Q1 2026 Canadian Pacific Kansas City Ltd Earnings Call

April 29, 2026

Speaker #1: Good afternoon, everyone. My name is Bo, and I will be your conference operator today. At this time, I would like to welcome everyone to CPKC's first quarter 2026 conference call.

Speaker #1: 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 speakers' remarks, there will be a question-and-answer session.

Speaker #1: If you would like to ask a question, simply press star, then the number 1 on your telephone. If you would like to withdraw your question, please press star 2.

Speaker #1: I would now like to introduce Mr. Chris De Bruin, Vice President, Capital Markets. Please go ahead, sir.

Speaker #2: Thank you, Bo. Good afternoon, everyone, and thank you for joining us today. Before we begin, I want to remind you this presentation contains forward-looking information.

Speaker #2: Actual results may differ. The risks, uncertainties, and other factors that could influence actual results are described on slide 2 in the press release and in the MD&A filed with Canadian and U.S.

Speaker #2: 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; Nadine Vellani, 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.

Speaker #2: The formal remarks will be followed by Q&A. In the interest of time, we would appreciate it if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Speaker #3: Hey, thanks, Chris, and thanks, everyone, for joining us on the call today. As always, I want to start by thanking our 20,000-strong family of railroaders across these three great countries that deliver the results we're honored to share with everyone today.

Speaker #3: So, for the quarter, the team delivered revenues of $3.7 billion, volume growth of 2%, and the RTM basis operating ratio of 63%, and earnings of $1.04.

Speaker #3: Overall, strong execution across the board operationally, commercially, and financially. And they did this in a very dynamic environment. Certainly, the first quarter's results we saw some impacts from volatile fuel and FX markets.

Speaker #3: That said, that tide has turned, and I'm very pleased with the underlying performance and our strong start to the second quarter. You know, when I step back three years into our journey at CPKC, what gives me continued confidence is not just the quarter itself, but the trajectory that we're on as a network and as a company.

Speaker #3: On the operating side, the network again performed exceptionally well in the first quarter, building on our strong momentum from 2025, delivering first-quarter operating results, record levels reflecting continuous improvement we've seen since the merger.

Speaker #3: Productivity velocity and asset utilization all continued to move higher, which tells me two things. First, the railroad is structurally better, and second, our people are executing with discipline each and every day.

With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, our Executive Vice President and Chief Financial Officer; John Brooks, our Executive Vice President and Chief Marketing Officer; and Mark Redd, our Executive Vice President and Chief Operating Officer. The formal remarks will be followed by Q&A. In the interest of time, we would appreciate if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel. Okay, thanks, Chris, and thanks everyone for joining us on the call today. As always, I want to start by thanking our 20,000 strong...

Speaker #3: The gains are translating into better service, capacity, improved efficiency, and that's exactly how we intend to continue to railroad. On the labor front and the safety side as well, I'm going to spend a couple of moments talking about our people.

Speaker #3: As we recently announced reaching long-term tentative agreements with both Smart TD and the BLAT on the LEX CKCS, it's a significant milestone for this company.

Family of railroaders across these 3, great countries. That deliver the results we're honored to share what they're doing today. Uh, so for the quarter of the team delivered revenues the 3.7 billion volume growth, 2% on your RTM basis. Operating ratio is 63% and earnings of a dollar and 4 cents.

Uh, overall strong execution across the board, operationally commercially, and financially, and they did this in a very Dynamic environment.

Speaker #3: These agreements improve quality of life for our railroaders, while providing the operating stability we need to continue driving performance and service reliability in this key growth corridor.

Speaker #3: Looking at safety, our focus remains unwavering. We made progress on the personal injury side, and while train accident frequency increased from an all-time low last year, our fundamentals remain extremely strong.

Certainly, the first quarter’s results, we saw some impacts from volatile fuel and FX markets. Uh, that said, that tide has turned, and I’m very pleased with the underlying performance and our strong start to the second quarter.

You know, when I step back three years in our journey at CPKC, what gives me continued confidence is not just the quarter itself, but the trajectory that we're on as a network and as a company.

On the operating side.

Speaker #3: On the commercial side, the franchise performed very well, with delivered solid volume growth across the network led by the record grain and continued momentum from our unique North American footprint, the exceptional grain volumes were supported by record harvest and our ability to efficiently connect Canada, the United States, and Mexico.

The network again performs exceptionally. Well in the first quarter building on our strong momentum from 2025.

Speaker #3: Automotive international intermodal and our MMX service also contributed. FX mix and more macro factors, pressured yields in the quarter, of course, regardless of pricing discipline remain strong, and as we move through the year, the yields have improved as comparisons normalize and market conditions have become more supportive.

Delivering first quarter operating results record levels. Reflecting continuous Improvement. We seen since the merger for productivity velocity and asset utilization all continued to move higher which tells me 2 things. First, the railroad is structurally better and second our people are executing the discipline each and every day the gains of translating in a better service capacity.

Speaker #3: On shareholder returns from a finance perspective, with our balance sheet in a position of strength and the business-generating strong cash flow, we announced a new share buyback program to repurchase up to $45 million shares.

Speaker #3: Yesterday, we announced a $17.5% increase to our quarterly dividend. We're certainly pleased to be in a position to continue returning cash to shareholders, particularly amidst a volatile market.

Approved deficiency. And that's exactly how we intend to continue to Railroad. Well the labor front and the safety side as well. I'm going to spend a couple of moments talking about our people as we recently announced reaching long-term tentative agreements with both smart, TD and the Blatt on the Lexi KCs is a significant milestone for this company. These agreements improve quality of life for our railroaders while providing the operating stability. We need to continue driving performance.

Speaker #3: So, in closing, looking ahead, we feel very good about where we are. The network is running extremely well. Our unique growth drivers continue to remain firmly intact, comparisons improved as we move through the year, and most importantly, we have a team that knows how to execute and a franchise that continues to differentiate itself.

And service reliability in this key growth Corridor. Looking at safety. Our Focus remains unwavering we made progress on the personal injury side.

And while train accident frequency, increased from an all-time low last year, our fundamentals remain extremely strong.

Speaker #3: We're going to remain focused on discipline execution, strong service, and delivering long-term value for our customers and our shareholders. Mark, over to you.

Speaker #2: Yeah, thank you, Keith, and good afternoon. I want to start by thanking our operating employees who delivered first quarter operational results across the or record first quarter across the North American network.

Speaker #2: The quarterly results demonstrate a tremendous job providing strong service, delivering efficiency, managing costs through the winter. As we reflect on the three years as a combined company, our team has done a tremendous job of safely executing on our vision, delivering resilient and industry-leading service for our customers.

On the commercial side, the franchise performed very well with delivered solid volume growth, the network led by the record grain and continued momentum from our unique North American footprint. The exceptional grain volumes were supported by record harvest and our ability to efficiently connect Canada to the United States and Mexico. Automotive, International Intermodal, and our MMX service also contributed. FX and macro factors pressured yields in the quarter. Of course, regardless, the pricing discipline remains strong; it is renewed through the year. The yields have improved as comparisons normalized and market conditions have become more supportive.

Speaker #2: Now, turning to the quarter, I'm very pleased with our network performance, which reflects a clear pattern of continuous improvement since the merger. Now, as I step back since the first quarter of 2024, I can see our train weight and length has increased by 9% in 7% respectively.

When shareholder returns from the finance perspective, with our balance sheet and the position of strength. And the business generating, strong cash flow, we announced a new share buyback programme to repurchase up to 45 million shares.

Yesterday, we announced the 17 and 1.5% increase to our quarterly dividend.

We're certainly pleased to be in a position to continue returning, cash to shareholders, particularly amidst a volatile Market.

Speaker #2: Our locomotive productivity has improved by 8%, while the fuel efficiency has improved by 2%. Our velocity across the system improved to 4%. These results highlight our progress as ongoing productivity and velocity gains continue to drive improved cycle times, better asset utilization, and dependable customer service for 24, 25, and as we look into 26 for the first quarter.

So, in closing, looking ahead, we feel very good about where we are. The network is running extremely well, our unique growth drivers.

Going to remain focused on disciplined execution, strong service, and delivering long-term value for our customers and our shareholders.

Speaker #2: And while these results are encouraging, we still see opportunity ahead. We are executing several focused velocity initiatives across the key north-south network to drive further improvement in the velocity in our fluidity and capacity.

Speaker #2: Now, turning to labor, I'm very pleased to share that CPKC reached a tentative long-term agreement with Smart TD and BLAT unions. This is an eight-year agreement covering approximately $1,700 train service employees across 11 U.S.

Mark over to you. Yeah, thank you Keith and good afternoon. I want to start by thanking our operating employees who delivered first quarter operational results. The um, our record first quarter across the North American Network, the quarterly results demonstrate a tremendous job, providing strong service, delivering deficiency managing costs through the winter, as we reflect on the 3 years. As to combine company, our team has done a tremendous job of safely, executing on our vision, delivering resilient and industry-leading service for our customers.

Speaker #2: states. Once ratified, our hourly agreements will be largely optimized across our U.S. network. This represents a key labor milestone and positions us for a drive or for additional operating improvements.

We're turning the corner. I'm very pleased with our network performance, which reflects a clear pattern of continuous improvements since the merger.

Speaker #2: Importantly, these agreements bring meaningful improvements in pay but also quality of life for our railroaders. By delivering the stability and flexibility we need for operating efficiently and reliable over the next decade.

Now, as I step back, since the first quarter of 2024, I can see our train weight and length has increased by 9% and 7%, respectively.

Speaker #2: Now, turning to safety, our focus remains on sustaining strong fundamentals and discipline execution our FRE personal injuries, we landed at a 0.91 in our train accident frequency with a 0.93.

Our locomotive productivity has improved by 8%. While the fuel efficiency has improved by 2% our velocity across the system improved the 4%, these results highlight our progress as ongoing productivity and velocity gains continue to drive improved cycle times. Better asset utilization and dependable customer service for 2425. And as we look into 26, for the first quarter,

Speaker #2: We continue to make progress in our personal injury performance. And while train accident frequency increased year over year, it follows an all-time record low in Q1 of 2025.

Speaker #2: We remain committed to our home safe program and to continue driving continuous improvement across our network. Now, turning to resource and capital, we remain well aligned with our growth outlook expect continued strong productivity improvements in 2026.

And while these results are encouraging, we still see opportunity ahead. We are, we are executing several focused velocity initiatives across the key, north north south Network to drive further Improvement in the Velocity in our fluidity and capacity.

Speaker #2: From a capital perspective, we have received $36 of the 100 new Tier 4 locomotives. In addition to the 100 that we delivered in 2025.

Speaker #2: These locomotives are delivering meaningful improvement in efficiency and reliability, particularly across the Canadian network. For our continuing to drive and deliver on our merger-related capital improvements, these upgrades continue or combined with focus and velocity initiatives improving speed, and our velocity on the critical north-south network.

At turning to labor. And I'm very pleased to share that cpkc reached a tentative, long-term agreement, uh with smart, TD and blet unions. This is an 8-year agreement covering approximately 1700 train service employees of 11. US states. Once ratified, our hourly agreements will be largely optimized across our us Network. This represent, a key labor, Milestone, and positions us for drive for for additional operating improvements.

Importantly, these agreements.

Uh, bring meaningful improvements and pay but also quality of life for our railroaders.

Our delivering the stability and flexibility. We need for operate efficiently and reliable over the next decade.

Speaker #2: I'm also pleased to share that we have completed capital improvements on our portion of the SMX east-west corridor for CSS connecting shippers to Mexico, Texas, and the U.S.

Speaker #2: We're now speeds up to 49 miles an hour on this network. In closing, the network is operating from a position of strength with record performance, supported by sustained improvements in efficiency, velocity, and service.

Now turning to safety. Our Focus remains on sustaining, strong fundamentals and discipline execution across the network. As I look at our F personal injuries, we landed at a 1, a 0.91 and our train train accident, frequency was a 0.93. We continue to make progress in our personal injury performance. And while training accident frequency increased year-over-year and follows an all-time record low in q1 of 2025, we remain committed to our home state.

Speaker #2: Our investments in capacity, power, and safety paired with the labor stability and we are well balanced in resource network are reinforcing our ability to deliver reliable services volume grows.

Program, and to continue driving continuous improvement across our network.

Speaker #2: As we look through 2026, we remain focused on discipline execution, delivering long-term value for our customers and our shareholders. With that, I'll pass it over to John.

Now, turning the resource and capital we remain. Well, aligned with our growth Outlook, expect contingent strong Pro productivity improvements in 2026, from a capital perspective. We have received 36 of the 100 new tier 4 locomotives,

uh, in addition to the 100 that we delivered in 2025

Speaker #3: All right, thank you, Mark, and good afternoon, everyone. Pleased with our first quarter performance and the way this network and team continues to deliver and execute for our customers.

These locomotives are delivering meaningful improvement in efficiency and reliability, particularly across the Canadian network.

Speaker #3: Despite a very high bar, this franchise, again, produced a record Q1 RTM growth, now six of the past seven years with the only exception being the strike year in 2022.

Speaker #3: This quarter, we again delivered solid volume growth across the franchise, supported by strong grain shipments, continued pricing discipline, and contributions from synergies and self-help initiatives.

For continuing to drive and deliver on our merger-related capital improvements, these upgrades continued or, combined with focus and velocity initiatives, are improving speed and our velocity on the critical north-south network.

Speaker #3: While mixed and macro factors impacted sense for RTM in the quarter, our underlying performance remained strong and I'm encouraged by the momentum to start the second quarter.

I'm also pleased to share that we have completed Capital Improvements on our portion of the SMX East West Corridor for CS. Connecting shippers to Mexico. Texas. And the us we're now speeds up to 49 miles an hour on this network.

In closing, the network is operating from a position of strength.

Speaker #3: Now, looking at our Q1 results, this quarter freight revenue was down 3% on a 2% RTM growth. Sense for RTM was down 4%. We continued to deliver strong pricing with renewals exceeding the top end of our long-term 3 to 4% outlook.

With record performance supported by sustained improvements in efficiency, velocity, and service.

Speaker #3: Yields in the quarter were impacted by FX, the removal of the federal carbon tax in Canada, and negative mix. Now, in April, sense for RTM has inflected positive.

Speaker #3: Supported by our pricing, lapping the carbon tax removal, macro tailwind from higher fuel prices, and moderating mix headwinds. Now, taking a closer look at our first quarter revenue performance, I'll speak to an FX adjusted results.

Speaker #3: Starting with our bulk business, Q1 was a record quarter for grain across revenue, RTMs, and carloads. With revenue up 14% on 12% volume growth.

Strike year in 2022.

Speaker #3: Canadian grain volumes were up 13%, supported by record harvests that's up 20% year over year. Our U.S. grain volumes rose 12%, driven by a record corn crop and higher volumes to Mexico and the Pacific Northwest.

This quarter we again delivered solid solid volume, growth across the franchise supported by strong grain shipments. Continued pricing discipline and contributions from synergies and self-help initiatives.

Well, mix and macro factors impacted sense for RTM in the quarter. Our underlying performance remains strong and I'm encouraged by the momentum to start the second quarter.

Speaker #3: This performance highlights the strength and diversity of our franchise as customers leveraged our unique North American network to access new destination outlets, driving a 50% increase in trains from Canada and the U.S.

Now, looking at our Q1 results, this quarter freight revenue was down 3% on a 2% RTM growth.

since for RTM was down 4%.

Speaker #3: into Mexico. Now, looking ahead, we expect grain to continue to deliver outsized growth deep into the current crop year. In potash, revenues were down 2% on 2% volume growth, driven by continued strong demand for export shipments.

We continue to deliver, strong pricing with renewals exceeding. The top end of our long-term 3 to 4%. Outlook yields in the quarter were impacted by FX. The removal of the federal carbon tax in Canada and negative mix.

Speaker #3: With solid demand fundamentals and Campitex fully committed through the first half of the year, we continue to expect potash to be a solid contributor to our base business in 2026.

Now in April, since for RTM has inflected positive supported by our pricing lapping, the carbon tax removal, macro Tailwind from higher fuel prices and moderating mix headwinds.

Speaker #3: To round out bulk, coal revenue was down 11% on a 10% reduction in volumes. This reduction was driven by a number of unexpected production-related issues that customer minds that impacted shipments through the quarter.

Now, taking a closer look at our first quarter Revenue performance, I'll speak to an fx adjusted results.

Starting with our bulk business. Q1 was a record quarter for grain across revenue, rtms and car loads.

With revenue up 14% on 12% volume growth.

Speaker #3: As a result, coal alone reduced Q1 RTMs by over 1%. While we expect volumes to stabilize the second half of the year, we expect coal to continue to be a headwind in Q2 and on the full year.

Canadian grain volumes were up 13%, supported by a record harvest. That's up 20% year-over-year.

As grain volumes Rose, 12% driven by a record corn. Crop in higher volumes to Mexico and the Pacific Northwest

Speaker #3: Moving on to our merchandise business, energy chemicals and plastics revenue and volume declined 5% in the quarter. This decline was driven by lower refined fuel volumes to Mexico, reduced Pemex heavy fuel oil shipments, and the impact of a plastics plant closure late last year.

This performance highlights the strength and diversity of our franchises customers. Leveraged our unique North American Network to access new destination Outlets driving. A 50% increase in trains from Canada and the US into Mexico.

Speaker #3: Looking ahead, we are seeing our ECP volumes continue to stabilize, supported by increases in crude, market share wins, and self-help initiatives. Our forest products revenue declined 14% on a 10% decline in volumes.

Now looking ahead. We expect grain to continue deliver outside growth. Deep into the current crop year.

And pot ash revenues were down, 2% on 2%, volume growth driven by continued strong demand for export shipments.

Speaker #3: Volumes were impacted by tariffs on Canadian lumber exports to the U.S. along with the broader macro softness in housing, and the pulp and paper markets.

With solid demand, fundamentals, and capex fully committed through the first half of the year, we continue to expect Paudash to be a solid contributor to our base business in 2026.

Speaker #3: Now, similar to ECP, we are seeing this business also stabilize with a focus on offsetting headwinds through truck conversion, synergies, and market share gains and currently we delivered record volumes of building projects into the Texas market during the month of March, and orders have continued to improve as we move through April.

To round out, bulk coal, Revenue was down 11% on a 10% reduction in volumes.

This reduction was driven by a number of unexpected production-related issues at customer mines that impacted shipments through the quarter.

As a result, coal alone reduced Q1 RTMs by over 1%.

Speaker #3: Metals, minerals, and consumer products revenues were down 1% on 3% volume growth. Growth in this space was supported by strong industrial development pipeline and synergies.

While we expect volumes to stabilize in the second half of the year, we expect coal to continue to be a headwind in Q2 and for the full year.

Speaker #3: Including new long-haul business in sand, stone, and other aggregates supporting construction activity across our network. This strength was partially offset by ongoing impact of tariffs on our cross-border steel business.

Moving on to our Merchandise business—Energy, Chemicals, and Plastics—revenue and volume declined 5% in the quarter. This decline was driven by lower refined fuel volumes to Mexico.

Reduce PMX, heavy fuel, oil shipments, and the impact of a Plastics plant closure late last year.

Speaker #3: Overall, we remain very encouraged by industrial development momentum on our network and expect to continue mitigating tariff headwinds through targeted sales campaigns across our network.

Looking ahead. We are seeing our ECP volumes. Continue to stabilize supported by increases in crude market. Share wins and self-help initiatives.

Our Forest Products Revenue declined 14% on a 10% decline in volumes.

Speaker #3: Moving on to the automotive sector, revenue was down 6% on 2% volume growth. Our auto franchise delivered another quarter of volume growth from new business wins including Land Bridge shipments from Mexico to Canada with a 13% increase in our average length of haul in this business unit.

Volumes were impacted by tariffs on Canadian. Lumber exports to the US along with the broader macro softness in housing, and the Pulp and Paper markets.

Now, similar to ECP. We are seeing this business. Also stabilized with a focus on offsetting headwinds through truck conversion.

Speaker #3: We delivered this performance despite challenging compares from pull-forward shipments ahead of tariffs last year. While uncertainty remains in this area around production levels and automotive sales, we expect another year of outperformance and growth in automotive driven by our wins in 2025 and new opportunities that will come online later this year.

Synergies and market share gains. And currently, we delivered record volumes of building projects into the Texas market during the month of March, and orders have continued to improve as we move through April.

Metals, minerals, and consumer products. Revenues were down 1% on 3% volume growth.

Speaker #3: Now, closing with our innermodal business, revenue was down 1% on 3% volume growth. I'm pleased to announce that we extended new. Long-term contracts with Hapag-Lloyd and Loblaw companies cementing the foundation of our innermodal franchise and unlocking new growth initiatives with both across Canada, the U.S., and Mexico for years to come.

Growth in this space was supported by strong industrial development, pipeline, and synergies, including new long-haul business in sand, stone, and other aggregates supporting construction activity across our network.

This strength of partially offset by ongoing impact of tariffs on our crossborder steel business.

Speaker #3: In international innermodal, volumes were up 8% on business into the port of Vancouver, including continued growth with our partners at Gemini. Now, looking ahead, comparisons will be more challenging in the second quarter before new product offerings come online at the Port of St.

Overall remained, very encouraged by Industrial Development momentum on our Network and expect to continue mitigating tariff, headwinds through targeted, sales campaigns across our Network.

Automotive sector Revenue was down 6% and 2%, volume growth.

Speaker #3: John and also at Lazaro and they pick up in the second half of the year. In domestic innermodal, volumes were down 1% in the quarter.

Our auto franchise delivered another quarter of volume growth from new business wins, including landbridge shipments from Mexico to Canada, with a 13% increase in our average length of haul in this business unit.

Speaker #3: Our MMX train was up 12% year over year in Q1, marking the ninth consecutive quarter of double-digit growth on this train. This growth was offset by a slower ramp-up of our Mexico volumes in January, combined with demarketing low-margin business in domestic innermodal on our Canadian franchise.

We delivered this performance despite challenging compares from pull-forward shipments ahead of tariffs last year.

Speaker #3: I'm also encouraged by early traction on our SMX service and partnership with the CSX. Following infrastructure investments made across this route over the past year, I'm excited to announce that we will formally launch a faster SMX product next week.

While uncertainty remains in this area around production levels, in Automotive Sales, we expect another year of outperformance and growth in automotive, driven by our wins in 2025 and new opportunities that will come online later this year.

A closing with our innoval. Business Revenue was down 1% on 3% volume growth.

Speaker #3: The SMX will offer customers truck-like reliability linking some of North America's largest production and consumption markets between Mexico, Texas, Georgia, and Florida. Looking ahead, we are encouraged by the timing of this launch as we are seeing early signs of incremental truck-to-rail conversions driven by higher fuel prices, tighter regulatory enforcement, and reduced trucking capacity.

I'm pleased to announce that we extended. New long-term contracts with half a Lloyd in Loblaw companies, cementing the foundation of our inner motorul franchise and unlocking New Growth initiatives with both across Canada. The US and Mexico for years to come

International intermodal volumes are up 8% on business into the Port of Vancouver, including continued growth with our partners at Gemini.

Speaker #3: Now, to close, our results reflect strong execution, record grain volumes, and continued unique contributions from synergies and self-help. With good momentum to start the second quarter, more favorable comparisons ahead, and improving yields, this network is primed to deliver another solid year of growth.

Now looking ahead comparisons will be more challenging in the second quarter before a new product offerings come online at the Port of St. John and also at Lazaro and they pick up in the second half of the year.

In domestic, Intermodal volumes were down, 1% in the quarter, our MMX, train was up, 12% year-over-year in q1 marking the 9th consecutive quarter of double digit growth on this train.

Speaker #3: Now, with that, I'll pass it over to Nadine.

Speaker #2: All right. Thanks, John, and good afternoon. This quarter's results reflect strong execution and cost control across the network, which show up solid financial performance.

This growth was offset by a slower ramp up of our Mexican volumes in January combined with demarketing low margin business in domestic Intermodal, on our Canadian franchise.

Speaker #2: While the quarter was impacted by fuel and FX headwinds, I'm very pleased with the underlying performance of the business. The resilience of our network and our growth opportunities remain intact.

I'm also encouraged by early traction on our SMX service and partnership with the CSX.

Speaker #2: Our core performance continues to be strong reflecting the strength of our franchise, durability of our operating model, and consistent execution by our team. Now, turning to our first quarter on slide 12, TPKC's reported operating ratio was 66%.

Calling infrastructure Investments made across this route over the past year. I'm excited to announce that we will formally launch a faster SMX product next week.

The SMX will offer. Customers truck-like reliability linking North, some of North America's largest production and consumption. Markets between Mexico. Texas, Georgia and Florida.

Speaker #2: Our core adjusted OR was 63%, up 50 basis points from last year. Diluted earnings per share was 94 cents, and core adjusted diluted EPS was $1.04, down 2% versus last year.

Looking ahead. We are encouraged by the timing of this launch. As we are seeing early signs of incremental truck derail conversions driven by higher fuel prices, tighter regulatory enforcement and reduced Trucking capacity.

Now, to close.

Speaker #2: The year-over-year decline included approximately 4 cents of impact from a foreign exchange and 3 cents of impact from changes in fuel price. We also saw an additional 1 cent impact from FX losses on cash and net working capital below the line.

Our results, reflect strong execution record grain volumes in continued, unique contributions, from synergies and self-help.

Speaker #2: Taking a closer look at our expenses on slide 13, I will speak to the year-over-year variances on an FX adjusted basis. Competent benefits expense was up 2% versus prior year.

Speaker #2: During the quarter, wage inflation and higher stock-based compensation were partially offset by continued productivity gains from improved train weights and workforce optimization. We expect to generate continued strong labor productivity in 2026 with headcount up modestly on mid-single-digit volume growth.

Speaker #2: Fuel expense was $458 million, down 4% year over year. The decline was driven primarily by the elimination of the Canadian federal carbon tax on April 1, 2025, along with improved efficiency and benefit from a contract discount, partially offset by the impact of changes in diesel benchmark prices.

With good momentum to start the second quarter, more favorable comparisons ahead, and improving yields, this network is primed to deliver another solid year of growth. Now with that, I'll pass it over to Nadeem. All right, thanks John and good afternoon. This quarter's results reflect strong execution and cost control across the network, and show solid financial performance. While the quarter was impacted by fuel and FX headwinds, I'm very pleased with the underlying performance of the business. The resilience of our network and our growth opportunities remain intact. Our core performance continues to be strong, reflecting the strength of our franchise, durability of our operating model, and consistent execution by our team.

Now, turning to our first quarter on slide 12, CPKC has reported an operating ratio of 66%. Our core adjusted OR was 63%, up 50 basis points from last year.

Speaker #2: Our 2% improvement in fuel efficiency drove $8 million in year-over-year savings, from improved train weights and locomotive productivity. Materials expense was $127 million, up 3% year over year.

Diluted earnings per share was $0.94, and core adjusted diluted EPS was $1.14, down 2% versus last year.

Speaker #2: The increase was primarily driven by volume-related expense and inflation. Partially offset by efficiency gains from contract optimization and lower locomotive material costs. Equipment rents were $95 million, flat versus last year, driven by efficiency gains offset by volume-related expenses.

The year-over-year decline included approximately 4 cents of impact from a foreign exchange and 3 sets of impact from changes in fuel price. We also saw an additional 1 cent impact from FX losses on cash and network working capital below the line.

Taking a closer. Look at our expenses, on slide 13. I will speak to the year-over-year. Variances on an fx adjusted basis.

Speaker #2: Appreciation amortization expense was up 4%, driven by a larger asset base. Purchase services and other expense was down 3% versus prior year. The improvement was driven by productivity and in-sourcing initiatives, partially offset by cost inflation.

Compensation and benefits expense was up 2% from the prior year during the quarter. Wage inflation and higher stock-based compensation were partially offset by continued productivity gains from the Fruit, Train Wave, and workforce optimization.

Speaker #2: Now, moving below the line on slide 14, other expense was $20 million, up $13 million increase year over year, driven primarily by FX losses on cash and net working capital.

We expect to generate continued strong labor productivity in 2026, with headcount up modestly, on mid-single-digit volume growth.

Speaker #2: Net interest expense was $228 million, or $223 million excluding purchase accounting. The increase was driven primarily by interest on new debt, partially offset by lower credit facility and commercial paper balances, as well as debt repayments.

Along with improved efficiency and benefit from a contract discount, partially offset by the impact of changes in diesel benchmark prices.

Speaker #2: Income tax expense was $275 million, or $305 million adjusted for purchase accounting, and significant items. We continue to expect a full-year core adjusted effective tax rate of approximately 24.75%.

Our 2% Improvement. In fuel, efficiency, drove 8 million, in year-over-year, savings from improved, trained weights and locomotive productivity.

Materials expense was 127 million up, 3% year-over-year. The increase was probably driven by volume related expense and inflation.

Speaker #2: Now, turning to slide 15 and cash flow, net cash used in investing activities was down 6%, primarily driven by 7% lower capital spend. We remain well on track to deliver full-year CapEx of $2.65 billion, up 15% reduction year over year.

Partially offset by efficiency, gains from a contract optimization and lower locomotive material costs.

Equipment rates for 95 million flat versus last year, driven by efficiency gains offset by volume related expenses.

Speaker #2: We also maintained a balance and opportunistic approach to shareholder returns. Deploying $680 million through share refurbishes in the quarter. Along with dividends, shareholder returns spend increased 69% in Q1.

Appreciation and amortization expense was up 4% driven by a larger asset base purchase services and other expenses down 3% versus prior year.

The Improvement is driven by productivity and sourcing initiatives partially offset by cost inflation.

Now, moving below the line on slide 14.

Speaker #2: I'm also pleased to share that yesterday we announced a $17.5% increase to our dividend, reinforcing our commitment to balanced shareholder returns. In closing, with the network continuing to run well, toughest quarter from a comparison perspective behind us and a strong start to the second quarter, we are well positioned to deliver another year of strong results.

Other expense was 20 million, a 13 million dollar increase, year-over-year driven primarily by FX losses on cash and networking capital.

Speaker #2: The business is executing at a high level, generating strong cash flow and providing meaningful capacity to return cash to shareholders. I fully expect, as we return to double-digit EPS growth here in Q2 and the second half, and will deliver on our full-year double-digit EPS guidance.

Net, interest expense was 228 million or 223 million excluding purchase accounting. The increase was driven primarily by interest on new debt partially offset by lower credit facility and Commercial paper, balances as well as debt repayments.

Income tax expense was $250 million, $275 million, or $305 million adjusted for purchase accounting and significant items.

We continue to expect a full year, core adjusted effective tax rate of approximately 24.75%.

Speaker #2: With that, let me turn it back to Keith.

Speaker #3: Keith, thank you, gentlemen. Let me go back to the operator. We'll open it up for questions.

Speaker #4: Certainly, Mr. Carrillo. Thank you. Ladies and gentlemen, at this time, if you would like to ask a question, simply press star within the number 1 on your telephone.

Speaker #4: If you would like to withdraw your question, press star 2. As previously highlighted, please limit yourself to one question. We'll go first this afternoon to Fatty Shamoun with BMO Capital Markets.

Now turning to slide, 15 and cash flow. Net cash used in investing activities was down 6% primarily driven by 7% lower Capital spend. We remain well, on track to deliver fully your capex 2.65 billion, a 15% reduction year-over-year,

Speaker #5: Yes, thank you. Good afternoon. I think the year was always expected to kind of start slow from a volume growth perspective. Versus the mid-single-digit guide for the year, maybe if you can, John, share with us what you are hearing from customer, what does the pipeline look like, and the segment that you expect to kind of lift you to that mid-single-digit range as we go into the balance of the year.

We also maintain the balance and opportunistic approach to shareholder returns deploying 680 million through share repurchases in the quarter. Along with dividends shareholder returns spend increased, 69% in q1.

I'm also pleased to share that yesterday, we announced a 17.5% increase to our dividend, reinforcing our commitment to balanced shareholder returns.

In closing with the network continuing to run, well, toughest quarter from a Compares perspective behind us and a strong start to the second quarter. We are well, positioned to deliver another year strong results.

Speaker #5: And if there's any framework to think about what Q2 volume potentially your account is looking for.

The business is executing at a high level generating strong, cash flow and providing meaning. Meaningful capacity to return cash to share shareholders.

Speaker #2: Yeah. All right, Fatty. So yeah, it was certainly an interesting Q1. It just January started off slow, and then we had some pent-up demand and actually February turned out to be quite strong and March sort of as we expected.

I fully expect this return to double-digit EPS growth here in Q2 and the second half, and we'll deliver on our full-year double-digit EPS guidance. With that, let me turn it back to Keith.

You think a gentlemen? Let me go back to the operator. We'll open it up for questions.

Speaker #2: As I mentioned, we definitely weren't counting on the drag related to the cold side of the business. Now, looking ahead, I'll tell you, just about everything outside of our cold business has inflected positive.

Certainly, Mr. C. Thank you. Ladies and gentlemen, at this time, if you would like to ask a question, simply press star, then the number 1 on your telephone. If you would like to withdraw your question, press star 2. As previously highlighted, please limit yourself to one question. We'll go first this afternoon to Fadi Chamoun with BMO Capital Markets.

Speaker #2: I'm quite pleased despite the tariff headwinds that remain out there and some of the challenges particularly in our ECP space that we faced. In Mexico with refined fuels, despite that, they've clawed their self even back to sort of flat euro over year on strong demand and growing demand in crude.

Yes, thank you. Uh, good afternoon. Um,

I I think the year was always expected to kind of start slow from a volume growth perspective, versus the mangle digit uh, guide for the year, you know, maybe if you can John share with us. Uh what you are hearing from customer, what does the pipeline look like and the segment that?

Speaker #2: And also our plastics business. So look, I fully expect our bulk business that being Canadian grain, US grain, and potash to continue to provide really strong numbers as we move through Q2 and into the back half of the year, Fatty.

Expect to kind of lift you to that mixing of digit range as we go into.

The balance of the year. And, and if there's any, uh, framework to think about—

uh, what Q2 volume and potentially um,

You're, uh, you're kind of looking for.

Speaker #2: I'm definitely not counting on our cold business, and that's going to have to be a headwind that we're going to have to sort of erase or make up for.

Speaker #2: As I look at our merchandise ECP forest products business, as challenged as those areas have been, as I monitor our car orders week after week in those three segments, we've seen a pretty steady increase.

Speaker #2: When I said we sent record volumes into Texas of building products in March, to be honest with you, a lot of that was Canadian stuff coming cross-border.

Speaker #2: So that's a really positive sign and a sign that we haven't seen for quite some time. And I'll tell you, I think a lot of it's driven by there is product moving in some of these traditional lanes.

Speaker #2: It's been moving truck. And I think what we're starting to see is some of this stuff flip back over to rail, not only in a little bit of an intermodal tailwind in that front, but also a car load tailwind we're seeing in some of these areas.

Speaker #2: So I do believe that's positive. Now, we're going to watch it. I'm not spiking the football at all. But certainly, there's some upside there.

Speaker #2: And then as I go down the list, we're going to continue to outperform in the automotive sector. Team is just on a really good job to put pucks in the net.

Despite that they've clawed the self even back to sort of, uh, flat ear over a year on on strong demand, and growing demand in crude in and also our Plastics business. Um, so look, I I fully expect our bulk business. Um, that being Canadian grain us grain and pot ash to continue to, to provide really strong numbers as we move through Q2 and into the back half of the are fatty. Um, you know, I'm I'm definitely not counting on our our coal business and that's going to have to be a headwind that, um, that we're going to have to sort of erase or, or make up for. As I look at our, our merchandise ECP Forest, Products business,

Speaker #2: And there's some stuff that's coming on yet. There's a little bit of pent-up demand that wasn't moved in the first half of the year that we're going to see.

Speaker #2: And then finally, in the intermodal side, I couldn't be more excited about our SMX product. That thing's going to pay dividends this year. We're going to see growth to back half of the year on that in partnership with the CSX.

Speaker #2: I think we proved it with the MMX. You develop a product that can compete head-to-head with trucks and they will come. And the fact that we're launching this in a really I think improving environment is only going to help, I think, our sellers to go out and try to fill that train up.

You know, as challenged as those areas have been, you know, as I monitor our car orders a week after week in in those 3 segments, we've seen a pretty steady increase. Um, you know, when I said we we sent record, um, you know, volumes into taxes of building products in March, um, you know, to be honest with you, a lot of that was was Canadian stuff coming across border. Um, so that's, that's a really positive sign and a sign that we haven't seen for, for quite some time. And, and I'll tell you, I think a lot of its driven um, by there is product moving in some of these, these traditional Lanes. Uh, it's it's been moving truck. And I, I think what we're starting to see is some of this stuff

Speaker #2: So I hope that helps.

Speaker #5: Yeah, sure. Maybe one follow-up on this Loblaw Habagloid contract you talked. Is this a renewal or is there a scope change in that relationship?

Speaker #2: Well, maybe a little bit of both. They are contract renewals. That we prior contracts that we had in place that we've extended for long-term with both.

Speaker #2: I think the neat thing about them and really because of the breadth of this new network, we've been able to intertwine a whole lot of new opportunities within those, both of those contracts.

Speaker #2: It's frankly staggering the amount of trucks that a company like Loblaw's utilized coming up from Mexico or the United States and how we can create and develop new solutions not only drive in but reefer solutions with them.

Back over to to rail, not only, you know, in a little bit of an intermodal Tailwind in that front, uh, but also a car load, uh, Tailwind. We're, we're seeing in some of these areas, so I, I do believe, that's that's positive. Now, we got a lot, we got to watch it, I'm not spiking the football at all. Um, but but certainly, there's, there's some upside there. Um, and then, as I as I go down the list. Well, we're going to continue to outperform in in the automotive sector. Uh, team is just done a really good job to put Pucks in the net um and there's some stuff that's that's coming on yet. Uh, there's a little bit of pent up demand. That was a moved in the first half of the year that that we're going to see. Um, and then and then finally, in the under modal side, um, I couldn't be more excited about our SMX product, uh, that that thing's going to pay dividends this year. We're going to see growth to back half of the year on that in partnership with the CSX. Um, I think we proved it with the MMX. You you develop a product that can

Speaker #2: And also, as we've talked about a lot with Habagloid, I'm excited about the opportunity how we are continuing to grow our St. John. We're excited about what the future might hold with them if, in fact, that progresses and goes forward as we look to next year.

Compete head-to-head with trucks and and they will come. And and the fact that we're launching this in a really uh I think improving environment is only going to help. I think our our sellers to go out and and and try to fill that trained up.

um, so I hope hope that helps

Yeah, sure. Uh maybe 1 1 follows

Speaker #2: And Habag continues to win not only in the Mexico intra-Mexico market, Fatty, but also we continue to slowly build volumes going northbound. And all that coming out of Lazaro.

Um hablo contract you talk is this renewal or is there a scope change in that relationship?

Speaker #2: So they are traditional contracts that we're extending forward. But they also have quite a bit of sort of new tentacles related to what this network brings to the table.

Well, maybe, maybe maybe a little bit of both. They're, they are contract renewals, uh, that we that prior contracts that we had in place, that we've extended for long term with both,

I think the neat thing about them. And and really, because of the breadth of this new network,

Speaker #5: I appreciate it. Thank you.

Speaker #2: Yep.

Speaker #3: Thank you. We go next now to Chris Weatherby with Wells Fargo.

Speaker #4: Hey, thanks. Good afternoon, guys. I maybe wanted to pick up on what sort of the deem ended with in terms of the guide for the rest of the year.

Speaker #4: A slower start for earnings growth sounds like Q2 you're expecting to re-accelerate into the double-digit growth range for earnings. I guess we heard from John about some of the top-line opportunities.

Speaker #4: Maybe just sort of help fill out sort of the walk from where we were in one Q to the ability to get back to that double-digit year-over-year EPS growth in Q2 and beyond.

Speaker #6: Sure, Chris. So a couple of things. Number one, we're Q1 was very much according to plan. When we look at John mentioned the revenue cadence.

Um, we've been able to intertwine a whole lot of new opportunities within those both of those contracts. Um, you know, it's it's frankly, staggering the amount of trucks, uh, that a company like Loblaws utilize, you know, coming up from Mexico or the United States and and how we can create and develop new Solutions. Um, not only drive in but refer Solutions with with them. Uh, and, and also, as we've talked about a lot with, with hapag Lloyd, um, you know, I'm excited about the opportunity, to how we are continuing to grow our St. John, uh, we're excited about what the future might hold with them. Uh, if in fact that progresses and goes forward as we look to next year,

Speaker #6: Operationally, Mark and team had the railroad running very well. And I'm pleased with some of the productivity initiatives. So but that being said, we had our toughest comp from a currency point of view.

Speaker #6: So Canadian dollar was quite weak a year ago in January. And that it created quite a headwind year over year. You saw it in the sense for RTM and that's probably a bit of a surprise as far as the overall sense for RTM combined that with fuel and the carbon tax surcharge that went away.

And have a continues to to win, not only in the Mexico intra, Mexico Market, uh, fatty. But but also we continue to slowly build volumes going northbound and and all that coming out of Lazaro. So they are traditional contracts that that we're extending forward. Uh but they also have quite a bit of sort of new tentacles related to what this network brings to the table.

Appreciate it. Thank you.

Speaker #6: So effectively, those headwinds dissipate. And in fact, fuel turns into a bit of a tailwind. We saw the headwind in March with spot fuel increase our cost right away.

Speaker #6: But we don't get the fuel surcharge until it's delayed. And so we saw that result here in April. And so as we look at Q2, I feel very confident both with record volumes that we're moving today, April is going to be a record month for us across the board.

Speaker #6: And CPKC history and combined the two companies. So the top lines perform extremely well. The railroad continues to run well. The FX headwinds, we even had some unique things as far as below the line that impacted us just with the volatility on currency.

Speaker #6: That goes away. And so some of that noise disappears. And the underlying business continues to perform and gives us strong confidence in that strong double-digits here in Q2.

Speaker #6: And a very good back half in what we see as far as both from a volume point of view and what we can deliver with this lower cost base.

Speaker #6: So we're pretty bullish, Chris.

Speaker #4: Sounds good. Perfect. Thank you very much for the time. Appreciate it.

Speaker #6: Thank you.

Speaker #3: We'll go next now to Kevin Chang at CIBC.

Speaker #7: Thanks for taking my question. You talked about some of the headwinds related to the coal franchise. I think some of that might be related to maybe some of the adjustments Glencore is making to the Elk Valley Resource play that they acquired from Tech.

Speaker #7: Just wondering, do you see this as primarily a 2026 issue and they ramp up in '27? Or is this an adjustment that could take a little bit longer?

Speaker #7: And bleed into next year potentially?

Speaker #2: Yeah, Kevin. So honestly, I think the feedback so far is we're going to probably continue to struggle somewhat. Through Q2, I do believe there's some optimism around some things that they want to deploy the second half of the year that could bring some upside to those volumes.

Speaker #2: Now, at the end of the day, I think the lost opportunities these first four months and the next couple of months will be hard to make up in terms of sort of full-year compares.

Speaker #2: But we remain optimistic that the second half of the year and I think they remain optimistic that the second half of the year will be better.

Speaker #2: And I know they continue to work through some of the permitting and issues that have been out there for quite some time now. I don't really have any additional feedback at this time on what that looks like timing-wise.

Speaker #2: With the federal government.

Speaker #7: Okay. That's helpful. Thank you.

Speaker #2: Yep.

Speaker #3: We'll go next now to Tom Wadewitz at UBS.

Speaker #8: Yeah, good afternoon. Keith, I wanted to ask you about I know you get this last couple of calls, but I just saw that kind of news today on the rail coalition against the or the coalition against the rail merger.

Speaker #8: And Shipper Groups, Teamsters, Rail Coalition, CP, CPKC, BNSF. So what is your thought on that? It seems like something different than what we've seen in the past.

Speaker #8: I guess the what you think the group may do and just how we should maybe try to understand that as part of the process with UPNS.

Speaker #8: Well, I think at a high level, Tom, the group is more of a collective voice, a unified voice. But very similar voice. We've not been very bashful about this.

Speaker #8: We have very strong views against the merger and the risk that the merger entails and represents. For our industry. Many others do as well.

Speaker #8: The momentum continues to build. We encourage continued encourage all the stakeholders to make sure that they share their views because at the end of the day, this isn't a three or four-year decision.

Speaker #8: This is a forever decision. So to in my mind, push forward with the merger that creates such and such scale unparalleled for this industry in a forever way that not only creates that entity, but most likely triggers an eventual duopoly is essentially putting the nation's rail network at risk.

Speaker #8: And I just don't believe and I believe there's probably a lot of people that feel the same way that I do that UP and NS are entitled to do that.

Speaker #8: They're not playing with house money. This is the nation's economy. It depends upon a robust and fluid and efficient rail network. We've had tremendous consolidation.

Speaker #8: I believe and I believe others believe we're consolidated enough. And at the end of the day, the facts will bear if we're correct. The market concentration as much as some have been dismissive in their comments about it.

Speaker #8: It's much more than just having 39% GTMs. And comparing yourself to a heavily GTMed railroad that moves a lot of grain and moves a lot of coal and to compare that's essentially west of the Mississippi Railroad.

Speaker #8: Mississippi River. We're talking about 43 states. We're talking about transnational. The entire continent. So at the end of the day, that's a lot. At risk and at stake.

Speaker #8: The facts will bear it out. I don't think it's as simple as the applicants are presenting. And I believe Jim and Mark are going to present their best story.

Speaker #8: I'm looking forward to reading their improved story. The last one obviously was grossly insufficient. In my view and I don't think I'm the only one again that shares that view.

Speaker #8: So again, I think that consolidation and that coalition that you see is just a unified voice of a common concern. Enough is enough. We've had enough consolidation.

Speaker #8: And for what? Who benefits? Versus who's at risk? And in the end, those rules that the STB will govern by and I believe this body will be very independent in assessing all these facts.

Speaker #8: At the end of the day, all the facts stack up. And a measurement is going to be made. And to me, public interest and to demonstrate enhanced competition, then all the benefits are going to have to exceed the harms.

Speaker #8: And I just think it's impossible with the set of facts that are going to be presented and given the scale and the market power and the operational risk that it represents.

Speaker #8: So again, more to come. Let's get the application tomorrow. We're all eagerly looking forward to receiving it and reviewing it. I'll be in Missouri when I receive it.

Speaker #8: That's a show me state. So I'm looking for something to show me to feel differently. And at this point, I don't.

Speaker #1: Right. Okay. Thank you.

Speaker #3: Thank you. We'll go next now to Jonathan Chappell of Evercore ISI.

Speaker #9: Thank you. Good afternoon. John, as far as this ramp in RTMs, are there other opportunities in energy that have kind of presented themselves recently given what's going on in the Middle East, whether that's screwed by rail FRAX and NGLs?

Speaker #9: Any line of sight on kind of real volume moves there as these hostilities kind of prolong themselves much longer than anyone anticipated?

Speaker #2: Yeah. Thanks, Jonathan. Geopolitical events sort of I instantly begin to look to the sort of three Fs. Food, fuel, fertilizer. They're usually benefits of when you see these types of things globally.

Speaker #2: And I do believe we're seeing shoots kind of across all those areas. I'll though, I wouldn't say anything significant has really emerged specifically in those areas.

Speaker #2: We are definitely seeing an uptick in our plastics business. We have, I would say, very spot related type of crude opportunities that we've seen come on.

Speaker #2: Maybe some unique fertilizer opportunities here and there. Nothing I would consider honestly super needle moving. The needle movers that are emerging are really tied to fuel price.

Speaker #2: And tied to trucker regulation. And Ridley's capacity and those things. That's really where we're starting to see the needle move. And as I mentioned, everyone kind of instantly looks at intermodal as the big beneficiary there.

Speaker #2: And I certainly we're going to see some of that. And we're deep into those discussions on the intermodal front. But as much as I'm starting to see it across our consumer merchandise customers in that.

Speaker #2: And so that becomes pretty exciting. Because that's really good business. And the challenge will be the team how do we make it sticky? How do we not allow that truck to convert or that shipper to convert that to rail?

Speaker #2: How do we then make them stick with rail? I think there's a great opportunity for that right now. So yeah, that's what we're seeing.

Speaker #1: All right. Awesome. Thanks, John.

Speaker #2: Thank you.

Speaker #3: We'll go next now to Walter Spracklin with RBC Capital Markets.

Speaker #10: Yeah. Thanks very much. Good afternoon, everyone. So what I'm comparing the US rails here and how they did in the quarter relative to the Canadian rails coming a little light.

Speaker #10: I'm just wondering if there's any divergence you're seeing. I don't know if John, you're the best one to answer this. But economic divergence, is it tariff related?

Speaker #10: Is it the truck regs that are helping US and not Canada? And it is related to that divergence. I know the Feds in Canada have been talking a lot about larger projects.

Speaker #10: But speaking to our engineering construction companies, they're not building it in their pipeline yet. So curious if you're hearing any rumblings about any project development that would, if there is that divergence, kind of contract that divergence a little bit here as we go into 2027 and close out the year.

Speaker #5: No. I don't think so, Walter. Our industrial development pipeline, and I think that's kind of what you're somewhat referring to, is pretty robust. It is you look at our, again, MMC, that business unit is in that is largely our steel franchise, which was heavily dependent on CrossBorder Steel that is still effectively shut off.

Speaker #5: But I don't have the numbers exactly in front of me. I think RTMs are up 5% plus. We haven't seen that for quite some time.

Speaker #5: And I think we are benefiting from some of these industrial development opportunities. Construction data centers that partners like Martin Marietta in fan movements, rock movements that are all supportive of this that I think you also heard from our peers in the US.

Speaker #5: There's no doubt our competitor in Canada and us, we're still facing pressures relative to some of these tariffs in steel and forest products in that.

Speaker #5: But I'm also pretty encouraged about what our US franchise is producing. So I'm going to say no. I don't think there's a big divergence there.

Brian Ossenbeck: Hearing any rumblings about any project development that would, if there is that divergence, kind of contract that divergence a little bit here as we go into 2027 and close out the year?

Speaker #10: Walter, it was simply in both cases, if you look at the yields, you look at the sense for RTM, I think there was a underestimation of the impact of currency on sense for RTM.

John Brooks: No, I don't think so, Walter. Our industrial development pipeline, and I think that's kind of what you're somewhat referring to, is pretty robust. Like, it is, you look at our, again, MMC, that business unit that is largely our steel franchise, which was heavily dependent on cross-border steel that is still effectively shut off. I don't have the numbers exactly in front of me. I think RTMs are up 5% plus. We haven't seen that for quite some time, and I think we are benefiting from some of these industrial development opportunities. Construction, data centers, that partners like Martin Marietta in sand movements, rock movements, that are all supportive of this, that I think you also heard from our peers in the US.

Hearing any rumors about any project development that would, if there is that divergence kind of contract, that divergence a little bit here, as we go into 2027 and close out the year.

Speaker #10: We had some added headwinds from FX below the line, which again, go away. And then the carbon tax goes away. So I think that's what drove the a bit of a softness on the top line was really the sense for RTM.

Speaker #10: And again, that's a temporal issue that goes away. There's nothing structural. I think structurally, if you look at where the Canadians are performing from a volume point of view from an RTM point of view, I think we're both kind of top of the pack.

John Brooks: We haven't seen that for quite some time, and I think we are benefiting from some of these industrial development opportunities. Construction, data centers, that partners like Martin Marietta in sand movements, rock movements, that are all supportive of this, that I think you also heard from our peers in the US.

Speaker #10: So no change whatsoever.

Speaker #5: Yeah. And even to add to that, Walter, our automotive franchise, and I said it, saw a 13% jump in average length of haul. And I have and I think overall in the quarter, we were up 3% on our length of haul.

John Brooks: There's no doubt, our competitor in Canada and us, we're still facing pressures relative to some of these tariffs in steel and forest products in that. I'm also, you know, pretty encouraged about what our US franchise is producing. I'm gonna say no. I don't think there's a big divergence there.

John Brooks: There's no doubt, our competitor in Canada and us, we're still facing pressures relative to some of these tariffs in steel and forest products in that. I'm also, you know, pretty encouraged about what our US franchise is producing. I'm going to say no. I don't think there's a big divergence there.

Speaker #5: The truth be told, we just had a lot of areas short haul steel business to the border that is not moving. We felt kind of a slow start to our automotive franchise coming out of Canada.

No, I I don't I don't think so Walter, our Industrial Development Pipeline and I think that's kind of what you're somewhat referring to is, is pretty robust, like it is. Um, you know, you look at our again MMC that business unit is in, that is largely our, our steel franchise, uh, which was heavily dependent on crossborder steel that is still effectively shut off. Um, but I don't have the numbers exactly in front of me, I think rtms are up 5% plus. We haven't seen that for quite some time and and I I think we are benefiting from some of these Industrial Development opportunities, uh, construction data centers, um, that um, Partners like Martin Marietta in in fan, movements Rock movements, that that are all supportive of this that I think you also heard from our our, our peers in, in the US. There's there's no doubt, um, our competitors.

Speaker #5: Into the US, again, fairly short haul, high sense for RTM. We saw a really good growth, 21% growth of our what we call our land bridges.

Speaker #5: Bridge business. That's business linking Canada and Mexico. So it just kind of had a perfect storm of business mix. And then you throw on top of it record grain movements, which is on average a little lower sense for RTM.

Nadeem Velani: Well, Walter, it was simply, in both cases, you look at the yields, you look at the cents per RTM. I think there was a underestimation of the impact of currency on cents per RTM. We had some added headwinds from FX below the line, which, again, go away, and then the carbon tax goes away. I think that's what drove the a bit of a softness on the top line, was really the cents per RTM. Again, that's a temporal issue that goes away. There's nothing structural. I think structurally, if you look at how the Canadians are performing from a volume point of view, from a RTM point of view, I think we're both kind of top of the pack. No change whatsoever.

Nadeem Velani: Well, Walter, it was simply, in both cases, you look at the yields, you look at the cents per RTM. I think there was an underestimation of the impact of currency on cents per RTM. We had some added headwinds from FX below the line, which, again, go away, and then the carbon tax goes away. I think that's what drove a bit of a softness on the top line, was really the cents per RTM.

Speaker #5: Against the total book. And those pressures, those mixed pressures that Nadine described, I think came through much heavier than even we expected.

Speaker #10: Yeah. Appreciate the time. Thank you.

Nadeem Velani: Again, that's a temporal issue that goes away. There's nothing structural. I think structurally, if you look at how the Canadians are performing from a volume point of view, from a RTM point of view, I think we're both kind of top of the pack. No change whatsoever.

Speaker #5: Yep.

Speaker #3: We'll go next now to Ravi Shanker at Morgan Stanley.

In Canada and us. We're, we're still facing pressures relative to some of these tariffs in in steel and Forest Products in that. Um, but but I'm I'm also, you know, pretty encouraged about what our what our us franchises is producing. So I I'm going to say, no, I I don't I don't think there's uh um, there's a big Divergence by Divergence there. Well, well sir it was simply in both cases. You, you look at the yield. You look at the sense for our TM. I think there was a underestimation of the impact of currency on sense, for RTM. We had some added headwinds from FX below the line, which again, go away. And then the carbon tax goes away. So I think that's what drove the, a bit of a softness on, on the top line was really the sense for RTM. And, and again, that's a temporal issue that goes away. There's nothing structural, I think, structurally. If you look at

Speaker #11: Good afternoon, everyone. Keith would love your views on the upcoming USMCA negotiation. Obviously, a big catalyst for you guys and your peer. What do you think are the potential puts and takes and kind of the boundary of outcomes there, do you think?

John Brooks: Yeah. Even to add to that, Walter, like our automotive franchise, and I said it, saw a 13% jump in average length of haul. You know, I think overall in the quarter we were up 3% on our length of haul. The truth be told, that we just had a lot of areas, short-haul steel business to the border, that is not moving. We saw kind of a slow start to our automotive franchise coming out of Canada into the US. Again, fairly short-haul, high cents per RTM. We saw a really good growth, 21% growth of our, what we call our land bridge business. That's business, you know, linking Canada and Mexico.

John Brooks: Yeah. Even to add to that, Walter, like our automotive franchise, and I said it, saw a 13% jump in average length of haul. You know, I think overall in the quarter we were up 3% on our length of haul. The truth be told that we just had a lot of areas, short-haul steel business to the border, that is not moving. We saw kind of a slow start to our automotive franchise coming out of Canada into the US. Again, fairly short-haul, high cents per RTM.

Speaker #11: And kind of how might you react to that in both directions?

Speaker #2: Well, I mean, at the end of the day, the bottom line is I think we have three nations that depend upon each other to trade.

Some um where the how the Canadians are performing from a volume point of view, from our RTM point of view, I think we're um we're both kind of top of the top of the pack so no change whatsoever. Yeah. And and even to add to that while they're like our Automotive franchise. And I said it saw a 13% jump in average length of haul.

Speaker #2: I think we're in a unique position to enable that trade Robbie. Short term, I would say buckle up. President Trump has been consistent in his expectations his objective through these negotiations a renewal of this agreement as it might be renewed.

Speaker #2: There'll be some bilateral negotiations between Canada and the US. There'll be bilateral perhaps first between Mexico and the United States. And some trilateral. But again, at the end of the day, it all leads to increased trade between the nations.

John Brooks: We saw a really good growth, 21% growth of our, what we call our land bridge business. That's business, you know, linking Canada and Mexico.

John Brooks: It just kind of had a perfect storm of business mix and then you throw on top of it record grain movements, which is, you know, on average a little lower cents per RTM against the total book. The pressures Nadeem described, you know, I think came through much heavier than even we expected.

Speaker #2: And even a rebalanced trade balance favoring the United States still involves this network. So we're in a good place we had growth after the last round.

Speaker #2: We'll have growth after this round. This network is in a very unique position to participate. And some are all a part of that.

Speaker #11: Got it. As a quick follow-up, kind of is there any variability to your guide based on the outcomes there? Or do you think it's kind of pretty straightforward?

Brian Ossenbeck: Yeah. Appreciate the time. Thank you.

And um, I have and and, you know, I think overall, in the quarter, we were up, 3% on our, on our length of haul. Um, the truth be told that we just had a lot of areas, shortall steel business to the border. That, that, that is not moving you. We, we felt kind of a slow start to our Automotive franchise coming out of Canada into the US again, fairly short, haul high sense for RTM. We saw a really good growth 21% growth of our, what we call our land bridge, uh, Bridge Business that's business, you know, linking Canada in in Mexico. So, it just kind of had a perfect storm of of business mix and and then you throw on top of it. Record grain movements, which is, you know, on, on average a little lower since for RTM, uh, against the, the total book. And, um, you know, those pressures. Those mixed pressures that Naim described, you know, I think came through much heavier, than than even we expected.

John Brooks: Yep.

Yeah, appreciate the time. Thank you.

Operator: We'll go next now to Ravi Shanker at Morgan Stanley.

Yep.

Speaker #10: No, it's not dependent on that.

Ravi Shanker: Great day so far, everyone. Keith, would love your views on the upcoming USMCA negotiation. Obviously a big catalyst for you guys and your peer. What do you think are the potential puts and takes and kind of the boundary of outcomes there, do you think? You know, how might you react to that in both directions?

We'll go next now to Robbie Chancre at Morgan Stanley.

Speaker #11: Very good. Thank you.

Thanks a lot everybody everyone.

Speaker #10: Thanks, Ravi.

Speaker #3: We'll go next now to Brian Ossenbeck at JPMorgan.

Speaker #12: Good afternoon. Thanks for taking the question. One to clarify, Nadine, if you talked about stock-based comp, I might have missed it. But I wanted to see what that headwind was during the quarter and how we should think about that for Q2.

Keith would love your views on uh, the upcoming USMC and negotiation. Obviously, a big Catalyst for you guys and your peer, uh, what do you think are the potential puts and takes? And kind of the uh the boundary of outcomes there, do you think? And you know how how might you react to that in both directions?

Keith Creel: Well, I mean, at the end of the day, the bottom line is I think we have three nations that depend upon each other to trade. I think we're in a unique position to enable that trade, Ravi. Short term, I would say buckle up. You know, President Trump has been consistent in his expectations, his objective through these negotiations, a renewal of this agreement, as it might be renewed. There'll be some bilateral negotiations between Canada and the US. There'll be bilateral, perhaps first between Mexico and the United States, and some trilateral. Again, at the end of the day, it all leads to increased trade between the nations, and even a rebalanced trade balance for favoring the United States still involves this network. We're in a good place. We had growth after the last round.

Speaker #12: And then for John, we're hearing a lot more about truckload conversion for obvious reasons. But I don't really recall hearing that too much in the past before the merger.

Well, I mean at the end of the day, the bottom line is I think we have 3 Nations that depend upon each other.

Speaker #12: So maybe you can help unpack what's different this time. Is it more the investments like the SMX and some of the other CrossBorder stuff you've been doing?

Speaker #12: Or is there actually more from the legacy CPKC that's also able and willing the shippers are willing to kind of convert more over to your network as well?

To trade. I think we're in a unique position to enable that trade Robbie um, short term. I would say buckle up. You know, president Trump has been consistent in his expectations uh his objective through these negotiations. A renewal disagreement as it might be renewed, there will be some bilateral

Speaker #12: So just some thoughts on what we're seeing here now versus prior history would be helpful. Thank you.

Speaker #10: Brian, stock-based comp is about 15 million. Headwind in the quarter. So a little over a penny.

Negotiations between Canada and the US, they'll be bilateral perhaps first between Mexico and the United States and some trilateral. Um but again at the end of the day It All Leads to increased trade between the Nations and even a rebalance trade.

Speaker #5: And Brian, I would say actually, when we put our Transcon intermodal product in place at CP in the day, we've actually had a lot of success as legacy CP in growing that truck conversion business across Canada.

Keith Creel: We'll have growth after this round. This network is in a very unique position to participate in some or all a part of that.

Ravi Shanker: Got it. As a quick follow-up, kind of is there any variability to your guide based on the outcomes there? Or do you think it's kind of pretty straightforward?

God has a quick follow up. Is there any variability to your guide based on the outcomes, there? Or or do you think it's going to produce straightforward?

Keith Creel: No, it's not dependent on that.

Speaker #5: We didn't talk about it a lot, but a lot of con vendor conversions with customers such as Canadian Tire or even Loblaw, who we talked about earlier.

No, it's not dependent on that.

Ravi Shanker: Very good. Thank you.

Keith Creel: Thanks, Ravi.

Very good. Thank you.

Thanks for having.

Operator: We'll go next now to Brian Ossenbeck at JP Morgan.

Speaker #5: So that's actually been a pretty good story. And in our growth in our reefer business, even across Canada, also was a pretty good truck conversion story.

We'll go next now to Brian Austin Beck at J.P. Morgan.

Brian Ossenbeck: Afternoon, thanks for taking the question. wanted to clarify, Nadeem, if you talked about stock-based comp, I might have missed it, but wanted to see what that headwind was during the quarter and how we should think about that for Q2. Then for John, you know, we're hearing a lot more about truckload conversion for obvious reasons, but I don't really recall hearing that too much in the past before the merger. Maybe you can help unpack what's different this time. Is it more the investments like that, SMX and some of the other cross-border stuff you've been doing? Is there actually more from like the legacy CPKC that's also able and, you know, willing, the shippers are willing to kind of convert more over to your network as well?

Brian Ossenbeck: Afternoon, thanks for taking the question. wanted to clarify, Nadeem, if you talked about stock-based comp, I might have missed it but wanted to see what that headwind was during the quarter and how we should think about that for Q2. Then for John, you know, we're hearing a lot more about truckload conversion for obvious reasons, but I don't really recall hearing that too much in the past before the merger. Maybe you can help unpack what's different this time. Is it more the investments like that, SMX and some of the other cross-border stuff you've been doing? Is there actually more from like the legacy CPKC that's also able and, you know, willing, the shippers are willing to kind of convert more over to your network as well?

Speaker #5: Specific to CPKC and most recently, it's all about the MMX and the great product that Mark and his team have put in place. And we've been able to execute and grow.

Speaker #5: I'll tell you, again, we started with zero on that train. And we're probably running north and south about 70% capacity now. We've done a heck of a job to grow that.

Speaker #5: And we've just grown it, frankly, on the speed and efficiency of that service. And honestly, I believe if this year continues to shape up and these fuel prices continue to stay where they are, we're going to pile on quite a bit more freight onto that thing.

Brian Ossenbeck: Just some thoughts on what we're seeing here now versus prior history would be helpful. Thank you.

Mark Redd: Brian, stock-based comp was about CAD 15 million headwind in the, in the quarter, so a little over CAD 0.01.

Nadeem Velani: Brian, stock-based comp was about CAD 15 million headwind in the, in the quarter, so a little over CAD 0.01.

Good afternoon. Thanks for taking the question. Um, 1, 1 to clarify Nadine, if, if you talked about stock based comp, but I might have missed it, but want to see what that headwind was during the quarter should think about that for 2 Q. Uh, and then for John, you know, we're hearing a lot more about truckload conversion for for obvious reasons. But I don't really recall hearing that too much in the past before the merger, so maybe you can help unpack. What's different? This time? Is it more? The Investments like that SMX and uh some of the other cross borders stuff you've you've been doing or is there actually more from like the Legacy cpkc this also able and you know willing the shippers are willing to kind of convert more over to your network as well. So just some thoughts on what we're seeing here now versus, um our history be helpful. Thank you.

Bye, 15 million headwind in the in the quarter. So a little over a penny.

John Brooks: But Brian, I would say, you know, actually when we put our transcon intermodal product in place at CP in the day, we've actually had a lot of success as legacy CP in growing that truck conversion business across Canada. We didn't talk about it a lot, a lot of vendor conversions with, you know, customers such as Canadian Tire or even Loblaw, who we talked about earlier. That's actually been a pretty good story. Our growth in our reefer business, even across Canada also was a pretty good truck conversion story.

Speaker #5: And there might actually be some discussions about what another train pair could look like. I'm not bullish on it. And I think we've been very transparent about the SMX.

Speaker #5: We introduced it during our original investor day. I think collectively, we saw a vision to create a best-in-class product, a competitive product into the Southeast.

Speaker #5: And frankly, you just look at I think it's close to 40% of Mexico trade is with Texas, Georgia, and Florida. It's just right in the wheelhouse of this product.

Speaker #5: So it's exciting that we got a partner in CSX who's highly motivated. We got a strong sales force in Mexico, in the southern part of our US that is pounding the pavement and selling the benefits of this product.

John Brooks: You know, specific to CPKC and most recently, it's all about the MMX and the great product that Mark and his team have put in place, and we've been able to execute and grow. I'll tell you, we started with zero on that train and, you know, we're probably running north and south about 70% capacity now. We've done a heck of a job to grow that, we've just grown it, you know, frankly, on the speed and efficiency of that service. Honestly, I believe if this year continues to shape up and these fuel prices continue to stay where they are, we're gonna pile on quite a bit more freight onto that thing.

And Brian, I would say, um, you know, actually, when we put our transcon Intermodal product in place at at CP in the day we, we, we've actually had a lot of success, uh, as Legacy CP and, and growing that, that truck conversion business across across Canada. Um, we didn't talk about it a lot but a, a lot of convener, vendor conversions with, you know, customers such as Canadian Tire or even Loblaw who we talked about earlier. So that's actually been a pretty good story and in our growth in our reefer business, even across Canada also was a pretty good truck, conversion story, you know, specific to

Speaker #5: So again, I think a lot what you're going to see onto that product is all going to be truck-to-rail conversion.

Speaker #12: And John, I would just add just to competition between the railroads now with the new service and from our train truckman Keith took with the leadership with CSX, we've been able to get that railroad up to 49 miles an hour.

Speaker #12: So we've got a premium package on that end of the railroad that will shine. Come here I guess in a week.

Speaker #10: Yeah. Look, I expect to run we're going to run under 40 hours between Dallas and Atlanta. This thing's going to fly. And.

John Brooks: There might actually be some discussions about what another train pair could look like. I'm not bullish on it. You know, I think we've been very transparent about the SMX. We introduced it during our original investor day. I think collectively we saw a vision to create a best-in-class product, a competitive product into the southeast. Frankly, you just look at, you know, I think it's close to 40% of Mexico trade is with Texas, Georgia, and Florida. It's just right in the wheelhouse of this product. It's exciting that we got a partner in CSX who's highly motivated.

To cpkc in most recently. Um, it's all about the MMX and, and the great product that Mark and his team have put in place and we've been able to execute in and grow. I, I'll tell you. We, again, we started with zero on that train. And, you know, we're, we're probably running North and South about 70% capacity. Now, we've done a heck of a job to grow that and we've just grown it, you know, frankly on the on the speed and efficiency of of that service. And, and honestly, I I I believe if this year continues to shape up and and, and these fuel prices continue to stay where there are we're, um, we're we're going to pile on quite a bit more freight on onto that thing.

Speaker #12: In three days, Atlanta to Monterey.

Speaker #10: And we'll be three days or better. Mexico to Atlanta. And with our secure border, with our bridge capacity, and that, it's going to be a really good product.

Speaker #12: Okay. Thanks very much.

Speaker #10: All right.

Speaker #3: We'll go next now to Brandon Oglinski at Barclays.

Speaker #5: Hey, good afternoon. And thanks for taking the question. And John or Mark, maybe this is a good follow-up. I mean, I think part of the success you had with MMX and maybe you can tell me I'm wrong, but is controlling the journey from end to end, right?

Speaker #5: So how are you going to ensure that operational integrity when it's not just your network that's running on, but your also partnering with CSX on this, right?

John Brooks: We got a strong sales force in Mexico, in the southern part of our US that is pounding the pavement and selling the benefits of this product. Again, I think a lot what you're gonna see onto that product is all gonna be, you know, truck-to-rail conversion.

Speaker #5: So maybe can you elaborate on that?

Speaker #12: I can start, Mark. I'll just tell you this. The CSX team is all in. They've invested in that franchise just like we have to get those rail speeds up.

And uh, there might actually be some discussions about what an what another train pair could could look like I'm not bullish on it. Um, and and you know, I think we've been very transparent about the SMX. I we introduced it during our original investor day. Um, I think collectively, we saw a vision to create a a best-in-class product, a competitive product into the into the southeast. And and frankly, you just look at, you know, I think it's close to 40% of Mexico. Trade is with Texas, Georgia and Florida, it's just right in the Wheelhouse of this this product. So um, it's exciting that we got a partner in CSX, who's who's highly motivated? We got a strong sales force in in in Mexico in the southern part of our us that is pounding the pavement and and selling the benefits of of this product. So again, I think, I think a lot what you're going to see on that product is

all going to be, um,

Mark Redd: John, I would just add just the competition between the railroads now with the new service and from our train trip me and Keith took with the leadership with CSX, we've been able to get that railroad up to 49 miles an hour. We've got a premium package on that, on that end of the railroad that will shine come I guess in a week.

Speaker #12: There's not been a blink, not been a waver. Whether it's Mike Corey and Mark working on what the ultimate product looks like or myself and Mary Claire and her team, working on how we go to market and what customers optimally fit onto that train.

John Brooks: Yeah. Look, we're gonna run under 40 hours between Dallas and Atlanta. Like, this thing's gonna fly.

Speaker #12: So you're right, it is unique. But I also think here's going to be a great example of where you put two class ones together, you partner, you get like-minded.

You know, trucked to rail conversion and John. I would just add just a competition between the railroads now with the uh, the new service and from our train trip and keep took with the, um, the leadership with CSX, we've been able to get that railroad up, 49 miles, an hour. So we've got a, we've got a premium package on that on that end of the railroad. That was shown come. Um, come here, I guess in a week. Yeah, look, I expect to run. We're going to run under 40 hours between Dallas and and Atlanta, like this thing's going to

Mark Redd: In 3 days, Atlanta to Monterrey.

John Brooks: We'll be 3 days or better Mexico to Atlanta. With our secure border, with our bridge capacity and that, it's gonna be a really good product.

Speaker #12: And you go attack some very specific markets with the best-in-class product. And frankly, we put a lot of capital on both sides. We put some sidings in.

Fly and 3 days later in the morning and we'll be 3 days or better Mexico to at Atlanta um and and with our secure border with our our Bridge capacity and that uh it's it's going to be a really good product.

Brian Ossenbeck: Okay. Thanks very much.

Speaker #12: We've increased the capacity. And we get fixated on Atlanta. It's beyond Atlanta for CSX. How can we continue to grow and build product beyond Atlanta on their side and help them get down to Mexico and Wiley as well?

John Brooks: Great.

Okay, thanks very much.

All right.

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

Brandon Oglenski: Hey, good afternoon, and thanks for taking the question. John or Mark, maybe this is a good follow-up. I mean, I think part of the success you had with MMX, and maybe you can tell me I'm wrong, but is controlling the journey from end to end, right? How are you gonna ensure that operational integrity when it's not just your network it's running on, but you're also partnering with CSX on this, right? Maybe can you elaborate on that?

we'll go next now, to Brandon olinsky at Berkeley's

Speaker #12: There's plenty of business to go into Wiley.

Speaker #10: And let me, Brandon, let me put the exclamation point on that. Expectations are set from the top. This whole initiative is something that I personally have been involved in since day one.

Speaker #10: In partnership with the CSX, Steve is committed to this. I'm committed to this. So top to bottom, bottom to top, these two organizations are mobilized and equipped to create a unique market solution that makes that border seamless that can't be replicated in the marketplace.

How are you going to ensure that operational Integrity. When it's not just your network, it's running on, but you're also partnering with CSX on this, right? So maybe can you elaborate on that?

John Brooks: I can start, Mark. You know, I'll just tell you this, the CSX team is all in. They've invested in that franchise just like we have to get those rail speeds up. There's not been a blink, not been a waiver. You know, whether it's Mike Cory and Mark working on what the ultimate product looks like, or myself and Mary-Clare and her team, you know, working on how we go to market and what customers optimally, you know, fit onto that train. You're right, it is unique. But I also think here's going to be a great example of where you put two Class Is together, you partner, you get like-minded, and you go attack some very specific markets with a best-in-class product.

Speaker #10: That's what our entrepreneurial spirit looks like. That's what creating your own self-help looks like. That's what strategic partnership looks like. That's the difference. And it's undeniably unique.

Speaker #10: Network and commitment. Thank you.

Speaker #12: Thank you.

Speaker #3: We'll go next now to Kunarth Gupta with Scotia Capital.

Speaker #10: Thanks, Sam. Going back to the yield comment early on in the call, it's inflecting up in Q2. Is it referred to as up from last year's Q2, or it's up sequentially from Q1?

Mark Redd: You know, frankly, we put a lot of capital on both sides. We put some sidings in. We've increased the capacity. You know, we get fixated on Atlanta. It's beyond Atlanta for CSX. How can we continue to grow and build product beyond Atlanta on their side and help them get down to Mexico, and Wylie as well? There's plenty of business to do in Wylie.

Speaker #10: So just trying to unpack that there. And also, any sense of fuel impact as we move into the next three quarters? I think you are going to be covering some of the costs with the fuel surcharges.

I can I can start Mark, you know? I I'll just tell you this. Um, the CSX team is is all in. Um, they've invested in that franchise. Just like, we have to get those those rail speeds up. There's not been a blink, not been a waiver, um, you know whether it's, um, Mike Corey and, and Mark working on what the ultimate product looks like, or myself and Mary Claire and, and her team, um, you know, working on how we go to market and what customers, optimally, you know, fit onto that train. So you're you're right, it is you it is unique. Um, but but I also think here's a, here's going to be a great example of where uh you put 2 class ones, together, your partner, you get like-minded and and you go attack some very specific markets with the best-in-class product and and you know, frankly we put a lot of capital on both sides. We put some sidings in we've increased the capacity and, you know, we get fixated on the land. It's Beyond Atlanta for CSX, how can we

Keith Creel: Let me, Brandon, let me put the exclamation point on that. Expectations are set from the top. You know, this whole initiative is something that I personally have been involved in since Day One, in partnership with the CSX. Steve is committed to this. I'm committed to this. Top to bottom to top, these two organizations are mobilized and equipped to create a unique market solution that makes that border seamless, that can be replicated in the marketplace. That's what entrepreneurial spirit looks like. That's what creating your own self-help looks like. That's what strategic partnership looks like. That's the difference, and it's undeniably unique. Networking commitment. Thank you.

Speaker #10: So any sense on EPS or OR impact? Thanks.

Continue to grow and build product Beyond Atlanta on their side and help them get down to Mexico. And we as well, there's plenty of business to go in a while and let me Brandon, let me put that exclamation point on that. Um,

Speaker #12: Well, it's up relative to last year quarter to date, about 5% since per RTM.

Expectations are set from the top.

Speaker #10: Can you repeat the second question?

Speaker #12: Yeah. So on the fuel side, I think it was 3 cents headwind in Q1. As you cover the fuel cost with surcharges, what do you expect the EPS impact to be in Q2 and the second half?

You know, this whole initiative is something that I personally have been involved in since day one, uh, in partnership with CSX. Steve is committed to this. I'm committed to this. So, top to bottom, bottom to top, these two organizations are mobilized and equipped to create a unique—

Market solution that makes that border seamless.

Speaker #10: Yeah. So we'll see a small impact in Q2. The fuel price will be basically a bit higher than we saw in the full quarter in Q1, of course.

That.

Can't be replicated in the marketplace.

That's what aren't you? Renewal Spirit looks like that's what creating your own self-help looks like.

That's what strategic partnership looks like.

That's the difference.

Speaker #10: We'll have the full three months of elevated prices. But we should be able to offset that with our fuel surcharge so net-net we'll have a small positive.

And it's undeniably Unique.

Networking commitment.

Thank you.

Nadeem Velani: Thank you.

Speaker #10: If you think about the delay in the fuel surcharge that went from March into April and Q2. Does that make sense? Yes. Thank you.

Operator: We'll go next now to Konark Gupta with Scotia Capital.

Thank you.

Konark Gupta: Thanks. Going back to the yield comment early on in the call, it's inflecting up in Q2. Is it referred to as up from last year's Q2 or it's up sequentially from Q1? Just trying to unpack that there. Any sense on fuel impact as we move into the next 3 quarters? You know, I think you're going to be covering some of the costs with the fuel surcharges. Any sense on EPS or OR impact? Thanks.

We'll go next now to kinark Gupta with Scotia capital.

Speaker #10: Basically, a delay of earnings from Q1 to Q2. Think about it that way. Yeah. Just making sure the EPS impact is not going to be as noisy in the future quarters.

Speaker #10: No. Especially with currency and as you asked about cents per RTM and so forth. So effectively, a lot of the I mean, there's obviously going to be volatility with kind of the world we live in.

Nadeem Velani: It's up relative to last year quarter to date about CAD 0.0005 per RTM.

Thanks. Um, going back to the yield comment early on in the call. Um, it's inflecting up in Q2, is it, uh, referred to, as up from last year's Q2, or it's up sequentially from q1. So, just trying to unpack that there and also, uh, any sense of fuel in fact, as we move into the next 3 quarters, uh, you know, I think you're going to be covering some of the costs of the fuel search charges. So any sense on EPS or or impact? Thanks.

Speaker #10: But I'd say that the worst is behind us. And we'll start seeing in fact a positive certainly from the fuel surcharge. So that's what gives us confidence in our Q2 being much stronger as we lap some of this noise with the carbon taxes, etc.

It's a relative. The last year quarter today about 5% since priority.

Konark Gupta: Can you repeat the second question? Yeah. On the fuel side, I think it was a CAD 0.03 headwind in Q1. As you cover the fuel cost with surcharges, what do you expect the EPS impact to be in Q2 and H2?

Um, can you repeat the second question?

Speaker #10: Okay. I appreciate it. Thank you.

Yeah. Sorry on the fuel side. Um I think it was 3 cents headwind in q1. Um as you cover the fuel cost with s charges. What do you expect the EPS in fact to be in Q2 and and the second hour.

Nadeem Velani: We'll see a small impact in Q2. The fuel price will be basically a bit higher than we saw in the full quarter in Q1, of course. We'll have the full 3 months of elevated prices. We should be able to offset that with our fuel surcharge. Net-net, we'll have a small positive if you think about the delay in the fuel surcharge that went from March into April and Q2. That make sense?

Speaker #3: Thank you. We'll go next now to Ken Hexter with Bank of America.

Speaker #11: Hey, great. Good afternoon. Keith and team. So Nadeem, just appreciate the double-digit EPS outlook. And it's accelerating. Maybe just parsing some mixed contributions. I guess the last five years, you've averaged about a $250 basis point improvement in the operating ratio from first quarter to second quarter.

yeah, so we we'll see, um, a small impact in in, um,

in Q2, um,

Speaker #11: Can you give any thoughts on that level given the impact of fuel that you just talked about with Konarth and kind of the volume growth that John is targeting?

Speaker #11: And then same thing, thoughts for the full year? Can you beat last year's sub-60 target on adjusted basis? And I don't know, maybe thoughts on cost headwinds should you focus on?

The full quarter in q1, of course, we'll have the full 3 months of elevated prices, but we should be able to um, offset that with our fuel surcharge. Um, so net. Net will have a small positive. If you think about the delay in the fuel S charge that went from March into, uh, April and, uh, and Q2

Konark Gupta: Yes. Thank you.

That make sense.

Nadeem Velani: Great. Basically a delay of earnings from Q1 to Q2. Think about it that way.

Speaker #11: I think you brought up incentive comp before or synergy targets post the merger. Maybe just wrap that all up on the cost side.

Konark Gupta: Yeah. Just making sure, like the EPS impact is not going to be as noisy in the future quarters.

Yeah, thank you basically a delay of earnings from q1 to Q2. Think about that way.

Speaker #10: Yeah. Thanks, Ken. So I'd say that the same level sequentially year over year, the historical sequential improvement is pretty much in line. So we do see despite the fuel surcharge headwind on the OR because there's a push of revenues effectively from, as I just mentioned, from March into April, you'll see a bit of a benefit.

Nadeem Velani: No. Especially with currency and as you asked about cents per RTM and so forth. Effectively, I mean, there's obviously gonna be volatility with kind of the world we live in, but I'd say that the worst is behind us, and we'll start seeing a positive certainly from the fuel surcharge. That's what gives us confidence in our Q2 being much stronger as we lap some of this noise with the carbon taxes, et cetera.

Yeah, I was just making sure, like, the EPS impact is not going to be as noisy in the future quarters.

No, especially with currency and as you asked about Scent for RTM, and so forth. So, effectively, a lot of the

Speaker #10: So I feel comfortable with that historical sequential improvement of that 200, 250 basis points is doable. And for the year, I have confidence that we can improve the OR year over year despite, again, the headwind from potentially from fuel surcharge.

Konark Gupta: Okay. No, I appreciate it. Thank you.

I mean, there's obviously going to be volatility with its kind of the world we live in, but I'd say that the the worst is behind us and and we'll start seeing it. In fact a positive certainly from the, the fuel search charge. So that's what gives us confidence in our our Q2 being much stronger, uh, as we lap some of this noise with the carbon taxes Etc.

Okay, I appreciate it. Thank you.

Operator: Thank you. We'll go next now to Ken Hoexter with Bank of America.

Speaker #10: I think a lot of our cost takeout, cost initiatives, and productivity initiatives that we have in place puts us in a position to still be able to improve the OR, I think we were 59.9 last year.

Ken Hoexter: Hey, great. Good afternoon, Keith and team. Nadeem, just appreciate the double-digit EPS outlook and it's accelerating. Maybe just parsing some mix contributions. I guess the last 5 years you've averaged about a 250 basis point improvement in the operating ratio from Q1 to Q2. Can you give any thoughts on that level given the impact of fuel that you just talked about with Konark and kind of the volume growth that John is targeting? Same thing, thoughts for the full year. Can you beat last year's sub-60 target on adjusted basis? I don't know, maybe thoughts on cost headwinds should you focus on, I think you brought up incentive comp before or synergy targets post the merger. Maybe just wrap that all up on the cost side.

Ken Hoexter: Hey, great. Good afternoon, Keith and team. Nadeem, just appreciate the double-digit EPS outlook and it's accelerating. Maybe just parsing some mix contributions. I guess the last 5 years you've averaged about a 250-basis point improvement in the operating ratio from Q1 to Q2. Can you give any thoughts on that level given the impact of fuel that you just talked about with Konark and kind of the volume growth that John is targeting? Same thing, thoughts for the full year. Can you beat last year's sub-60 target on adjusted basis? I don't know, maybe thoughts on cost headwinds should you focus on, I think you brought up incentive comp before, or synergy targets post the merger. Maybe just wrap that all up on the cost side.

Thank you with the next now to Ken hexter with Bank of America.

Speaker #10: I think we could improve on that for 2026. And I think another point to not overlook is we're about to lap day in. Last year, it's something we all would like to forget, obviously.

Speaker #10: Something we learned a lot from. But certainly, a lot of unnecessary cost and pain and velocity in assets that started the 1st of May, went through effectively the worst of it even through August.

Speaker #10: So certainly, we'll capture a recapture that with very fluid network. Cost is going to go down. Revenue is going to go up. Those will all be very beneficial and supportive to the comments that Nadeem has made.

Nadeem Velani: Yeah. Thanks, Ken. I'd say that the same level sequentially year over year, the historical sequential improvement is pretty much in line. We do see despite the fuel surcharge headwind on the OR, because there's a push of revenues effectively from, as I just mentioned, from March into April, you'll see a bit of a benefit. I feel comfortable with that historical sequential improvement of that 200, 250 basis points is doable. For the year, I have confidence that we can improve the OR year over year despite again the headwind from potentially from fuel surcharge.

Hey, great, good afternoon, uh, Keith and team. Um, so Nadeem, just appreciate the the double digit EPS Outlook and, and it's accelerating maybe just parsing some mixed contributions. I guess the last 5 years, you've averaged about a 250 basis, basis, point Improvement in the operating ratio from first quarter to set quarter, can you give any thoughts on that level given the impact of fuel that that you just talked about with KARK and kind of the volume growth? That, that John is targeting? And then same thing thoughts for the full year? Can you beat last year's sub 60 Target on adjusted basis and I don't know. Maybe thoughts on cost. Headwinds should should you focus on? I think you brought up incentive comp before or Synergy targets. Post the merger. Maybe just wrap that all up on the cost side.

Speaker #11: time.

Speaker #10: Thanks, Ken.

Speaker #3: We'll go next now to Scott Group with Wolf Research.

Speaker #12: Hey, thanks. Afternoon. Keith, I'm wondering, do you think there's a potential path to a settlement where maybe you're, I don't know, supportive, maybe not that, but maybe less opposed to a merger?

Speaker #12: And then I just had a random thought question on fuel. The truckers all do weekly lags, FedEx UPS used to do monthly lags. Now they do weekly lags on their fuel surcharge.

Speaker #12: Ultimately, it doesn't really matter. You eventually get made whole. But why do you think the rails still have these monthly and for some of the rails, two-month lags on fuel?

Nadeem Velani: I think a lot of our cost takeout, cost initiatives and productivity initiatives that we have in place puts us in a position to still be able to improve the OR. I think we were 59.9 last year. I think we could improve on that for 2026.

Yeah, thanks Ken. So I I'd say that that the same level sequentially year over year the, the historical, uh, sequential Improvement is is pretty much in line. So we do see despite the the fuel, uh, search charge headwind on, on the oh um, because there's a push of of uh, revenues effectively from as I just mentioned from March into April, to see a bit of a benefit. So I feel comfortable with that historical. Sequential Improvement of of that. 200250 base points is is doable. Um, and for the year I I have confidence that we can improve the, you know, our year-over-year despite again the the headwind from potentially from fuel search charge. I think um a lot of our costs take up.

Speaker #12: Why does that make sense though?

Speaker #10: Well, I'll be simple in my answer, Scott. I think there's zero chance of a negotiator agreement. No. We're full stop. No merger needed. I'm not interested in negotiating.

Keith Creel: Yeah. I think another point to not overlook is we're about to lap Day One. Last year, you know, it's something we all like to forget obviously. Something we learned a lot from, but certainly a lot of unnecessary cost and pain and velocity and assets that started 1 May, went through effectively the worst of it, even through August.

Speaker #11: Scott, I think it's a great I think it's a great idea. We'd remind you we've already got a we definitely have the fastest reacting fuel surcharge, I believe, in the industry.

Cost initiatives and productivity and issues that we have in place. Um, but to send a position to still be able to to improve the the oh, I think we're 599 last year, I think we could improve on that for 2026. I think another Point uh, to not uh, overlooked is we're about the lap day in last year, you know, it's something we all like to forget, obviously something we learned a lot from but

Speaker #11: I do believe there also is tariff notification laws or rules with the STB that probably somewhat govern both here in Canada and also in the US on how we could announce those changes and still meet those regulations.

Ken Hoexter: Yeah.

Keith Creel: Certainly we'll recapture that with very fluid network. Costs is gonna go down, revenue's gonna go up. Those will all be very beneficial and supportive to the comments that Nadeem had made.

Certainly a lot of unnecessary cost, and and pain and velocity and assets that started at the first of May went through effectively, the worst of it, uh, even through August. Yeah.

Uh so certainly we'll capture recapture that uh with very fluid Network costs. As we go down, revenue is going to go up.

Ken Hoexter: Wonderful. Thanks, guys. Appreciate the time.

Those will all be very beneficial and supported through the comments. It may be with me.

Nadeem Velani: Thanks, Ken.

Wonderful, thanks guys. Appreciate your time.

Operator: Go next now to Scott Group with Wolfe Research.

Thanks Scott.

Speaker #11: I'm all about brainstorming idea how we can figure it out, though.

Go next. Now to Scott Group with Wolfe Research.

Scott Group: Hey, thanks. Afternoon. Keith, I'm wondering, do you think there's a potential path to a settlement where maybe you're, I don't know, supportive, maybe not that, but maybe less opposed to a merger? I just had a random like thought question on fuel. Like, the truckers all do weekly lags. FedEx, UPS used to do monthly lags, now they do weekly lags on their fuel surcharge. Like, ultimately it doesn't really matter, you eventually get made whole. Like, why do you think the rails still have these monthly and for some of the rails, you know, 2-month lags on fuel? Why does that make sense still?

Speaker #10: Okay. All right. Just a thought. Thank you, guys.

Speaker #11: Yep.

Speaker #3: We'll go next now to Stephanie Moore with Jefferies.

Hey, thanks afternoon. Um, Keith I'm wondering, do you think there's a potential path to a

Speaker #1: Great. Thank you. Good afternoon. Simple one for me here. Maybe just wanted to get a sense on how we can think about maybe some of the capital return increases, particularly the buyback boost.

settlement where maybe you're? I don't know supportive. Maybe not that but maybe less opposed to to a merger. And then I just had a, a random like thought question on fuel like

Speaker #1: Is there anything you're signaling here that you want to highlight?

The truckers all do weekly lags FedEx UPS used to do monthly lags. Now they do weekly lags on their fuel surcharge like

Speaker #10: No. I'd say that we're generating significant amount of free cash. I think long-term, CP has always been a one to not sit on cash.

Keith Creel: Well, I'll be simple in my answer, Scott. I think there's zero chance of a negotiated or agreement. No. We're full stop. No merger needed. I'm not interested in negotiating.

Ultimately it doesn't really matter you eventually get made whole. But like why do you think the rails still have these monthly? And for some of the Rails, you know, 2 month lags on fuel? Why does that make sense though?

Speaker #10: And we've been very successful as far as buying back stock at value creating levels. As we sit here today, we see that continue. And so certainly, share buybacks are going to always be a part of our shareholder return philosophy.

I'll be simple. My answer Scott. I think there's zero chance of a negotiator

agreement. No.

More full stop. No merger needed. I'm not interested in negotiating.

Nadeem Velani: Scott, I think it's a great idea. I would remind you, we definitely have the fastest reacting fuel surcharge, I believe, in the industry.

Speaker #10: We also added to our dividend payout and increase our dividend by 17.5%. And that's just reflective of being balanced. So when we speak to our shareholders and the evolution of our shareholders, there's those that also like dividends.

John Brooks: I do believe there also is tariff notification laws or rules with the STB that probably somewhat govern both here in Canada and also in the US on how we could announce those changes and still meet those regulations. I'm all about brainstorm an idea how we can figure it out though.

Got it. I I think it's a great. I think it's a great idea. I would remind you we've already got a um, we definitely have the fastest reacting fuel search charge I believe in in the industry.

I do believe there are also is

Speaker #10: We are at the lowest payout ratio in the industry. So we have room to grow there. But we just see ourselves as the growth opportunity is larger; there'll be time to do the dividend at a more meaningful level.

Probably um somewhat governed both here in Canada and also in the US on on how we could announce those changes and still meet those those regulations.

Um, I'm all about brainstorming idea how we can figure it out though.

Scott Group: Okay. All right. Just a thought. Thank you, guys.

Speaker #10: But we needed to start ratcheting that up a little bit. But we still see buybacks as a meaningful value creation opportunity.

John Brooks: Yeah.

All right, just a thought. Thank you guys.

Operator: We'll go next now to Stephanie Moore with Jefferies.

We'll go next now to Stephanie Moore with Jeffries.

Stephanie Moore: Great. Thank you. Good afternoon. You know, simple one for me here. Maybe just wanted to get a sense on how we can think about maybe some of the capital return increases, particularly the buyback boost. Is there anything you're signaling here that you wanna highlight?

Speaker #1: Thank you.

Speaker #10: Thanks.

Great, thank you. Good afternoon. Um, you know, simple one.

Speaker #3: Thank you. We'll go next now to Ari Rosa with Citigroup.

Speaker #13: Hey, good afternoon. So I actually wanted to stay on the buyback comment. Keith or Nadeem, I believe you guys made the decision to pull forward the timing of the buyback last year because you felt the shares were undervalued.

Here. Maybe just wanted to get a a sense on how we can think about maybe some of the capital return increases. Particularly the buyback boost. Is there anything? Your signaling here that you? You want to highlight

Nadeem Velani: No, I'd say that we're generating significant amount of free cash. I think long-term, CP has always been a one to not sit on cash, and we've been very successful as far as buying back stock at value-creating levels. As we sit here today, we see that continue. Certainly share buybacks are gonna always be a part of our shareholder return philosophy. We also added to our dividend payout and increased our dividend by 17.5%, and that's just reflective of being balanced. When we think for our shareholders and the evolution of our shareholders, there's those that also like dividends. We are at the lowest payout ratio in the industry, we have room to grow there.

Speaker #13: Here, we're looking at the stock's up about 15% year to date. It's not necessarily a comment on overtime we continue to think stock compounds nicely.

Speaker #13: Obviously, there's a compelling case for that. But has there been a shift, I guess, in the appetite for the buyback relative to the dividend?

Speaker #13: It's a fairly sizable dividend increase. Just trying to understand how you're thinking about that. And then, obviously, as the share price moves higher, does it make it harder to hit that target to repurchase 5% of shares?

Speaker #13: Or are you pretty committed to that level of buyback?

No, I'd say that we're generating significant amount of free cash. I think long term, uh, CP. And it's always been a, a, uh, 1 to not sit on cash. And we've, we've been very successful as far as buying back stock, um, at at Value creating levels. Um, as we sit here today, we we see that continue and so um, certainly sure BuyBacks are going to be always be a part of our shareholder return philosophy. Um, we have, we also added to our dividend, um, pay out and and increase our dividend by 17 and a half percent, and that's just reflective of of being balanced. Uh, so let

Speaker #10: So last year, we had a 3.5% program or 4% program, which we completed. And we're quite aggressive. The stock price in Canadian dollars was closer to about 106, 107 dollars.

Nadeem Velani: We just see ourselves as the growth opportunity is larger. There'll be time to do the dividend at a more meaningful level, but we needed to start ratcheting that up a little bit. We still see buybacks as a meaningful value creation opportunity.

Speaker #10: And we saw an opportunity value creation. That was coming off the heels of strengthening our balance sheet and having good discussions with the rating agencies.

Thanks for your shareholders and the evolution of our shareholders. Uh, there's those that also, uh, like dividends. We are at the lowest payout ratio in the industry, so, uh, we have room to grow there. Um, but we just see ourselves as, uh, the growth opportunity is larger. There'll be time to do the dividend at a more meaningful level. Um, but we needed to start ratcheting that up a little bit, but, uh, we still see buybacks as a meaningful value creation opportunity.

Speaker #10: And so had similar discussions when we completed our buyback in November of last year. And that's why we came to the conclusion and came to announcing our new buyback in January.

Stephanie Moore: Thank you.

Nadeem Velani: Thanks.

Thanks.

Operator: Thank you. We'll go next now to Ariel Rosa with Citigroup.

Thank you, we'll go next now to Ari, Rosa, with Citi group.

Ariel Rosa: Good afternoon. I actually wanted to stay on the buyback comment. Keith or Nadeem, I believe you guys made the decision to pull forward the timing of the buyback last year because you felt the shares were undervalued. Here we're looking at, you know, the stock's up about 15% year to date. You know, it's not necessarily a comment on, you know, over time we continue to think stock compounds nicely. Obviously, there's a compelling case for that. Has there been a shift, I guess, in the appetite for the buyback relative to the dividend? You know, it's a fairly sizable dividend increase. Just trying to understand how you're thinking about that.

Speaker #10: We made it a little larger and part of that is just showing the resiliency of our balance sheet and our ability to continue to service our debt and the diversity of our franchise and the growth story, etc.

Hey, good afternoon. Uh, so I actually wanted to stay on on the buyback comment. Um

Speaker #10: I think we took advantage of an opportunity in the market to go to take on some additional debt prior to some of the geopolitical noise that raised rates.

Keith Bernardine. Uh, I believe you guys made the decision to post our the timing of the buyback uh, last year because you felt these Shares are undervalued here. We're looking at, you know, the stocks up about 15% here today, uh, you know, it's not necessarily a comment on, you know, over time we continue to think stock compounds nicely. Obviously that's there's a compelling case for that. But has there been a shift

Speaker #10: And so I think we were very advantageous timing and so we see an opportunity to continue to buy back the shares. We're not going to hold off.

Ariel Rosa: Obviously as the share price moves higher, does it make it harder to hit that target to repurchase 5% of shares or are you pretty committed to that level of buyback?

Speaker #10: Are we going to be strategic and buy back at value-creating prices? Yes. So there's times when we will pause and given all the volatility in the marketplace, there is opportunity sometimes to be strategic.

I guess in the appetite for the buyback relative to the dividend, uh, you know, it's a fairly sizable dividend increase. Uh, just trying to understand how you're thinking about that. And then obviously, as the share price moves higher, does it make it harder to hit that that Target to repurchase 5% of shares or or or are you pretty committed to that to that level of buyback?

Nadeem Velani: Last year we had a 3.5% program or 4% program, which we completed. You know, we're quite aggressive. The stock price in Canadian dollars was closer to about CAD 106, CAD 107. You know, we saw an opportunity value creation that was coming off the heels of strengthening our balance sheet and having good discussions with the rating agencies. Had similar discussions when we completed our buyback in November 2023. That's why we came to the conclusion and came to announcing our new buyback in January 2024.

Speaker #10: You're never going to completely you can't get too cute on some of those things, especially when you have a 45 million or 45 million share authorization.

Speaker #10: But I fully expect we will complete it. We'll complete it by the end of the year. And like we've seen today, some near-term pullback with some volatility in the market.

Speaker #10: We could take advantage of that, and we will.

Speaker #11: Very helpful. Thank you.

Speaker #10: Okay. Thanks, Ari.

Speaker #3: Thank you. Thank you. And ladies and gentlemen, we have reached our allotted time for Q&A today. I would like to turn the conference back to you, Mr. Creel, for any closing comments.

Nadeem Velani: We made it a little larger, and part of that is just showing the resiliency of our balance sheet and our ability to continue to service our debt and the diversity of our franchise and the growth story, et cetera. I think we took advantage of an opportunity in the market to take on some additional debt prior to some of the geopolitical noise that raised rates. I think we were very advantageous timing, and, you know, so we see an opportunity to continue to buy back the shares. We're not gonna, you know, hold off. Are we gonna be strategic and buy back at, you know, value-creating prices? Yes.

Speaker #10: Okay. Just a few comments. Listen, we've started this second quarter with a lot of momentum. We're in a very good position to operate. To execute operationally, commercially, and financially, that's exactly what we're focused on and intend to do in the second quarter.

So, so last year, we we had a 3 and a half percent, um, program or 4% program, um, which we completed and um you know, we're quite aggressive, the stock price in Canadian dollars was closer to about 1067. Um, and you know, we saw an opportunity value creation. We that was coming off the heels of of shrinking, our our balance sheet and having, um, good discussions with the rating agencies. And so, um, had similar discussions when we completed our our buyback in, in November of last year. And, uh, that's why we came to, uh, the conclusion and came to to announcing our, our new buyback in, in January, um, we we made it a little larger and part of that is, is just showing the resiliency of our balance sheet and our ability to continue to um, to to service our debt and and the diversity of our franchise and the growth story, Etc. Um, I think we we took advantage of

Speaker #10: To continue this very unique value-creating story at CPKC. We look forward to sharing those results soon. Be safe.

of a opportunity in the market to, to go to, uh,

Speaker #3: Thank you, gentlemen. Again, ladies and gentlemen, this brings us to the conclusion of CPKC's first quarter earnings call. Again, thanks so much for joining us, everyone.

Nadeem Velani: There's times when, you know, we will pause, and given all the volatility in the marketplace, there is opportunity sometimes to be strategic. You can't get too cute on some of those things, especially when you have a CAD 45 million or 45 million share authorization. I fully expect we will complete it. We'll complete it by the end of the year. You know, like we've seen today, some near-term pullback with some volatility in the market. You know, we can take advantage of that, and we will.

Some near-term pullback with some volatility in the market. You know, we could take advantage of that and we will

Ariel Rosa: Very helpful. Thank you.

Nadeem Velani: Yeah. Thanks, Ari.

very helpful. Thank you.

Operator: Thank you. Thank you. Ladies and gentlemen, we have reached our allotted time for Q&A today. I would like to turn the conference back to you, Mr. Creel, for any closing comments.

Thanks sorry. Thank you.

Keith Creel: Okay. Just a few comments. Listen, we started this Q2 with a lot of momentum. We're in a very good position to operate, to execute operationally, commercially, and financially. That's exactly what we're focused on and intend to do in Q2, to continue this very unique value-creating story at CPKC. We look forward to sharing those results soon. Be safe.

Thank you. And ladies and gentlemen, we have reached our allotted time for Q&A. Today, I would like to turn the conference back to you Mr. Creel for any closing comments

Okay, just a few comments. Listen, we started this second quarter with, with a lot of momentum. We're in a very good position to operate, uh, to execute operationally the final. That's exactly what we're focused on and intend to do in the second quarter to continue this very unique value. Creating story of Chief, Casey, we look forward to share those results. Soon be safe.

Operator: Thank you, gentlemen. Again, ladies and gentlemen, this brings us to the conclusion of CPKC's Q1 earnings call. Again, thanks so much for joining us, everyone. We wish you all a great evening. Goodbye.

Thank you, ladies and gentlemen. This brings us to the conclusion of CPKC's first quarter earnings call. Again, thanks so much for joining us, everyone. We wish you all a great evening. Goodbye.

Q1 2026 Canadian Pacific Kansas City Ltd Earnings Call

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