 was gonna be a little bit more of a challenge on that front, Walter. You know, certainly this weather event was a little bit of a setback, but I'm also pretty optimistic on, you know, sort of what we had in our base plan for grain in February and in March.
Specifically I think grain as we've talked about both sides of the border continues to be an opportunity we've got a strong.
Export potash plan.
Our bulks kind of a similar sort of 2025 I think presents a really good opportunity for us and then we kind of shift to the synergies and self help initiatives and that's where we've got to lean in and create our own luck, but I think that something we've proven we've been able to do.
Speaker #2: Strong AR and strong pricing, that should be how it plays out. So I think over time, our long and kind of term guidance of 100 basis point improvement in the OR is what you should expect from us if we're executing and delivering the way we should.
<unk>.
Look at intermodal.
Speaker #7: That's helpful . Thank you .
We still got a fair amount of growth on our MMX.
Speaker #2: Thanks , Chris .
Speaker #3: Your next question comes from Chamoun BMO Fadi Markets . Please go ahead
Train that will be targeting we're going to be launching the new <unk> with with.
John Brooks: And my gut sense and what our customers are telling us is, there's a pretty good opportunity for us to exceed and claw back maybe some of that that we gave away here the last week during that time period. There's no doubt, though, I do believe Q2, Q3, the balance of the year is where we'll see the momentum build. You know, specifically, I think grain is, as we've talked about, both sides of the border, continues to be an opportunity. We've got a strong export potash plan. So our bulk, kind of a similar story to 2025, I think presents a really good opportunity for us. And then we kind of shift to the synergies and self-help initiatives, and you know, that's where we've got to lean in and create our own luck.
Speaker #3: .
<unk> here and in the coming months and I can tell you. We're looking at transit times that of Central Mexico into markets of Atlanta, Charlotte, Jacksonville, and roughly four days or less.
Speaker #8: you . Good Thank afternoon . Just a couple of things on the revenue side . Can you help us kind of bridge the volume to revenue ?
Speaker #8: I think last year you had a lot of mix issues and and RTM and revenues were kind of aligned . But as you think about this year , what what does kind of mid-single RTM mean to revenue ?
Would kind of be really fast.
As Keith said better than truck like service and.
The early bidding prognosis, we're looking at.
Current bids of about 80000 load the year with one particular.
Speaker #8: What's kind of the mix like as you look at the book of business that you're about talking and maybe a quick one for Marc , if the network set up to this handle book of business that John is with current talking about headcount level , you what are headcount perspective ?
That we're working on so I.
I am pretty optimistic.
Around those opportunities.
We havent scratched the surface on on really our launch of the Americold building in Kansas City, and that business that reefer business.
John Brooks: But I think that's something we've proved we've been able to do. You know, I look at intermodal. We still got a fair amount of growth on our MMX train that we'll be targeting. We're gonna be launching the new SMX with CSX here in the coming months. And I can tell you, we're looking at transit times out of central Mexico into, you know, markets of Atlanta, Charlotte, and Jacksonville, in roughly 4 days or less. This is gonna be really fast, as Keith said, better than truck-like service. And, you know, the early bidding prognosis, you know, we're looking at current bids of about 80,000 loads a year with one particular, you know, client that we're working on. So, I'm pretty optimistic around those opportunities.
That is just starting to ramp up and I'll remind you up in Canada Port St. John.
Speaker #5: Yeah . So I think probably the Q1 Q2 , we're probably going to see some of , those those challenges that you described .
<unk> will open their second building on us.
That will open up around the July time frame so.
Speaker #5: Yet given the, the strong bulk business, those in that were projecting that, that maybe is a less little natural than what we.
Justin.
Intermodal sector, although theres, no doubt theres going to be headwinds and ongoing challenges, but I think we've created enough unique products in the marketplace.
Speaker #2: Would normally see , probably does some of that create mix headwind during that time period . would you , Plus , I you know , we had we had tell terrorist impacts of north of 200 million , you know , one 1.5% of our revenue in Rtms .
But I think that will allow us to go out and sell and do things, maybe a little differently than what our competitors do out there.
That gives me some confidence, particularly in those areas I think one other point they want to have another point of reference I think it is.
Speaker #2: And a lot of those tariff impacts were on really profitable , you know , positive sense for RTM business . That just is not available under to us environment .
Important to remember, we're going to lap that period of time.
In the second quarter first part of.
John Brooks: We haven't scratched the surface on really our launch of the Americold building in Kansas City and that business, that reefer business. That is just starting to ramp up. And I'll remind you, up in Canada, at Port Saint John, Americold will open their second building on us, that will open up around the July timeframe. So, you know, just in the mobile sector, Walter, there's no doubt there's gonna be headwinds and ongoing challenges, but I think we've created enough unique products in the marketplace, that I think will allow us to go out and sell and do things maybe a little differently than what our competitors do out there. And, you know, that gives me some confidence, particularly in those areas.
Third quarter, we implemented the cutover.
Speaker #2: tariff So I expect to see kind of some headwinds earlier in the year . And then see that stabilize . I think there's probably a couple points , you know , if rtms and revenue matched up even in 25 , there's probably a couple points of upside on on the revenue as we're towards 2026 .
Classified as a <unk> time.
We integrated our it system. So there obviously were some increased costs responding to that and some lost revenue we will lap that period given that.
Railroad chomping at our systems are humming and we grow stronger as a result of that so that's going to be a benefit for us in our 26 results.
Speaker #2: looking That helps you out . Yeah , I would just add Q1 the last the initial first , the carbon tax . So we got one more quarter of that or a couple more months here from where we are today .
I appreciate the color. Thank you.
Your next question comes from Brian often back with J P. Morgan.
Speaker #2: That'll be a bit of a headwind to mix. And then, depending on if the dollar just continues to appreciate. So I think we're at $1.35 today at the Bank of Canada, and, you know, a year ago we were at $1.43.
Hey, good afternoon. Thanks for taking my question. So just wanted to see if you could weigh in on reciprocal switching is being proposed right now, obviously yourselves and others kind of grown up with that in Canada. Do you think that's really applicable to the ask would you be concerned if that were to be extended to the us in terms of how it's.
Keith Creel: I think, one other point. Hey, Walter, one other point of reference I think it's, it's important to remember, we're gonna lap that period of time in Q2, first part of Q3. We implemented the cutover, and I think some would classify it as our, our CP schmoozle time, when we integrated our IT system. So there obviously were some increased costs responding to that and some lost revenue, and we'll lap that period, given that the railroad's humming and our systems are humming, and we've grown stronger as a result of that. So that's gonna be a benefit for us in our 2026 results.
Speaker #2: So, that's closer to going to be a headwind. Not going to help us on our—it's leverage. It's going to help us overall.
Proposed.
Speaker #2: As far as we think about our balance that From perspective and payments and things interest that . So there is a net benefit it will elsewhere , but hurt our sense for our team .
Right now and I guess ultimately do you expect the industry to have to deal with this whether or not there is M&A.
Thank you.
Everyone. If you do your job and you provide good service you don't have to worry about it.
Speaker #9: And headcount, I would say some of my comments on the prepared remarks was headcount will be flat, or slightly up.
You don't have to worry about somebody coming in your backyard in.
And being able to do better than you are that said whats being proposed now versus what's in Canada. There is still a unique difference with an inter switching Canada, you've got the other carrier handling the switch to the interchange location and you take the line haul to the to the next destination with they're proposing is literally what I started with that somebody else coming in and providing service.
Speaker #9: have strong operating leverage as a We'll result . And again , we're going to be focused on train size . Again , we've got some agreements that working through with some of we're our labor unions that will , you know , we'll vest with that as far as headcount .
[Analyst] (RBC Capital Markets): Appreciate the time. Thank you.
Speaker #9: So, we'll be that—through working through that piece.
Speaker #2: Yeah . And fatty non employee headcount contractors and so forth are kind of for the most part off the property as In well .
<unk>.
Operator: Your next question comes from Brian Ossenbeck with J.P. Morgan.
So again that said if it were to happen we.
We would respond to it I don't see it as a threat to us at all the ultimately if a customer can't get their service.
Speaker #2: Q4 as part of our our cost focus . So I think overall I'm going to push Mark as well on on keeping single digit that low or keep it closer to flat .
John Brooks: Hey, good afternoon. Thanks for taking the question. So, Keith, I want to see if you could weigh in on reciprocal switching as it's been proposed right now. Obviously, yourselves and others have kind of grown up with that in Canada. Do you think that's really applicable to the US? Would you be concerned if that were to be extended to the US in terms of how it's proposed right now? And I guess ultimately, do you expect the industry to have to deal with this, whether or not there is M&A? Thank you.
Agree they should have an alternative they shouldnt be kept captive.
Captive to terrible deteriorating service, just think that again it needs to be fair it needs to be balanced and we need to think about the unintended consequences. It's not so complex that kind of what we go through ends up doing more damage to the customer than good.
Speaker #2: So I think we can accommodate it .
Speaker #2: So I think we can accommodate it .
Speaker #8: you Thank .
Speaker #2: , Patty Thanks .
Speaker #3: next Your question comes from Jonathan Chappell with Evercore ISI . Please go ahead .
Alright, Thanks Keith.
Speaker #6: Thank you . Good afternoon . Nadeem , be I hate to so short term focused , but you know how it is in the seat .
Keith Creel: Well, number one, if you do your job and you provide good service, you don't have to worry about it. You don't have to worry about somebody coming in your backyard and being able to do better than you are. That said, what's being proposed now versus what's in Canada, there's still a unique difference. With an interswitch in Canada, you've got the other carrier handling the switch to the interchange location, and then you take the line haul to the next destination. What they're proposing is literally what I started with, that somebody else coming in and providing service. So again, that said, if it were to happen, we'd respond to it. I don't see it as a threat to us at all. Now, ultimately, if a customer can't get their service, I agree, they should have an alternative.
Your next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.
Speaker #6: So, you know, John pointed out a lot of headwinds in one Q we weather, and now you had the talking—carbon tax is still there.
Yeah, Hey, Thanks, Good afternoon, guys I guess as you're thinking about 2026, I mean, obviously finished 25 on a very strong note from an operating perspective.
Speaker #6: Exchange a little bit. So, if we think about the path to both the mid-single digit RTMs, but most especially the double digit EPS, are you thinking about a slower start to one quarter and then kind of a ramp as you go through the year?
56, or I guess, how do you think about sort of the algorithm when you're at a mid single digit RPM growth I think.
Speaker #6: So, you know, not quite a hockey stick. It does, but it appears that, kind of, you need to make it up in the second half of the half-year.
Are you sort of merger, we thought about the potential for that type of RCM to maybe drive.
Speaker #6: loaded Back .
Our improvement potentially very high incremental margins and obviously earnings power, you're guiding to that I'm curious how do you think about the potential as you move forward from here, obviously for 2026, but maybe also bigger picture are you kind of hitting stride. It seems like the network's running well just kind of get your thoughts on how you think about it as we move forward.
Speaker #2: Yeah , I one is going to be the no toughest quarter of the year . And that's , you full on know , expectation .
Keith Creel: They shouldn't be kept captive to terrible deteriorating service. I just think that, again, it needs to be fair, it needs to be balanced, and we need to think about the unintended consequences. It's not so complex that kind of what we go through ends up doing more damage to the customer than good.
Speaker #2: You think about Liberation Day a year ago. It was moving everyone. It's tough traffic to compare. But to keep earlier to the point, we're very easy comparison Q2.
Speaker #2: Q3 And forth . so So yeah it's going to be a tougher start to the year as far as earnings the algorithm . But no , I'm not concerned about that .
Yes, Chris I mean, a year ago, we sat here, we talked about sub 60 than perhaps we want to get to that level, which is we've accomplished now and beyond that obviously the goal is in essence lower operating ratios.
John Brooks: All right, thanks, Keith.
Speaker #2: And the carbon tax that's that's net neutral to earnings . So I'm not that doesn't create a headwind at all create a bit of a headwind .
Operator: Your next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.
Generate earnings and generate long term return on invested capital and so.
Speaker #2: our team . But it actually Just to helps us in our in our margins overall . So but it won't be a thank you will be a natural increase .
[Analyst] (Wells Fargo): Yeah, hey, thanks. Good afternoon, guys. I guess as you're thinking about 2026, I mean, you know, obviously, you finished 2025 on a very strong note from an operating perspective, so 56 OR. I guess, how do you think about sort of the algorithm when you're at a mid-single-digit RTM growth? I think pre-merger, we thought about the potential for that type of RTM to maybe drive, you know, decent OR improvement, potentially very high incremental margins and obviously earnings power, and you're guiding to that. Kind of curious, how do you think about the OR potential as you move forward from here? Obviously for 2026, but maybe also bigger picture. Are you kind of hitting stride? It seems like the network's running well.
Our earnings algorithm and it's kind of in that mid single digit RPM growth layer on strong price and price to the value of our service.
Speaker #2: . Yeah
Speaker #6: Okay . Great . Thanks
And then generate additional value through free cash that's going to bring it to the bottom line and get kind of that double digit EPS growth.
Speaker #6: .
Speaker #2: Thank you .
Speaker #3: Your next question from Ravi Shanker comes Morgan Stanley . with Please go ahead .
Over time so.
Speaker #10: Everyone . Great . Thanks . So there's talk of the harbor maintenance tax exemption kind of potentially going away and kind of potential So we'd implications there .
The operating leverage and I think we're going to get given the strong bulk opportunity we have in front of us.
We're coming in as you said with.
It's a very.
Speaker #10: love if you to know guys any have views on what impact might be there on cross-border volumes . If that happens not or .
Solid footing as far as Q4 with our with our cost structure.
We've done some things on the workforce side to help us get to.
[Analyst] (Wells Fargo): Just kind of get your thoughts on how you think about it as we move forward.
Speaker #11: Frankly , the Ravi , cross-border volume is business so small in our book today , specific to that , I really give it don't much or that much of credence a concern right now in our book .
A better spot from a resourcing point of view, we've got new locomotives coming in I think theres opportunities on the fuel efficiency side and overall efficiency. So no I do think kind of getting back into that 100 basis points type of operating ratio improvement.
Nadeem Velani: Yeah, Chris, I mean, a year ago, we sat here, we talked about step 60, first we want to get to that level, which as we've accomplished now, and beyond that, you know, obviously the goal is to just lower operating ratio that generates earnings and generate long-term return on invested capital. So, you know, our earnings algorithm is kind of in that mid-single digit RTM growth, layer on strong price and price to the value of our service, and then generate additional kind of value through free cash. That's going to help bring it to the bottom line and get kind of that double-digit EPS growth, over time.
Speaker #11: You know , four or maybe 5 or 6 years ago where , , you know , certainly where we saw that , that that volume much stronger .
Per year, if youre doing things right. If you were generating strong volumes and <unk>.
Strong pricing.
Speaker #11: But at this point, I really don't think that being much of an impact if they change some of those fees or regulations.
That should be how it plays out so I think over time and kind of our long term guidance of 100 basis point improvement in the or is what you should expect from us if we are delivering and executing the way we should.
Speaker #10: Very good. Thank you.
Got it that's helpful. Thank you.
Nadeem Velani: So, you know, the operating leverage that I think we're going to get, given the strong bulk opportunity we have in front of us, you know, we're coming in, as you said, with a very solid, you know, footing as far as Q4 with our, with our cost structure. You know, we've done some things on the workforce side to help us get to a better spot, from a resourcing point of view. We've got new locomotives coming in. I think there's opportunities on the fuel efficiency side and overall efficiency.
Speaker #3: Your next question comes from Brandon Oglenski. Please go ahead, Barclays.
Thanks, Chris.
Your next question comes from <unk> <unk> with BMO capital markets. Please go ahead.
Speaker #6: Hey .
Speaker #1: Good afternoon and thanks for taking
Speaker #1: the question , Keith . .
Speaker #1: kind of shocked I'm hasn't come up it yet , but I think everyone respects your view on , M&A . And obviously the application was rejected on some maybe technical grounds , maybe not .
Thank you good afternoon.
Just a couple of things on the revenue side.
Can you help us kind of bridge the volume to revenue I think last year, you haven't let a mix issue then.
Speaker #1: But nonetheless , your maybe get updated thoughts there . And especially in to have with the development that you regards CSX , you know , going from Dallas and and Texas and Mexico into the southeast .
And <unk> revenues as more of kind of aligned but.
Speaker #1: Really appreciate it . Okay . Well , I think when you say everyone respects that might be true , but I everyone don't think agrees with my views .
As you think about this year.
Nadeem Velani: So, you know, I do think kind of getting back into that 100 basis point type of operating ratio improvements per year, if you're doing things right, if you are, you know, generating strong volumes and strong pricing, that should be how it plays out. So I think over time and kind of our long-term guidance of a 100 basis point improvement in the OR is what you should expect from us if we're delivering and executing the way we should.
What does it.
Mid single digits in.
The revenue, what's kind of the mix like in Cuba.
Speaker #1: That said , they remain to be the same . I think that rejection by the STB said loudly , what I believe to be true in the first place .
Talking about and maybe a quick one for mark.
As the networks.
Randall.
Book of business that John was talking about wind.
Speaker #1: The facts are going to matter. This is not a fait accompli. This is a merger that is complex and has tremendous U.S. impact on the rail network.
Our current headcount level, whether you win.
Envisioning on that front from a headcount perspective.
Speaker #1: As well as Mexican . It's Canadian and all ultimately one obviously network , but STB the is seized with making sure they do right to protect the what's strength of the US rail network , which supports strength that the obviously vitality of commerce and the economy United States of America .
Got it.
[Analyst] (Wells Fargo): Got it. That's helpful. Thank you.
So.
Nadeem Velani: Thanks, Chris.
I think probably.
Q1, Q2, we're probably going to see some of those challenges that you described yet.
Operator: Your next question comes from Fadi Shamoun with BMO Capital Markets. Please go ahead.
Given the.
Keith Creel: Thank you. Good afternoon. Just a couple of things. So on the revenue side, can you help us kind of bridge the volume to revenue? I think last year you had a lot of mix issues and RPM revenues were kind of aligned. But as you think about this year, what does a kind of mid-single digit RTM mean to revenue? What's kind of the mix like as you look at the book of business that you're talking about? And maybe a quick one for Mark. Is the network set up to handle this book of business that John's talking about with current headcount level? What are you envisioning on that front from a headcount perspective?
Speaker #1: in the So again , it's not going to matter . I think this is what they're saying about how the may . Just tell them what the facts are .
Strong bulk business.
In those quarters that we're projecting that that maybe has a little less natural than what we would normally see probably does create some of that mix headwind during that time period, plus I would tell you. We had we had tariff impacts of north of 200 million 115.
Speaker #1: what That's that said . And that application was facts . short on It had a lot of positives , a of lot aspirational growth projections in there .
Speaker #1: And I'm you know , I'm not saying they can't be achieved . I'm saying a that's that's a big big bar to that's a meet given that .
Our revenue in RPM.
And a lot of those tariff impacts were on really profitable.
Positive sense for our team business that just is not available to us under the tariff environment.
Speaker #1: We're quartered in, and Missouri now. I'd say it's the Show Me State. That's what we want. We want to see the facts.
Speaker #1: We want all the facts to be revealed . So we all can opine on those facts and how they impact each of us .
Yes.
I expect to see.
Kind of some headwinds earlier in the year and then see that stabilize I think theres, probably a couple of points.
Speaker #1: And that's railroads . That's customers , that's communities . There's a public interest test that has to be solved , to which includes strongly defined enhanced by competition .
John Brooks: Yeah, Fadi. So, I think probably the Q1, Q2, we're probably going to see some of those challenges that you described. Yes, given the strong bulk business in those quarters that we're projecting, that maybe is a little less natural than what we would normally see, probably does create some of that mixed headwind during that time period. Plus, I would tell you, you know, we had tariff impacts of north of CAD 200 million, you know, 1.5% of our revenue in RTMs, and a lot of those tariff impacts were on really profitable, you know, positive cents for RTM business that just is not available to us under this tariff environment.
Yeah.
If rpms in revenue matched up.
Even in 'twenty five is probably a couple of points of upside on the revenue as were looking towards 2026 that helped out.
Speaker #1: Those rules were written after the brakes were put on consolidation Morgan , who was chairing . the Linda STB back in 2001 when that moratorium was She didn't the brakes , issued .
Yes, I would just add.
Ed.
Q1 will lap the initial first the carbon.
Speaker #1: she slammed the brakes on and she went back and looked at what the nation needed going forward for the rail network standpoint . And a lot of people would benefit if they would actually go back and read and study , not just what's written in the regulations , but the perspective on that .
So we got one in a quarter of that or couple of more months here from where we are today there'll be a bit of a headwind to mix and then the trillion dollar continues to appreciate so I think we're at about <unk>.
$1 35 today in Canada held in.
Speaker #1: And if you go back and turn the page to the hearings, the Commerce Committee hearings, its Senate reading on a plain—print them out.
A year ago, we were closer to $1 43, so thats going to be a headwind now it's going to help us on our leverage it's going to help us.
Speaker #1: pretty thick , It's what ? You but you know can get her perspective in how those rules were shaped . And I'm telling you , when you read the regulations , they're not always clearly prescriptive .
Overall as far as we think about our balance sheet from my perspective, and interest payments and things like that so there is a net benefit elsewhere, but it will hurt our priorities.
John Brooks: So I expect to see kind of some headwinds earlier in the year and then see that stabilize. I think there's probably a couple points, you know, if RTMs and revenue matched up, even in 2025, there's probably a couple points of upside on the revenue as we're looking towards 2026. That helps you out?
Speaker #1: Sometimes they are, sometimes they're black and white, like one of the issues that UPS application got rejected on. A lot of times it's the words that are used.
Yeah on the head count I would say.
My comments on the prepared comments was head count will be flat slightly up.
We have strong operating leverage as the resolve and again, we're going to be focused on train size again, we've got some agreements that we're working through with some of our labor unions as well.
Speaker #1: It's the commas . But a lot It's the context . And if you go back and do your homework , which I , think is critically important to do the perspective , she said it in her own words in And I'll testimony .
Best with that as far as head count So we'll be working through.
Speaker #1: It's up to you. The new rules encourage enhancement of competition. The old rules actually encourage mergers. The new rules substantially increase the burden of proof for the applicants to demonstrate that the proposed transaction will be in the public interest.
Nadeem Velani: Yeah. Yeah, Fadi, I would just add, Q1 will lap the initial first, the carbon tax, so we got almost a quarter of that or a couple more months here from where we are today. That'll be a bit of a headwind to mix, and then the Canadian dollar just continues to appreciate. So I think we're at about 1.35 today, I think Canada held, and, you know, a year ago, we were closer to 1.43. So that's going to be a headwind. Now, it's going to help us on our leverage, it's going to help us overall, as far as we think about our balance sheet from that perspective and interest payments and things like that. So there is a net benefit elsewhere, but it will hurt our cents per RTM.
Yes.
Employee head count contractors, and so forth or are kind of for the most part off the property as well in Q4 as part of our our cost focus so I think overall.
I'm going to push mark as well on keeping that low single digit or people closer to flat. So I think we can accommodate it.
Speaker #1: They must demonstrate the transaction would enhance competition where necessary to offset the negative effects of the merger. So you can't understand if that's true unless you understand what all the adverse effects are as well.
Thank you.
Exciting.
Your next question comes from Jonathan <unk> with Evercore ISI. Please go ahead.
Speaker #1: You know , made that I think is comment she extremely telling . When she was pressed to explain what enhanced competition means , she said , Senator simply said , this way the benefits box must be fuller than the harm box .
Thank you good afternoon.
I hate to be so short term focus but it is in the seat so John pointed out a lot of headwinds in <unk> at the weather.
Keith Creel: Yeah, on the headcount, I would say, some of my comments on the prepared comments was headcount will be flat, slightly up. We'll have strong operating leverage as a result. And again, we're going to be focused on train times again. We've got some agreements that we're working through with some of our labor unions that will, you know, we'll vest with that as far as headcount. So we'll be working through that, through that case.
Carbon tax is still there.
Speaker #1: So, how can you determine 'true' or if that's not true? Unless you know the facts that are contained in both boxes? And I tell you, this is a forever decision.
Change a little bit so when we think about the path to both the mid single digit rpms, but most.
Especially the double digit EPS are you thinking about a slower start to <unk> and then kind of a ramp as we go through the year so not.
Speaker #1: This regulatory body . Chairman Fuchs and the members that serve the Chairman Fuchs , to take this are going responsibility seriously . Again , it's not going to the matter what applicants think or feel .
Not quite a hockey stick, but it does appear that you.
Nadeem Velani: Yeah, and Patty, like non-employee headcount, contractors and so forth, are kind of, for the most part, off the property as well, and since water is part of our cost focus. So I think overall, you know, I'm going to push Mark as well on keeping that low single digit or keep it closer to flat. So I think we can accommodate it.
You need to kind of make it up in the second half of the year back half loaded.
Speaker #1: As may be to good as it I them . And up , I believe board . I believe their Jim Vena , they believe it's the nation .
Q1 is going to be the toughest quarter of the year and.
Speaker #1: good for They believe it's good for their shareholders . They believe it's good for their employees . And that can be true . But does that also mean it's true for all the other concerned parties ?
That's.
For an expectation when you think about liberation day, a year ago.
Traffic.
Some compares but to <unk> point are renowned for very easy compares in Q2, Q3, and so forth. So it's going to be.
Speaker #1: that Is true for the industry ? Is that represent the risk of additional consolidation and something that large being created in the integration risk that creates for the it nation ?
[Analyst] (Wells Fargo): Thank you.
Nadeem Velani: Thanks, Patty.
Operator: Your next question comes from Jonathan Chappell with Evercore ISI. Please go ahead.
A tougher start to the year as far as the.
The earnings algorithm.
But no I'm not concerned about that and the carbon taxes net neutral to earnings.
John Brooks: Thank you. Good afternoon. Nadeem, I hate to be so short-term focused, but you know how it is in this seat. So, you know, John pointed out a lot of headwinds in Q1. We had the weather, now carbon tax is still there, exchange a little bit. So as we think about the path to both the mid-single digit RTMs, but most, especially the double-digit EPS, are you thinking about a slower start to Q1 and then kind of a ramp as we go through the year? So, you know, not quite a hockey stick, but it does appear that you need to kind of make it up in the second half of the year, back half load it.
Speaker #1: Because if it fails , we're trouble we're in . nation could The be brought to its knees with something that large affecting our entire rail transportation in North system America .
Sure.
It doesn't create a headwind at all just to create a bit of a headwind on the FERC, but it actually helps us in our on our margins overall so.
Speaker #1: And it affect every shipper , affect every railroad , affect commerce . So they have to get it right . It has to be a fulsome process .
But it won't be it will.
Moving to Nashville, increasing.
Okay, great. Thanks.
Speaker #1: You know , Jim , I heard Jim wants all yesterday , he the facts to be heard . And known . Then them heard and make let's known , because that's the only the way to get to decision .
Thank you.
Your next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Speaker #1: And in the end , I believe this regulatory body , the regulations require and I believe committed they're if to their can demonstrate that the benefits outweigh the harms , then they've got a good chance of approval .
Great. Thanks, everyone.
So theres talk of the harbor.
Nadeem Velani: Yeah, no, Q1 is going to be the toughest quarter of the year, and that's, you know, full on expectation. When you think about Liberation Day, a year ago, everyone was moving traffic. It's some tough compares. But to Keith's point earlier, we ran off some very easy compares in Q2, Q3, and so forth. So yeah, it's going to be a tougher start to the year as far as the earnings algorithm. But no, I'm not concerned about that. And the carbon tax, that's net neutral for earnings, so I'm not. That doesn't create a headwind at all, just to create a bit of a headwind on cents per RTM, but it actually helps us in our margins overall, so. But it won't be a hockey game.
Maintenance tax exemption kind of potentially going away and kind of.
<unk>.
Financial implications there so we'd love to know if you guys.
Speaker #1: That said , for that to be true , in my based on the regulations and mind , definition of enhanced based on that competition , it's going to have to come with concessions , considerable concessions , you know , to suggest that you're meeting a definition of enhanced competition because you introduced the CGP proposition .
How many views on what impact there might be on cross border volumes if that happens.
Frankly, the cross border volume businesses is so small.
In our book today.
Specific to that.
Really.
Don't give it much screens are that much of a concern right now in our book, maybe 456 years ago, where we're certainly we saw that.
Speaker #1: This mechanism that they introduced , you know , that's the definition . Then why does it have an expiry date ? And if that definition of a forever meets the decision beyond the expiry date , how can you exclude railroads ?
That volume much stronger, but at this point.
Speaker #1: think they deemed it I Canadian railroads . That originate traffic west of the Mississippi and shipped to destinations east , and vice versa .
John Brooks: Got it. Thank you.
Nadeem Velani: It'll be a natural increase, yeah.
Don't see that being much of an impact if they changed some of those fees are regulations.
John Brooks: Okay, great. Thanks.
Nadeem Velani: Thank you.
Operator: Your next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Speaker #1: American Those are shipments going generated to locations . That's part American of making America great again . And I guarantee you , President Trump means what he says he wants what's best for the nation .
Very good thank you.
Okay.
[Analyst] (Morgan Stanley): Great, thanks, anyone. So, there's talk of the Harbor Maintenance Tax exemption kind of potentially going away and kind of potential implications there. Would love to know if you guys have any views on what impact there might be on cross-border volumes if it happens or not?
Your next question comes from Brandon <unk> with Barclays. Please go ahead.
Speaker #1: The STB wants what's best for the nation , Cbkc wants what's best for the nation . It's critically concerned stakeholder that's impacted by this decision , that the facts proved that all the facts , not just the ones that support the applicant's view of what's best for the nation .
Hey, good afternoon, and thanks for taking my question.
Keith I'm kind of start that hasn't come up yet, but I think everyone with respect your view.
M&A and obviously the application was rejected.
Maybe technical guys maybe not.
But nonetheless, maybe you can get your updated thoughts there and especially in regards to the development that you have with CSI <unk>, calling from Dallas and Texas.
Nadeem Velani: Frankly, Robbie, the cross-border volume business is so small in our book today, specific to that, I really don't give it much credence or that much of a concern right now in our book. You know, maybe 4, 5, 6 years ago, where, you know, certainly we saw that volume much stronger. But at this point, I really don't see that being much of an impact if they change some of those fees or regulations.
Speaker #1: So that's a lot , said . But that's the gravity of this . And again , I would encourage people I know it's very seducing to get wrapped up in drinking .
Texas and Mexico into the southeast.
Got it.
Okay well.
I think we say everyone respects.
Speaker #1: This merger Kool-Aid and wanting to see all these wonderful gains and all these, these dollars printed that perhaps some are suggesting would be printed.
That might be true, but I don't think everyone agrees with my views.
Said they remain to be the same I think that the rejection by the STB.
Speaker #1: And all this amazing shareholder value created , but at what cost ? It can't be at the cost of our U.S. rail network back .
Said loudly what I believe to be true in the first place to actually get a better this is not a fait accompli.
Speaker #1: again , you got to go So and yourselves educate . Listen , I've had lawyers me I've tell had lawyers disagree with me .
This is a complex merger.
[Analyst] (Morgan Stanley): Very good. Thank you.
It has tremendous impact on the U S rail network as well as Canadian and Mexican consult ultimately.
Speaker #1: I've had other CEOs. I've got a little bit of experience in this one, that I think the world of. Pat saw this differently when they were going through their process, trying to get their trusts approved and their agreement with Canadian National.
Nadeem Velani: Okay.
Operator: Your next question comes from Brandon Oglenski with Barclays. Please go ahead.
Our net worth that obviously, the STB seized with making sure. They do what's right to protect the strength of the U S Rail network, which supports the strength in August but county Commerce Bank.
Keith Creel: Hey, good afternoon, and thanks for taking the question. Keith, I'm kind of shocked that hasn't come up yet, but I think everyone respects your view on, you know, M&A, and obviously, the application was rejected on some maybe technical grounds, maybe not. But nonetheless, maybe get your updated thoughts there, and especially in regards to the development that you have with CSX, you know, going from Dallas and Texas and Mexico into the Southeast. Really appreciate it. Okay, well, I think you say everyone respects. That might be true, but I don't think everyone agrees with my views. That said, they remain to be the same. I think that rejection by the STB said loudly what I believed to be true in the first place. The facts are going to matter.
Speaker #1: He and I had some very active debates. He was influenced by what his regulatory lawyers told him, and he was wrong.
Coming to United States of America.
Again, it's not going to matter.
Because this is what they are saying about.
Speaker #1: I think the ARBs had—we were stacked 90% against us, and they were wrong. Again, don't get tied up in emotion.
Now this may feel.
It's telling what the facts are that is what that said in that application was short on facts. It had a lot of positives.
Speaker #1: Don't get tied up in spin . Focus on the facts . Read the regulations , get the perspective . read the Go back and hearings and you're going to get right back to where I am today .
A lot of.
Yeah.
Aspirational.
Growth projections in there.
Speaker #1: The facts must prove and show that this is ultimately in the public's interest. That benefit box is going to have to be loaded up heavier than that harm box, because, again, this decision cannot be undone.
I'm not saying they can't be achieved I'm, saying.
That's a big that's a big bar to meet.
And given that we're headquartered in Missouri, now I'll say this.
The shall we say that's what we want we want to see the tax we went all the facts to be revealed so we all can opine on those facts and how they impact each of us and thats railroads as customers. That's communities. There's a public interest test that has to be solved two which includes <unk>.
Speaker #1: And if it's approved with concessions , will it likely trigger additional consolidation in industry this to create railroads to be in a position to best defend itself and compete against a Goliath .
Keith Creel: This is not a fait accompli. This is a complex merger that has tremendous impact on the US rail network as well as Canadian and Mexican. It's all ultimately one network, but obviously the STB is seized with making sure they do what's right to protect the strength of the US rail network, which supports the strength and obvious vitality of commerce and the economy in the United States of America. So again, it's not going to matter, I think this is what they're saying, about how the applicants may feel. Just tell them what the facts are. That's what that said, and that application was short on facts. It had a lot of positives, a lot of aspirational growth projections in there, and I'm, you know, I'm not saying they can't be achieved.
Speaker #1: That will be in created a combination. And I'll say, UPN's this one last thing. It's not competition that CP-KCS is concerned about.
Strong defined by enhanced competition.
Those rules were written after the brakes, we put on consolidation Linda Morgan, who is chairing the STB back in 2001 when that moratorium was issued she did this pump the brakes. She slammed the brakes on and she went back and looked at.
Speaker #1: I'm an advocate for competition . I'm an advocate for single line service . But again , what I'm not an advocate for is anti-competitive .
What's the nation needed going forward from a rail network standpoint, and a lot of people would benefit.
Speaker #1: Not an advocate. What I'm for is a railroad that has so much size and scale as they have historically. And I would suggest history says a lot about what the future might look like—how they've imposed their will on other railroads.
Yes, they would actually go back and read instead.
Not just what's written in the regulations, but the perspective on that and if you go back and turn the page to the hearings the Senate Commerce Committee hearings.
Keith Creel: I'm saying that's a, that's a big, that's a big bar to meet, and given that we're headquartered in Missouri now, I'd say it's the Show-Me State. That's what we want. We want to see the facts. We want all the facts to be revealed so we all can opine on those facts and how they impact each of us, and that's railroads, that's customers, that's communities. There's a public interest test that has to be solved, too, which includes... strongly defined by enhanced competition. Those rules were written after the brakes were put on consolidation. Linda Morgan, who was chairing the STB back in 2001, when that moratorium was issued, she didn't just pump the brakes, she slammed the brakes on. She went back and looked at what the nation needed going forward from a rail network standpoint.
Great rating Underplaying print amounts pretty sick.
Speaker #1: I think that's a dangerous and slippery slope . I think it's critically important that whatever concessions that the STB to and and NS U.P.
Speaker #1: I think that's a dangerous and slippery slope . I think it's critically important that whatever concessions that the STB to and and NS U.P. that agrees would agree to if they decision , if it's accept the favorable , that they have teeth as well to them .
You can't get her perspective, and how those rules reshaped and I'm, telling you when you read the regulations.
They're not always clearly prescriptive.
Sometimes they are sometimes they're black and white like one of the issues that <unk> application got rejected on but a lot of times, it's the worst of the use just the comments.
Speaker #1: It has to be enforceable able to protect to be the public interest and enhance competition . It can't be something that can just be conveniently ignored because they see the different way .
The contacts and if you go back and do your homework.
I think it's critically important to do the perspective, she said it in her own words and testimony and I'll just give it to the new rules encourage enhancement of competition the old rules actually encouraged railroad mergers.
Speaker #1: It's got to be clear , concise , and there has to be a mechanism that we can quickly seek relief in . That's not the standard go wait in line for two years until the STB has time to get through the litany of other complaints and concerns that something of this magnitude likely would create before they could opine and give you a decision like we had to navigate after our merger , and that South End rights agreement .
The new rules.
Substantially increase the burden of proof for the advocates to demonstrate that the proposed transaction will be in the public interest.
Keith Creel: A lot of people would benefit if they would actually go back and read and study, not just what's written in the regulations, but the perspective on that. If you go back and turn the page to the hearings, the Senate Commerce Committee hearings, it's great reading on a plane. Print them out, it's pretty thick. But you know what? You can get her perspective and how those rules were shaped. And I'm telling you, when you read the regulations, they're not always clearly prescriptive. Sometimes they are, sometimes they're black and white, like one of the issues that UP's application got rejected on. But a lot of times it's the words that are used, it's the commas, it's the context.
It must demonstrate the transactions that enhanced competition, where necessary to offset the negative effects of the merger.
Speaker #1: Do your homework that one . Read what was said in that one . Read the case of that was . That pure anti-competitive behavior .
You can't understand it thats true unless you understand but all the adverse FX.
Speaker #1: We said it when you took the position to try to off our South End rights granted to us from previous consolidations protect to competition , we said it then , and the STB agreed with us two years later .
Effects are as well.
One of the comments you made that I think is extremely caliber suppressed.
To explain the enhanced competition.
And she said Senator simply said this way the benefits box must be full within the harm box.
Speaker #1: But in the meantime, I guarantee you the customers' interests were not served that were shut out from competing into those marketplaces during record grain harvest.
So how can you determine.
If that's true or not true unless you know.
Keith Creel: If you go back and do your homework, which I think is critically important to do, the perspective, she said it in her own words and testimony, and I'll just give it to you. "The new rules encourage enhancement of competition. The old rules actually encourage railroad mergers. The new rules substantially increase the burden of proof for the applicants to demonstrate that the proposed transaction will be in the public interest. It must demonstrate the transaction will enhance competition, where necessary, to offset the negative effects of the merger." You can't understand if that's true unless you understand what all the adverse effects are as well.
Speaker #1: in the That was harm box . That certainly was not in the benefit box . So thanks for the question . a bit more than you anticipated , but I hope I cleared some of that So up .
The facts contained both boxes and I'll tell you. This is a forever decision this regulatory body chairman.
And the members that serve the chairman keeps theyre going to take this responsibility seriously.
Speaker #1: we'll wait and see . Let's just let facts be developed heard and and and we'll see all these where this thing comes out .
Again second matter with the advocate's banker feel as good as it maybe to Dan, but I believe.
Speaker #8: Well , the
Speaker #1: Keith and everyone focused on positive outcomes here . Thanks . Thank you .
I believe the board I believe.
They believe it's a gift to the nation. They believe it's good for their shareholders. They believe it's good for their employees.
Speaker #3: Your next question comes from Tom Wadewitz with UBS. Please go ahead.
And that can be true.
But does that also mean, it's true for all the other concerned parties.
Speaker #12: Good
Speaker #12: afternoon . . Keith , I Yeah . to get your sense on just high level how you're thinking about Usmca and kind of risk associated with , I guess , I don't know , you want call it renegotiation , whatever guys have to .
Is that true for the industry does that represent the risk of additional consolidation and something that large being created in the integration risks that it creates for the nation.
Keith Creel: And, another comment she made that I think is extremely telling, when she was pressed to explain what enhanced competition means, she said, "Senator, simply said, this way, the benefits box must be fuller than the harm box." So how can you determine if that's true or not true, unless you know the facts that are contained in both boxes? And I tell you, this is a forever decision. This regulatory body, Chairman Fuchs and the members that serve with Chairman Fuchs, are going to take this responsibility seriously. Again, it's not going to matter what the applicants think or feel, as good as it may be to them, and I believe UP, I believe their board, I believe Jim Vena. They believe it's good for the nation. They believe it's good for their shareholders. They believe it's good for their employees, and that can be true.
Because if it fails.
Speaker #12: pretty helpful in kind of You defining what you think you've lost from tariffs and Liberation So I Day . don't it's obviously tough to have a , you know , a lot of conviction on where tariff related things come out .
We're in trouble.
The nation could be brought to the states was something that large.
Affecting our entire rail transportation system in North America and in effect every shipper affect every railroad affect commerce. So they have to get it right. It has to be a full suite.
Speaker #12: But at a high level, do you think there is significant risk, or do you think the timing is— is this something where you've already incurred a lot of the kind of headwind already from Liberation Day?
SaaS.
Jim I heard yesterday, he brings all the facts.
Speaker #12: So, yeah, thank you.
Speaker #1: Yeah . Let me let me start with kind of the last question . We've already absorbed a pretty significant hit from all the uncertainty .
No.
Let's.
No.
That is still a way to get to a decision and I believe this regulatory body. The regulations required I believe they are committed to.
Speaker #1: I think about $200 million of revenue impact . Maybe higher felt it on the balance . sheet So we already . I don't have a crystal ball to exactly tell you where the needle is going to land .
Their application could demonstrate that the benefits now.
Way to harm.
Then they got a good chance of approval.
Speaker #1: I believe , and I've said from the beginning , President Trump is going to adjust the balance of trade between our three nations .
<unk> said for that to be true.
Keith Creel: But does that also mean it's true for all the other concerned parties? Is that true for the industry? Does that represent the risk of additional consolidation and something that large being created and the integration risk that it creates for the nation? Because if it fails, we're in trouble. The nation could be brought to its knees with something that large affecting our entire rail transportation system in North America, and it affect every shipper, affect every railroad, affect commerce. So they have to get it right. It has to be a fulsome process. You know, Jim, I heard Jim yesterday, he wants all the facts to be heard and known, then let's make them heard and known, because that's the only way to get to the decision.
In my mind based on the regulations and based on that definition of enhanced competition.
Speaker #1: He is going to make decisions in renegotiation , that which to his satisfaction and to his view , benefits the United America . That said , I think that can be true .
It's going to have to come with concessions considerable concessions.
This suggests that you are meeting our definition of enhanced competition, but could you introduced the CGP.
Speaker #1: And a positive renewal in Usmca can be true . At the same time , because trade between these three nations , even if it gets rebalanced a bit , it's critically important to all three nations success .
Proposition this mechanism that they introduced that.
Definitions and why does it have an expiry date and if that meets the definition of a forever decision.
Beyond the expiry date, how can you exclude railroads I think they deem the Canadian railroads.
Speaker #1: We depend upon each other . That's undeniable . When Usmca was created , trade grew . After the fact . After the pandemic , even more critical importance about cross-border trade between these three nations .
That originate traffic west of Mississippi, and shipped to destination based and vice versa.
Those are American generated shipments going to American location, that's part of making America, great again and again.
Speaker #1: So sitting in the seat we're in , we've gone through some choppy waters . They may get more choppier . But at the end of the day , we'll get to the storm .
Keith Creel: In the end, I believe this regulatory body, the regulations require, and I believe they're committed to, if their application can demonstrate that the benefits outweigh the harms, then they've got a good chance of approval. That said, for that to be true, in my mind, based on the regulations and based on that definition of enhanced competition, it's going to have to come with concessions, considerable concessions. You know, to suggest that you're meeting a definition of enhanced competition because you introduce this CGP proposition, this mechanism that they introduced, you know, if that's the definition, then why does it have an expiry date? And if that meets the definition of a forever decision, beyond the expiry date, how can you exclude railroads, I think they deemed it Canadian railroads, that originate traffic west of the Mississippi and ship to destinations east and vice versa?
Guarantee president Trump means with SaaS evokes what's best for the nation, the FCB with what's best for the nation.
Speaker #1: These three nations will trade together , and we uniquely believe our network enables it . We act with our infrastructure , the network that allows trade to flow .
<unk> works with rest of the nation.
Critical reported Thats never really concern stakeholder thats impacted by this decision.
Speaker #1: Canada to the US , US , Canada . Mexico to the US , US and Mexico . And now , because of these tribulations , before trade even more , Canada , Mexico , Mexico to Canada , we are the only network that can do that .
The facts prove that all of the facts not just the ones.
That support the applicants view of what's best for the nation. So Thats alive said, but that's the gravity of this and again I would encourage people I know.
Speaker #1: We truly are a success enabler for North America . are North We America's railroad , heavily connected to the United States , heavily committed to Canada , heavily committed to Mexico .
It's various to do seem to get wrapped up in <unk> and this merger Kool aid and Im wondering if you see all these wonderful gains in all of these dollars printed that perhaps some are suggesting would be credit and all this amazing shareholder value created.
Speaker #1: We're going to enable success across these three great nations in a trilateral way that allows everyone to succeed, including CPKC.
But at what cost.
It can't be at the cost of our U S Rail network.
Speaker #12: any Do you have sense of what the most likely timing might be , or is it just tough to say as well ?
So again, you've got to go back and educate yourselves listen I've had larger selling I've had large disagree with me.
Keith Creel: Those are American-generated shipments going to American locations. That's part of making America great again. I guarantee President Trump means what he says. He wants what's best for the nation. The STB wants what's best for the nation. CPKC wants what's best for the nation. It's critically important to us and every other concerned stakeholder that's impacted by this decision, that the facts prove that. All the facts, not just the ones that support the applicant's view of what's best for the nation. That's a lot said, but that's the gravity of this. Again, I would encourage people. I, I know it's, it's very seducing to get wrapped up in drinking this merger Kool-Aid and, and wanting to see all these wonderful gains and all these, these dollars printed that perhaps some are suggesting would be printed and all this amazing shareholder value created.
Speaker #1: I'm Yeah , reading the same things you're hearing . My guess is it's going to really , you know , get active . This summer .
Other Ceos I got a little bit experienced in this one I think the world up past all of this differently.
Speaker #1: So that's my view . I think in the summer it's going to get renewed . Maybe , hopefully I would , I would think midterms , you know , again , that's just me speculating based on the way I'm reading the tea leaves .
They were going through their process trying to get their trust approve an era agreement with Canadian National Eni has some very active debates he.
Was influenced by what is regulatory large soda.
Speaker #1: I don't control the agenda, but that, to me, would be a—and a possible, probable outcome.
And he was wrong.
I think they are Ted.
Speaker #12: Right. Okay. Thank you. Appreciate it.
We were stacked 90% against us.
And they were wrong.
Again don't get tied up in emotion don't get tied up in spend focus on the facts read the regulations get the perspective go back and read the hearings and you're going to get right back to where I am today.
Speaker #3: Your next question comes from Konark Gupta with Scotia Capital . Please ahead .
Speaker #13: Hi , Nadeem . Some the free . Just wondering a couple of things real quick here . The free cash conversion . You guys at the talked about Investor day in 90% .
Facts must prove and show that this is ultimately in the public sensors that benefit box is going to have to be loaded up heavier than.
Speaker #13: In that context, where do you see things shake out this year? And then for the CapEx, even if they've adjusted the forward of maintenance projects, would CapEx seemingly be down in '26?
Keith Creel: But at what cost? It can't be at the cost of our US rail network. So again, you got to go back and educate yourselves. Listen, I've, I've had lawyers tell me, I've had lawyers disagree with me. I've had other CEOs, I got a little bit of experience in this, one that I think the world of. Pat saw this differently, when they were going through their process, trying to get their trust approved and their agreement with Canadian National. He and I have had some very active debates. He was influenced by what his regulatory lawyers told him, and he was wrong. I think the odds had—we were stacked 90% against us, and they were wrong. Again, don't get tied up in emotion. Don't get tied up in spin.
Net harm box, because again thats decision cannot be undone, and if it's approved with concessions it will likely trigger additional consolidation in this industry.
Speaker #13: Where are you cutting CapEx on and is there some flex ?
To create railroads.
To be in a position to best.
Speaker #2: So free cash conversions in the 75% range ? I think , you know , long term , we talked about 90% . Part of our guide in 2028 and beyond .
Defend itself and compete against.
<unk> it will be created in the <unk> combination.
And I'll say this one last thing it's not competition pkc's concerned about.
Speaker #2: And you know, I think the current level of the range, $2.627 billion CapEx, is something that we can continue to do over the next future.
I'm an advocate for competition I'm, an advocate for single line service.
But again, what I'm not an advocate for its anti competitive behavior.
Speaker #2: So foreseeable , in fact , you know , with the weaker Canadian dollar that could go with the stronger Canadian dollar that can go even lower .
What I am not an advocate for it as a railroad that has so much size and scale.
Keith Creel: Focus on the facts, read the regulations, get the perspective, go back and read the hearings, and you're going to get right back to where I am today. The facts must prove and show that this is ultimately in the public's interest. That benefit box is going to have to be loaded up heavier than that harm box, because again, this decision cannot be undone, and if it's approved with concessions, it will likely trigger additional consolidation in this industry. To create railroads, to be in a position to best defend itself and compete against a Goliath that would be created in a UP NS combination. And I'll say this one last thing, it's not competition that CPKC's concerned about. I'm an advocate for competition. I'm an advocate for single line service. But again, what I'm not an advocate for is anti-competitive behavior.
Speaker #2: So the the CapEx is a bit of a shift of in terms , you know , timing of So , we investment . pulled forward some of the infrastructure investment .
As they have historically and I would suggest history says a lot about what the future might look like.
Now they impose their wheel.
On the other railroads.
Speaker #2: did a lot We of the synergy or the integration related capital investments . The last three years . As you can imagine , with the Laredo Bridge , with some of the siding extensions and siding investment that we did to support the integration , as well as some of the growth investments .
I think that's a dangerous slippery slope I think it's critically important that whatever concessions that the STB agreed to in the U P and NFS would agree to accept the decision if it's favorable.
They have teeth to them as well.
It has to be enforceable to be able to protect the public interest and enhanced competition.
Speaker #2: You know , Americold , for example , and vestments . Transload So so there's basically a bit of a shift in just the spend of CapEx .
It can't be something that can just be conveniently ignore because they see the different way, it's got to be clear concise and there has to be a mechanism.
Speaker #2: So we don't have the day in our systems integration anymore . So there'll be some reduced capital there . We don't have as many railcar investments that have , but we we have announced that locomotive investments with with Wabtec and Progress .
That we can quickly seek relief and that's not the standard Youll wait in line for two years into the STB has time to get through the litany of other complaints and concerns that step into this magnitude.
Speaker #2: So it's a it's a shift in overall . capital And that reduction of 15% somewhat due to timing . but But mainly out of the I'd say siding extension infrastructure investments and to an extent is investments overall .
Likely would create before they could kind of give you a decision like we had to navigate after our merger in that South end rights agreement.
Keith Creel: What I'm not an advocate for is a railroad that has so much size and scale as they have historically, and I would suggest history says a lot about what the future might look like, how they've imposed their will on other railroads. I think that's a dangerous and slippery slope. I think it's critically important that whatever concessions that the STB agrees to, and that UP and NS would agree to if they accept the decision, if it's favorable, that they have teeth to them as well. It has to be enforceable to be able to protect the public interest and enhance competition. It can't be something that can just be conveniently ignored because they see it a different way.
Do your homework on that one.
<unk> said on that one read the case of that.
The sphere anti competitive behavior, we said it when he took the position to try to shut off our south and rights that were granted to us from previous consolidations.
Speaker #3: Next, from comes next quarter, your Benoit Poirier with Desjardins Capital.
Speaker #3: question
To protect competition.
We set it Dan and the SCB agree with seniors later, but in the meantime, our guarantee the customers interest were not serve that were set out from competing into those marketplaces.
Speaker #8: Yes , thank you very much . Good afternoon everyone . My question back in November , if the Canadian government new announced measures to help Canadian steel and the lumber companies , one of these was the government with the measures with the the rails to freight subsidize rates by 50% , beginning in spring 2026 .
Record grain harvest that was in the harm box that certainly was not in the benefit box.
Keith Creel: It's got to be clear and concise, and there has to be a mechanism that we can quickly seek relief in that's not the standard, "Go wait in line for two years until the STB has time to get through the litany of other complaints and concerns," that something of this magnitude likely would create before they could opine and give you a decision, like we had to navigate after our merger and that South End Rights agreement. Do your homework on that one. Read what was said on that one. Read the case of that. That was pure anti-competitive behavior. We said it when UP took the position to try to shut off our South End Rights that were granted to us from previous consolidations to protect competition. We said it then, and the STB agreed with us two years later.
So thanks for the question, probably a bit more than you anticipated, but I hope it cleared some of that up so we'll wait and see and let's just let all these facts, we developed <unk> heard and we'll see where this thing comes out.
Speaker #8: I was wondering if you could give an update on that, and whether it could be kind of a volume tailwind in the back half?
We'll have the passion Keith I never focused on positive outcomes here. Thanks.
Speaker #8: Of this year ?
Thank you.
Speaker #11: Yeah , thanks . know , You certainly we've got our GA folks working through still , the mechanics of how all this will be accounted for , sort of parties , the customer , the between all the government and ourselves .
Your next question comes from Tom <unk> with UBS. Please go ahead.
Yes, good afternoon.
Keith I wanted to.
Get your sense on.
Just high level, how you're thinking about U S MCA and kind of risk associated with it.
Speaker #11: You know , our analysis says , yeah , maybe there is some opportunity , particularly in maybe some long haul transload type movements the across country .
I guess I don't know renegotiation wherever you want to call it.
You guys have been pretty helpful.
Defining what do you think you've lost from tariffs and Liberation day. So I don't know I mean, it's obviously tough to have a lot of conviction on where tariff related things come out but the high level do you think there is significant risk do you think the timing is is this something where you've already incurred a lot of the kind of the headwind already from liberation deck.
Keith Creel: But in the meantime, I guarantee you, the customer's interests were not served. It was shut out from competing into those marketplaces during record grain harvest. That was in the harm box. That certainly was not in the benefit box. So thanks for the question. Probably a bit more than you anticipated, but I hope I cleared some of that up. So we'll wait and see. Let's just let all these facts be developed and heard, and we'll see where this thing comes out. Love the passion, Keith, and everyone, focused on, you know, positive outcomes here. Thanks. Thank you.
Speaker #11: But I'm not looking at sort of needle moving type type numbers . There . Benoit . So we'll see . As I said , there's still a fair amount that has to be sorted out and then we'll see how it sort of through ripples the marketplace .
So yeah. Thank you.
Speaker #11: And , and we're keeping our hands on the pulse of opportunity , there's an right there we'll , it . we'll be If to try to we'll , capture it .
Yeah, Let me, let me start with kind of a last question we've already absorbed.
Pretty significant hit from all the uncertainty I think about $200 million of revenue impact may be higher.
Speaker #11: But I'm at not looking big numbers .
Speaker #8: Okay. Great update. Thanks, John.
Speaker #11: Yeah .
So we felt that on the balance sheet already.
Speaker #3: Your next question comes from Scott Group with Wolfe Research. Please go ahead.
I don't have.
Operator: Your next question comes from Tom Wadowitz with UBS. Please go ahead.
The Crystal ball to tell you exactly where the need is going to land I believe in our system at the beginning.
Speaker #13: Hey , thanks .
Speaker #1: Afternoon .
Speaker #13: So
[Analyst] (UBS): Yeah, good afternoon. Keith, I wanted to get your sense on, you know, just high level, how you're thinking about USMCA and kind of risk associated with, I guess, I don't know, renegotiation, whatever you want to call it. You guys have been pretty helpful in, in kind of, you know, defining what you think you've lost from tariffs and Liberation Day. So I, I don't know. I mean, it's obviously tough to have a, you know, lot of conviction on where tariff-related things come out. But being high level, do you think there's significant risk? What do you think the timing is? Is this something where you've already incurred a lot of the, you know, kind of the headwind already from Liberation Day? So yeah. Thank you.
President Trump is going to adjust now.
Speaker #1: rails Talking
Speaker #1: was .
Speaker #13: about one .
Speaker #13: inflation . How are you feeling about price . And Of the other overall price ? Cost . This year . And then maybe just along those lines , just given some of the Q1 commentary on any thoughts about how to think about operating ratio Q1 in .
Balance of trade between our three nations.
He is going to make decisions and that renegotiation, which to his satisfaction into his view benefits United States of America.
I think that can be true and a positive renew on U S. MCA can be true at the same time because trade between these three nations EBIT to gets rebalanced a bit it's critically important to all three nation success, we depend upon each other.
Speaker #2: Got through a call with us at Scott . Thank you . You know , I year over year , we'll see think . We'll see .
Speaker #2: Potential for improvement in the operating ratio—I'll keep it at that. From a point of view, we're not seeing that same inflation sort of issue.
That sounded out.
When <unk> was created trade grew after the fact.
Speaker #2: And again, the Canadian dollar, in terms, does help us with some of our costs. And capital investments in U.S. dollar conversion.
After the pandemic, even more critical importance about cross border trade between these three nations so sitting in the seat. We're in we don't see some choppy waters, they may get more choppy or but at the end of the day, we will get through the storm. These three nations will three together and we uniquely because of our network enables it <unk>.
Keith Creel: Yeah, let me, let me start with kind of the last question. You know, we've already absorbed a pretty significant hit from all the uncertainty, I think about $200 million of revenue impact, maybe higher. So we felt it on the balance sheet already. I don't have the crystal ball to tell you exactly where the needle is going to land. I believe, and I've said from the beginning, President Trump is going to adjust the balance of trade between our three nations. He is going to make decisions in that renegotiation, which, to his satisfaction and to his view, benefits the United States of America.
Speaker #2: But but our overall , true inflation , which is locked in with , with labor , we find some very unique deals and favorable deals for for labor and for for management .
We connect with hard infrastructure. The rail network that allows that trade to flow, Canada. The U S. U S to Canada, Mexico to the U S U S to Mexico and now because of these trade regulations, even more so than before.
Speaker #2: And those are in that two and a half to 3% range . So as far as our inflation , you should expect that level of inflation overall .
Speaker #2: And we're pricing above that. So that spread should be positive, and will be part of our benefit to our margins overall.
Canada, and Mexico in Mexico to Canada, we are the only network that can do that we truly are a success enabler for North America, we are north America's Railroad.
Keith Creel: That said, I think that can be true and a positive renewal on USMCA can be true at the same time, because trade between these three nations, even if it gets rebalanced a bit, is critically important to all three nations' success. We depend upon each other. That's undeniable. When USMCA was created, trade grew after the fact. After the pandemic, even more critical importance about cross-border trade between these three nations. So sitting in the seat we're in, we've gone through some choppy waters. They may get more choppier, but at the end of the day, we'll get through the storm.
Heavily committed to United States heavily committed to Canada heavily committed to Mexico, we're getting enable success across these three great nations and a trilateral way that allows everyone succeed including CP Casey.
Speaker #13: Appreciate it . Thank you guys . Thanks Scott .
Speaker #3: Here next question comes from Ken Hoexter with Bank of America . go Please ahead .
Speaker #7: Hey great . Good afternoon . Nadeem . Just to clarify that one Q I'm sorry , the year over year improvement was that a one ?
Do you have any sense on what the most likely timing might be or is it just tough to say as well.
Speaker #7: specific comment or Q is that a year over year comment on the Or and then just your thoughts on synergy targets , how where you think you are and what you still think can add this year and next ?
I'm reading the same things Youre hearing my guess is it's going to really get active this summer.
So that's my view I think.
Keith Creel: These three nations will trade together, and we uniquely, because of our network enables it, we connect with hard infrastructure, the rail network that allows that trade to flow: Canada to the US, US to Canada, Mexico to the US, US to Mexico, and now, because of these trade tribulations, even more so than before, Canada to Mexico and Mexico to Canada. We are the only network that can do that. We truly are a success enabler for North America. We are North America's railroad, heavily committed to the United States, heavily committed to Canada, heavily committed to Mexico. We're going to enable success across these three great nations in a trilateral way that allows everyone to succeed, including CPKC.
In December its going to get renewed maybe hope.
Speaker #2: Yeah . So we'll see year over year improvement in Q1 in the ratio . operating And I expect to see year over year improvement annually in the operating ratio as well .
Hopefully I was I would think before the mid terms again Thats just me speculating based on the way I'm reading the tea leaves.
I don't control the agenda.
To me it would be a possible in a probable outcome.
Speaker #2: You know, we talked about Q1 being a little bit more challenging just given the volume won't be as strong in Q1. I still, absent a major winter event or disruption, see that we'll see some improvement in the operating ratio given the low cost structure we entered January with. And remind me of your question, the second part of your—
Okay.
Thank you I appreciate it.
Yes.
Your next.
Question comes from <unk> Gupta with Scotia capital. Please go ahead.
And then just on the free cash just wondering a couple of things scale quite here and be free cash conversion you guys talked about at Investor day, and 90% in that context, where do you see you can shake out this year and then for the Capex.
Speaker #1: Your synergy . Question . Synergy . Yes , yes , can we exited 2025 at about a 1.2 run rate , 1.2 billion .
Speaker #1: see opportunity for another We an 200 plus , about a 1.4 as we close out 2026 . So well on our way of meeting the made this relative to integration opportunity .
Just a pull.
[Analyst] (UBS): Do you have any sense on what the most likely timing might be, or is it just as tough to say as well?
We look forward of maintenance projects of the Capex is down by <unk> 26, we are cutting capex.
Keith Creel: Yeah, I'm, I'm reading the same things you're hearing. My guess is it's going to really, you know, get active this summer. So that's my view. I think in the summer, it's going to get renewed, maybe, hopefully. I would, I would think before the midterms. You know, again, that's just me speculating based on the way I'm reading the tea leaves. I, I don't control the agenda, but that, to me, would be a possible and a probable outcome.
Is there some flex.
So free cash conversions in the 75% range I think long term, we've talked about 90%.
Speaker #7: Wonderful . Thanks , Keith . Thanks .
Speaker #2: Ken Thanks , .
Speaker #3: next Your question comes Ari from Rosa with Citigroup . Please go ahead .
Part of our guide in 2028 and beyond.
Speaker #14: Hi . Good Yeah . afternoon . So I wanted to ask maybe a little bit longer term . It's been interesting to see there's been quite a bit of convergence here between kind of valuations across the class run rails .
The current level of the 2627 Capex range is something thats.
[Analyst] (UBS): Right. Okay. Thank you. Appreciate it.
Can continue to do over the next foreseeable future. So.
In fact with the weaker Canadian dollar that could go along with the stronger Canadian dollar that can go even lower so.
[Analyst] (Desjardins Securities): ... Mm-hmm.
Speaker #14: Keith , as we think about the growth prospects for CP over the term about your level of , maybe speak confidence that CP can continue to outgrow the industry and kind of what are the drivers behind that ?
Operator: Your next question comes from Konark Gupta with Scotia Capital. Please go ahead.
The capex is a bit of a shift in terms of.
[Analyst] (Scotia Capital): Hey. Hi, Nadeem. Just on the free cash, just wondering a couple of things for you quick here. The free cash conversion, you guys talked about that the invested in 90%, in that context, where do you see it can shake out this year? And then, for the CapEx, even if we adjust, the pull forward of maintenance projects, the CapEx is seemingly down, in 2026. Where, where are you cutting CapEx on, and, and is there some flex?
The timing of investment so we pull forward some of the infrastructure investment we did a lot of the synergy or <unk>.
Speaker #14: You know , as we think about , you know , three , five years out and particularly how potentially a UPN's situation alter that .
Integration related capital investments the last three years as you can imagine with the Laredo Bridge.
Speaker #14: Thanks could
Some of the siding extensions in siding investments that we did to support.
Speaker #1: Let me start with the last part.
Speaker #1: First , UPN's , if . that comes together with the puts and takes and the concessions , we believe that will be required to satisfy to enhanced competition .
The integration as well as some other growth investments amira.
Americold for example on trans load investment so.
Nadeem Velani: So free cash conversion's in the 75% range. I think, you know, long term, we talked about 90%, part of our guide in 2028 and beyond. And I, you know, I think the current level of the CAD 260 to 270 CapEx range is, is something that's, we can continue to do over the next foreseeable future. So, in fact, you know, with the weaker Canadian dollar, that could go lo- with the stronger Canadian dollar, that can go even lower. So, the CapEx is a bit of a shift in terms of, you know, timing of investment. So, you know, we pulled forward some of the infrastructure investment.
Speaker #1: I see that as a net positive, as long as we have a fair playing field and we don't have anti-competitive behavior. So that's a qualifier there.
So there is just basically a bit of a shift in the <unk>.
Spend of Capex. So we don't have the data and our systems integration anymore. So there'll be some reduced capital there we.
Speaker #1: And I'm going to take I'm going to expect that Jim will . That's not going to be true . commit that That said , when it comes to the in our synergies growth We look algorithm .
We don't have as many railcar investments that we have but we have now except that locomotive investments.
Speaker #1: forward . Think about this , think about what we're doing today with no macro help . So that's that single digit RTM growth with the macro working against us .
With one second progress so.
The shift in capital overall and that reduction of about 15% somewhat.
Speaker #1: So if you go forward , we're going to continue to have synergies . We're going to continue to create new and unique opportunities .
Due to timing, but.
But mainly out of the let's say exciting extension infrastructure investments.
Speaker #1: This product that was never contemplated . And those initial targets that we put out , you to a little bit of got a place where you tailwind get back normalized economy , with a a little bit of GDP growth and normal shipments synergies can come off a little .
And to an extent.
Ias investments overall.
Nadeem Velani: We did a lot of the synergy or the integration-related capital investments the last three years, as you can imagine, with the Laredo Bridge, with some of the siding extensions and siding investments that we did to support the integration, as well as some of the growth investments, you know, Americold, for example, and transload investments. So, there's just basically a bit of a shift in the spend of CapEx. So we don't have the end of our systems integration anymore, so there'll be some reduced capital there. We don't have as many railcar investments that we have, but we have announced that locomotive investment with Wabtec in progress.
Next corner. Your next question comes from <unk>, Yang with Desjardin capital markets.
Speaker #1: You maintain price, and you still kind of echo the same behavior over, repeated the next several years. So again, I think that's a sweet spot.
Yes. Thank you very much good afternoon, everyone. My question back in November with the Kingdom government announced new measure to help the Canadian steel and lumber company.
Speaker #1: You know what we do our work . It's not It's not a layup . But we've got the network to be able to create these customer solutions that have never been able to be created before .
One of these reserve measure was the government.
Speaker #1: Benefit from trade between the three nations , benefit from these unique networks . North , South , the southeast to The Dallas . southeast to That Mexico .
Work with the.
The rails to subsidized free trades by 50% beginning in spring of 2026 was wondering if you could give an update on this and whether it could be kind of a volume tailwind in the back half of this year.
Speaker #1: a again , UPN's can't replicate . And I gives us a think that nice recipe for having confidence in in meeting that guidance that we've laid out on the growth algorithm .
Nadeem Velani: So it's a shift in capital overall, and that reduction of about 15%, somewhat due to timing, but mainly out of the siding extension, infrastructure investments, and to an extent, IS investments, overall. Thanks, Konark.
Yes, Thanks a lot.
Yeah.
Certainly we've got our GAA folks working through still the mechanics of how all of this will be accounted for.
Speaker #3: Next, your question comes from Steve Hansen with Raymond James. Please go ahead.
Between all the parties of the customer the government and.
Speaker #7: Oh , I guys . yeah . Thanks , time . appreciate the question on the grain Just a harvest , given its size , I think you've already described it as a tailwind for the year .
And ourselves.
Our analysis says.
There is some opportunity, particularly in maybe some long haul trans load type movements across the country.
Operator: Your next question comes from Benoit Poirier with Desjardins Capital Markets.
Speaker #7: I was a bit surprised you didn't move more in the fourth quarter, on the back of the big harvest, and just curious whether or not you think the normal pattern will evolve in this sense—will we move, year in, the bulk of the harvest?
[Analyst] (Desjardins Securities): Yes, thank you very much. Good afternoon, everyone. My question, back in November, when the Canadian government announced new measures to help the Canadian steel and lumber companies, one of these measures was the government would work with the rails to subsidize freight rates by 50% beginning in spring of 2026. Was wondering if you could give an update on this and whether it could be kind of a volume tailwind in the back half this year.
But I'm not looking at sort of needle moving type type numbers there have been lots. So we'll see as I said theres still a fair amount that has to be sorted out.
Speaker #7: You know, in the first half, or would you say two quarters, or do you think that quarter and a half pattern will extend into the third quarter as well, just given, again, the size of the carryover this year?
And then we'll see how it sort of ripples through the marketplace and we're keeping our hands on the pulse of that if there's an opportunity. We'll we'll we'll be right there to try to capture it but I'm not looking at big numbers.
Speaker #7: Thanks .
Speaker #14: Yeah .
Speaker #2: Steve , you .
Speaker #9: And I both were .
Speaker #2: Surprised , you know , certainly the the wet weather out there in Vancouver didn't help . And you know I know we talked about it on the Q3 call like we were excited about the level of freight that we had sold with the grain companies in gearing up for that .
Okay, Great update thanks, John.
Yeah.
Speaker #2: You know, it does feel like maybe there is a little bit of a shift. We'll see if this is unique or not as we get towards harvest next year.
Your next question comes from Scott Group with Wolfe Research. Please go ahead.
Nadeem Velani: Yeah, thanks, Benoit. You know what? Certainly, we've got our GA folks working through still the mechanics of how all this will be accounted for, sort of between all the parties, the customer, the government, and ourselves. You know, our analysis says, yeah, maybe there is some opportunity, particularly in maybe some long-haul transload-type movements across the country. But I'm not looking at sort of needle-moving type numbers there, Benoit. So we'll see. There, as I said, there's still a fair amount that has to be sorted out. And then we'll see how it sort of ripples through the marketplace, and we're keeping our hands on the pulse, so that if there's an opportunity, we'll, you know, we'll be right there to try to capture it, but I'm not looking at big numbers.
Hey, Thanks afternoon.
So one of the other rails was starting to pick up in inflation. How are we doing about pricing just overall price cost. This year and then maybe just along those lines just given some of the Q1 commentary.
Speaker #2: I'm not not really sure yet . I do believe sets us up for a very which readable , we like as a railroad , you know , shipment profile of of grain .
Speaker #2: frankly , soybeans with the not And moving very much in the US , you know , we're kind of excited about what that might bring as we move through .
Any thoughts about how to think about operating ratio in Q1.
We've gone through a call without that.
Speaker #2: You know, the mid part of the year. So I met with one of our very largest grain customers last week. And they told me they fully expect to be kind of sold out to busy levels.
Got it thank you.
I think year over year.
Let's see.
Central for improvement in the operating ratio uptick with that.
From an inflation point of view, we're not seeing that same sort of.
Speaker #2: Right through August . And new crop , you got pretty good snow levels up across Canada right now . We exited with pretty decent moisture , and I know we're we're really in early innings right now , but I can tell you there's already a little bit of bullishness around , you know , could there be a repeat .
Issue and again as you have seen.
It does help us in terms of some of the some of our cost and capital investment.
In U S dollar.
Conversion, but but overall our true inflation language is locked in with labor.
[Analyst] (Desjardins Securities): Okay, great update. Thanks, John.
Nadeem Velani: Yeah.
We found very.
Operator: Your next question comes from Scott Group with Wolfe Research. Please go ahead.
I mean, these deals and favorable deals for labor.
Speaker #2: And certainly the Canadian farmer has built a lot of storage . So they've been able to put this this crop away . But I think there's a pretty big confidence that is going to going to this move .
<unk>.
[Analyst] (Wolfe Research): Hey, thanks, afternoon. So one of the other rails was talking about pickup in inflation. How are you feeling about price and just overall price cost, this year? And then maybe just along those lines, just given some of the Q1 commentary under Nadeem, any thoughts about how to think about operating ratio in Q1?
Our management and so those are in that 2.5% to 3% range. So.
As far as our inflation, you should expect that level of inflation.
Speaker #2: have to throughout the year . move And then what happens next fall we'll see .
We're all in we're pricing above that.
So that spread should be positive in <unk>.
Speaker #7: caller . Appreciate the Thanks .
Speaker #6: Yep .
We will be part of our.
Speaker #3: Your next question comes from David Vernon with Bernstein. Please go ahead.
Benefit to our margins overall.
Nadeem Velani: We've got through a call without that, Scott. Thank you. You know, I think year-over-year, we'll see a potential for improvement in the operating ratio. I'll keep it at that. From an inflation point of view, we're not seeing that same sort of issue. And again, the Canadian dollar does help us in terms of some of our costs and capital investments in US dollar conversion. But overall, our true inflation, like which is locked in with labor, you know, we signed some very unique deals and favorable deals for labor and for management, and those are in that 2.5% to 3% range.
I appreciate it thank you guys.
Speaker #12: Hey . Good afternoon .
Speaker #15: And thanks for taking the question . So , John , maybe can you talk a little bit about how you're thinking about the tariff environment and in terms of building out the the mid-single digit RTM guide , like , are you expecting to kind things of stay volatile , stay the a little better , get a little worse , and then how same , get are you guys thinking about , you know , the the next iteration of the Usmca and how that might sort of impact some of the , the opportunities for you guys in the next three years .
Thanks Scott.
Your next question comes from Ken <unk> with Bank of America. Please go ahead.
Okay great.
Good afternoon.
I think just to clarify that <unk> I'm sorry, the year over year improvement was that a <unk> specific comment or is that a year over year comment on the <unk> and then just your thoughts on synergy targets.
Where do you think you are in.
But you still think.
Speaker #2: Well , you know , David , we've we've assumed this this isn't really going to that change . So we've we've planned to sort of build in this , this headwind into 2026 .
Can I add this year and next.
Yes, so we will see year over year.
Improvement in Q1, and the operating ratio and I expect to see year over year improvement annually in the operating ratio as well.
Speaker #2: Now, look, we were — we backfill it. Able to — I example. Give you an — we, you know, our bridge volume that we've land talked about really both directions grew by about 140 million year over year in those types of opportunities.
Nadeem Velani: So, as far as our inflation, you should expect that level of inflation overall, and we're pricing above that. So that spread should be positive and will be part of our benefit to our margins overall.
<unk> talked about Q1 being a little bit more challenging just given volume won't be as strong in Q1, but still see outside of.
A major winter events or disruption that we'll see some improvement in the operating ratio given the low cost structure, we entered January with.
Speaker #2: We see opportunity there to add on to that pretty significantly look , . So so it it's it's no doubt it's frustrating . It was a pretty significant headwind .
[Analyst] (Wolfe Research): Appreciate it. Thank you, guys.
And remind you of your second part of your question.
Nadeem Velani: Thanks, Scott.
So your question is yes.
Operator: Your next question comes from Ken Hoexter with Bank of America. Please go ahead.
Yes. It came we exited 2025 at about a 1.2 run rate $1 2 billion you see an opportunity for another 200 plus.
Speaker #2: get a If we break it in positively . Certainly we're going to embrace bringing a lot of that traffic back on . But but it certainly hasn't been planned .
[Analyst] (Bank of America): Hey, great. Good afternoon. Nadeem, just to clarify that Q1—I'm sorry, the year-over-year improvement, was that a Q1 specific comment, or is that a year-over-year comment on the OR? And then just your thoughts on synergy targets, how, where you think you are and, and-
Out of one four as we close out 2026 are well on our way of meeting.
Speaker #2: You know , as I future holds , I what the can tell you one thing . We're going to really amp up our our activity sales on our Mexico franchise .
Got it that's really relative to this integration opportunity.
Wonderful thanks.
[Analyst] (Raymond James): ... but you still think, can add this year and next?
Thanks Sandeep.
Yes.
Speaker #2: You know , I think there there is a of a heck lot more opportunity down there . To to sort feed this of network .
John Brooks: Yeah, so we'll see year-over-year improvement in Q1 in the operating ratio, and I expect to see year-over-year improvement annually in the operating ratio as well. You know, we talked about Q1 being a little bit more challenging, just given volume won't be as strong in Q1, but I still see, you know, outside of a major winter event or disruption, that we'll see some improvement in the operating ratio, given the low cost structure we entered January with. And remind you of your second part of your question?
Your next question comes from Ari Rosa with Citigroup. Please go ahead.
Yes, hi, good afternoon, so I wanted to ask maybe a little bit longer term, it's been interesting to see theres been quite a bit of convergence here.
Speaker #2: again , And whether it would be opportunities land bridge up into Canada or continuing to feed the the American economy and , and really , we've really never done it to the extent that you've become accustomed to seeing our sales team across Canada , in the US do it .
Between.
Kind of valuations across the class one rails.
As we think about the growth prospects for CP over the long term.
Can you speak about your level of confidence that you can continue to outgrow the industry and kind of what are the drivers behind that.
Speaker #2: So , so more to come on that . But but I'm looking for a lot bigger things in terms of growth out of our franchise in the coming years .
Five years out and particularly how potentially a upenn situation could alter that.
Keith Creel: Yes, so we exited 2025 at about a 1.2 run rate, CAD 1.2 billion. We see an opportunity for another 200+, about a 1.4 as we close out 2026. So well on our way of meeting the commitments we made relative to this, integration opportunity.
Speaker #15: And anything that, you know, Carney and the team are doing to kind of promote trade with other partners that might have an impact on outlook.
Let me start with the last part first.
Speaker #15: I know there's been talk about the Chinese EVs, that kind of stuff.
If that comes together with the puts and takes in the concessions we believe.
Speaker #2: Well, I think certainly there's a fair bit of work. And actually, we've got some of our ag folks down there in the coming weeks to promote better ag shipments between the two.
That will be required to.
To satisfy enhanced competition I would say that as a net positive.
As long as we have a fair playing field and we don't have anti competitive behavior, such a qualifier there.
Keith Creel: Yes.
Operator: Your next question comes from Ari Rosa with Citigroup. Please go ahead.
I'm going to take.
Speaker #2: know , You eliminate some of the red tape and know , you , bureaucracy in terms of the customs movements of those products , I think we're making some some headway on those those fronts .
And we expect that Jim will commit that thats not going to be true.
That said when it comes to the synergies and our growth algorithm, we look forward.
[Analyst] (Citigroup): Yeah. Hi, good afternoon. So I wanted to ask, maybe a little bit longer term. It's been interesting to see there's been quite a bit of convergence here, between kind of valuations across, the class one rails. Keith, as we think about the growth prospects for CP over the long term, maybe speak about your level of confidence that CP can continue to outgrow the industry, and kind of what are the drivers behind that, you know, as we think about, you know, 3, 5 years out, and particularly how potentially a UPNS situation could alter that? Thanks.
Think about this think about what we're doing today with no macro health.
Speaker #2: I can tell you also , as we think , you know , products , intermodal , moving , you know , all the way between Canada and Mexico , David .
So that's a single digit.
<unk> growth for the macro working against US. So if you go forward, we're going to continue to have synergies, we're going continue to create new and unique opportunities.
Speaker #2: Also , there's an effort to try to streamline some of those customs processes related to to those products early . So I do there's some some believe there momentum , but we're kind of in the early innings on some of that stuff .
<unk> product that was never contemplated and those initial.
Targets that we put out you get back to a place where you've got a little bit of tailwind with a normalized economy, a little bit of GDP growth.
The normal shipments synergies can come off a little you maintain pricing still kind of echoed the same repeated behavior over the next several years. So again I think that's a sweet spot.
Keith Creel: Well, let me start with the last part first. UPNS, if that comes together with the gives and takes and the concessions, we believe that will be required to satisfy enhanced competition, I see that as a net positive. As long as we have a fair playing field, and we don't have anti-competitive behavior, so that's a qualifier there. And, I'm gonna take, I'm gonna expect that Jim will commit that that's not gonna be true. That said, when it comes to the synergies and our growth algorithm, we look forward. Think about this. Think about what we're doing today with no macro help. So that's single digit RTM growth with the macro working against us. So if you go forward, we're gonna continue to have synergies. We're gonna continue to create new and unique opportunities.
Speaker #15: Again, thanks for the time.
Speaker #3: Thank you. We have reached our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Creel.
What we saw our work is not easy it's not a lay up but we've got the network to be able to create these customer solutions that have never been able to be created before benefit from trade between the three nations benefit from these unique networks north south.
Speaker #1: Thank you everyone again for spending Okay . your time with us . Some really good questions . Thanks and active , active discussion .
Speaker #1: Certainly topical at a very important time of change for our industry. We're going to stay close to that, as we have stayed close to that before, to make sure that our facts are heard and understood, as well as the industry's, and as well as our customers'.
The southeast.
The Dallas Southeast, New Mexico that again, a upenn can't replicate.
Speaker #1: Our joint customers . And we'll see how it all shakes out . More to come on that these next several months will be very telling once that application is resubmitted and we all have a chance to digest it and and comment on that .
I think that gives us a nice recipe for having competency in meeting that guidance that we've laid out on the growth algorithm.
Speaker #1: In the meantime, we're going to focus on our core competencies, which is running the safe and efficient, benefit railroad for the benefit of our— and for the benefit of customers, commerce, which is going to produce a very solid.
Your next question comes from Steve Hansen with Raymond James. Please go ahead.
Keith Creel: This SMX product, that was never contemplated in those initial targets that we put out. You get back to a place where you got a little bit of tailwind with a normalized economy, a little bit of GDP growth, and normal shipments. Synergies can come off a little, you maintain price, and you still kind of echo the same repeated behavior over the next several years. So again, I think that's a sweet spot. You know, what we do is hard work. It's not easy, it's not a layup, but we've got the network to be able to create these customer solutions that have never been able to be created before, benefit from trade between the three nations, benefit from these unique networks, north, south, to southeast to Dallas, to southeast to Mexico, that again, a UPNS can't replicate.
Oh, Yes, I think that's it I.
I appreciate the time just a question on the grain harvest given its size I think you've already described but it's a tailwind for the year.
Speaker #1: And we think, unique value—creating financial outcome for those that choose to invest in our company. We take that responsibility seriously.
A bit surprised you didnt move more in the fourth quarter on the back of the big harvests, but just curious whether or not you think the normal pattern will evolve this year and the central move the bulk of the harvest.
Speaker #1: We appreciate your trust. We look forward to sharing results in the next stay call. Stay safe, stay warm, and we'll see you out on the road.
In the first quarter and a half or two quarters or would you think that pattern will extend into in the third quarter as well just given again the size of the carryover this year. Thanks.
Yes.
You and I both were.
Certainly the wet weather out there in Vancouver didn't help in.
I know you've talked about it on the Q3 call like we were excited about the level of freight that we had sold with the grain companies and gearing up for that.
Keith Creel: I think that gives us a nice recipe for having confidence in meeting that guidance that we've laid out on the growth algorithm.
It does feel like maybe there's a little bit of a shift we'll see if this is a unique or not as we get towards harvest next year I'm not really sure yet I do believe it sets us up for a very ratable, which which we like as a railroad.
Operator: Your next question comes from Steve Hansen with Raymond James. Please go ahead.
[Analyst] (Raymond James): Oh, yeah. Thanks, guys. I appreciate the time. Just a question on the grain harvest, given its size. I think you've already described it as a tailwind for the year. I was a bit surprised you didn't move more in the fourth quarter on the back of the big harvest. But just curious whether or not you think the normal pattern will evolve this year in the sense it'll move the bulk of the harvest, you know, in the first quarter and a half or two quarters, or would you think that pattern will extend into the third quarter as well, just given, again, the size of the carryover this year? Thanks.
Shipment profile of grain and frankly with the soybeans not moving very much in the U S.
Yeah.
And are excited about what that might bring as we move through.
The mid part of the year, So I met with one of our very largest screening customers last week.
And they told me they fully expect to be kind of sold out ability level right.
Right through August and new crop.
John Brooks: Yeah, Steve, you and I both were surprised. You know, certainly the weather out there in Vancouver didn't help. And, you know, I know we talked about it on the Q3 call, like, we were excited about the level of freight that we had sold with the grain companies, and gearing up for that. You know, it does feel like maybe there is a little bit of a shift. We'll see if this is unique or not as we get towards, you know, harvest next year. I'm not really sure yet. I do believe it sets us up for a very ratable, which we like as a railroad, you know, shipment profile of grain.
You got pretty good snow levels.
Right now, we exited with pretty decent moisture.
And I know or we're really in the early innings right now, but I can tell you there's already a little bit of bullishness around.
Could there be a repeat in certainly in Canadian farmers.
Lot of storage so.
<unk> been able to put them.
Prop away, but.
Pretty good confidence that this is going to go.
And then throughout the year.
And then.
Got it.
John Brooks: And frankly, with the soybeans not moving very much in the US, you know, we're kind of excited about what that might bring as we move through, you know, the mid part of the year. So, you know, I met with one of our very largest grain customers last week, and they told me they fully expect to be kind of sold out to busy levels, right through August and new crop. You got pretty good snow levels up across Canada right now. We exited with pretty decent moisture. And I know we're really in early innings right now, but I can tell you there's already a little bit of bullishness around, you know, could there be a repeat?
Yes.
Okay.
Please go ahead.
Hey, good afternoon, and thanks for taking my question so.
John maybe can you talk a little bit about how youre thinking about the tariff environment and in terms of building out the Dmitry <unk>.
Guide like are you expecting.
Okay.
Okay.
I get a little worse and then how are you guys thinking about.
The consideration of the CRA and how that could impact some of the.
The opportunity for you guys in the next three years.
Okay.
We assume that.
Is it really going to change.
John Brooks: And certainly, the Canadian farmer has built a lot of storage, so they've been able to put this crop away. But I think there's a pretty big confidence that this is gonna have to move and move throughout the year. And then we'll see what happens next fall.
So we have plans to sort of built in.
This headwind.
2026.
Last week, we were able to backfill it.
Given the whole week.
Land bridge volume that.
Okay.
<unk> group.
Million year over year, and those types of opportunities we see opportunity.
[Analyst] (Raymond James): Appreciate the call. Thanks.
John Brooks: Yep.
Operator: Your next question comes from David Vernon with Bernstein. Please go ahead.
Thank you.
To add on there that's pretty significant.
[Analyst] (Bernstein): Hey, good afternoon, and thanks for taking the question. So, John, maybe can you talk a little bit about how you're thinking about the tariff environment in terms of building out the mid-single-digit RTM guide? Like, are you expecting things to kind of stay volatile, stay the same, get a little better, get a little worse? And then how are you guys thinking about, you know, the next iteration of the USMCA and how that might sort of impact some of the opportunities for you guys in the next three years?
So to look at it.
It's no doubt it's frustrating.
A pretty significant headwind, if we get a break in it.
Okay.
Okay.
Okay.
Okay.
But it certainly hasn't been plan.
As I.
What the future holds but I can tell you one thing.
Okay.
Our ourselves.
Sure.
John Brooks: Well, you know, David, we've assumed that this isn't really gonna change. So we've planned to sort of build in this headwind into 2026. Now, look, we were able to backfill it. I give an example, we, you know, our land bridge volume that we've talked about, really both directions, grew by about 140 million year-over-year in those types of opportunities. We see opportunity there to add onto that pretty significantly. So, look, it's no doubt it's frustrating. It was a pretty significant headwind. If we get a break in it positively, certainly we're gonna embrace bringing a lot of that traffic back on, but it certainly hasn't been planned.
On our Mexico franchise.
I think there is a heck of a lot more opportunity.
Down there.
To lead this broader network and again, whether it be land bridge opportunities up into Canada.
Continuing to feed the American economy.
Okay.
And really we've really done it to the extent.
That you've become accustomed to seeing our sales team across Canada, and the U S do it.
So more to come on that but I'm looking for a lot bigger things in terms of growth out of our Mexico franchise in the coming years.
And anything that.
The team are doing to kind of promote trade level partners that might have an impact on the outlook I know, there's been talk about the Chinese evs.
John Brooks: You know, what the future holds, I can tell you one thing, we're gonna really amp up our sales activity on our Mexico franchise. You know, I think there's a heck of a lot more opportunity down there to sort of feed this broader network, and again, whether it would be land bridge opportunities up into Canada or continuing to, you know, feed the American economy. And really, we've really never done it to the extent that you've become accustomed to seeing our sales team across Canada and the US do it. So some more to come on that, but I'm looking for a lot bigger things in terms of growth out of our Mexico franchise in the coming years.
Well I think certainly there is a fair amount of work and actually we've got.
Some of our AG folks down there.
In the coming weeks to promote better AG shipments between the two.
Eliminate some of the Red tape then.
Bureaucracy in terms of the custom movement of those products I think we're making some headway on both fronts.
I can tell you also.
As we think about.
No products intermodal moving.
All the way between Canada, and Mexico. David also there is an effort to streamline some of those customs processes related to those products.
Products early so I do believe there is tremendous momentum there.
[Analyst] (Bernstein): And anything that, you know, that Kearney and the team are doing to kind of promote trade with other partners that might have an impact on the outlook? I know there's been talk about the Chinese EVs, that kind of stuff.
But we're kind of in the early.
Early innings on some of that stuff.
Alright, Thanks again for the time.
Okay.
Thank you we have reached our allotted time for Q&A.
John Brooks: Well, I think certainly there's a fair amount of work, and actually we've got some of our ag folks down there in the coming weeks to promote better ag shipments between the two. You know, eliminate some of the red tape and you know, bureaucracy in terms of the customs movements of those products. I think we're making some headway on those fronts. I can tell you also, as we think about you know, products intermodally moving you know, all the way between Canada and Mexico, David, also, there's an effort to try to streamline some of those customs processes related to those products early. So I do believe there's some momentum there, but we're kind of in the early innings on some of that stuff.
I would like to turn the call back over to Mr. Keith Creel.
Okay. Thank you everybody.
Really good questions. Thank some active active discussion certainly a very.
Topical time of change for our industry and we're going to stay close to that as we have stayed close to that.
Again to make sure that our facts are heard and understood as well as the industries and as well customers our joint customers.
Okay.
Okay.
Okay.
Please go ahead.
Thanks.
In the meantime.
We're going to focus on them.
It's running a safe and efficient railroad with the benefit of our customers that could benefit of commerce, which is going to produce a very solid and we think unique value, creating financial outcome for those that choose to invest in our company we take that responsibility.
[Analyst] (Bernstein): All right. Thanks again for the time.
Seriously we appreciate your trust.
Operator: Thank you. We have reached our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Creel.
Look forward to sharing results over the next call stay safe stay warm in the Seattle area.
This concludes today's conference call you may now disconnect.
Keith Creel: Okay, thank you everyone again for spending your time with us. Some really good questions. I think some active discussion. Certainly a very topical time and change for our industry. We're gonna stay close to that as we have stayed close to that, again, to make sure that our facts are heard and understood, as well as the industry's, and as well as our customers, our joint customers. And we'll see how it all shakes out. More to come on that. These next several months will be very telling once that application is resubmitted, and we all have a chance to digest it and comment on that.
[music].
Keith Creel: In the meantime, we're gonna focus on our core competencies, which is running a safe and efficient railroad for the benefit of our customers and for the benefit of commerce, which is gonna produce a very solid and, we think, unique value-creating financial outcome for those that choose to invest in our company. We take that responsibility seriously. We appreciate your trust. We look forward to sharing results on the next call. Stay safe, stay warm, and we'll see you out on the rail.
Operator: This concludes today's conference call. You may now disconnect.
