Good afternoon. My name is Krista and I will be your conference operator today. All lines have been muted to avoid background noise, and participants are in listen-only mode. After the speakers' remarks, there will be a question-and-answer session. Now, I would like to turn the call over to Stacy Alderson, CN's Assistant Vice President of Investor Relations. Ladies and gentlemen, Ms. Alderson.

Thank you, Krista. Welcome, everyone. Thank you for joining us for CN's fourth quarter financial and operating results conference call. As of note, we have forward-looking statements and non-GAAP definitions for your review on Page 2 of our presentation. These forward-looking statements include estimates, goals and predictions about the future based on our current information and educated assumptions. These come with risks and uncertainties. And with that, there is always a possibility that the outcomes may differ from expectations. That being said, forward-looking statements aren't guarantees and factors like economic conditions, competition, fuel prices and regulatory changes could affect actual results. Now, joining us on the call today are Tracy Robinson, our President and CEO; Derek Taylor, our Chief Field Operations Officer; Pat Whitehead, our Chief Network Operations Officer; Remi Lalonde, our Chief Commercial Officer; and Ghislain Houle, our Chief Financial Officer. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson.

Thanks, everyone, for joining our call. Today, I'll spend a few minutes on 2024 and then turn to our plans for 2025. Now 2024 was clearly not what we expected and certainly not what we planned. We are happy to have it behind us. We experienced a number of one-off challenges that had some outsized impacts on our results, including an unprecedented referral to the Canadian Investor Relations Board by the Canadian government of what was otherwise a normal labor dispute, which caused three months of uncertainty and the diversion of container volumes for a longer period of time. That was followed by a rail shutdown and then strikes at the ports of Prince Rupert, Vancouver and Montreal. Long story short, we were resourced for more volumes than we handled and we didn't deliver growth to the bottom line. We're not happy with that. Now there were a number of things that I am pleased with. The team's agility in managing through the year with solid execution was very strong. Our operation recovered from each shock quickly and effectively. Car velocity for the year was solid at almost 210 miles per day despite the challenges, and through dwell, an indicator of yard fluidity is on par with 2023 at seven hours. Now this wouldn't have been the case a few years ago, and I'm proud of the discipline of this team and their adherence to our operating model. We also delivered on our CN specific initiatives and grew volumes by more than 1%. We moved record amounts of Canadian grain. We had solid same-store pricing above-rail cost inflation. Our customer service remained top-tier and we had the second-best accident and injury performances in the company's history. So we have a strong foundation. From a financial perspective, we delivered Q4 adjusted EPS of $1.82 and an operating ratio of 62.6%. For the full-year, our adjusted EPS was $7.10 and the OR landed at 62.9%. I'm going to ask the team to give some more color on the quarter's performance in a few minutes. Now turning to 2025, it's a new year, the labor issues are behind us and I feel really good about our setup for this year. I'll start with the good news from the SCB who approved our Iowa Northern transaction. I want to extend a warm welcome to our new colleagues. This transaction extends our network reach into the Iowa Greenbelt and provides extended single-line access for customers to new markets. A side benefit of the deal is that we're bringing on a team with a strong entrepreneurial spirit, and that's something that we want to lean into as an organization. We'll start the integration in a few weeks and I expect to realize operational and commercial synergies in the coming months. Now in the operation, we're well into winter, and the network has been fluid despite the cold. As we rounded into January, we've had shorter bouts of severe cold, which has allowed us to pick-up velocity. Month-to-date car velocity is nearly 200 miles per day, right in that sweet-spot for winter operations. This railroad continues to run well. Now a tight operation is table stakes for both customer service and margin expansion. And over the past number of quarters, we've taken actions to realign resources, both people and assets, and this will flow through in our results moving forward. And we'll continue to refine the operating plan and resourcing as necessary. We're also continuing to focus on our productivity initiatives, including in engineering and mechanical, which will help us mitigate the impact of inflation and support operating leverage. On the labor front, we're in a stable position this year. We reached a tentative agreement with the IBEW this week, and this is the union representing our signals and communications employees, which is positive progress for both parties. We're also pleased that we reached a four-year agreement with Unifor in December. Unifor represents our employees that work in mechanical, clerical and intermodal functions. With respect to the Teamsters union, which represents our conductors and locomotive engineers, the arbitration process is proceeding as expected and on track to be wrapped up by the end of the second quarter. Now these unions represent the bulk of our Canadian unionized workforce. We're also progressing well with negotiations in the U.S., and ports on the West Coast and in Montreal are proceeding with their own arbitration process. So we're in good shape on labor stability across the supply chain in 2025. Now finally, when we think of the broader economy, the most significant driver could be what happens with tariffs initiated by the new U.S. administration. But we all want growth in the North American economy, and we want consumers to be strong, and we're hopeful that the conditions that will support this will be in place. Now clearly, we can't predict how this will unfold, but we can control how we respond and how we partner with customers to adjust. We’ve considered a full range of options and have a plan for various scenarios. The key for us will be to be nimble and adjust quickly as the situation unfolds. Turning to our 2025 outlook, we've provided earnings guidance, which accounts for multiple scenarios related to volume, energy prices and currency. Significantly, our underlying assumption as it relates to tariffs and potential retaliatory measures is that while there may be some impact, it won't be so significant or prolonged as to cause a recession in Canada or significant inflationary impacts in the U.S. With this in mind, we expect to deliver 10% to 15% EPS growth for 2025, and we are reaffirming our 2024 to 2026 outlook for compound annual high single-digit EPS growth. While the business environment has evolved from our Investor Day timeframe, the investment thesis we presented has not. We remain in growth mode, and we are executing our strategy this year, including year-over-year margin improvement. So we're aiming for growth in volume as well as earnings and margins. Now to give you a sense of the margin improvement quantum, altogether, the 2024 one-offs, including fuel, impacted the operating ratio by roughly 200 basis points. Remi will give you more details on the volume outlook, which all-in assumes low-to-mid single-digit RTM growth. More than 50% of it is expected to come from CN-specific initiatives. About a third is related to the recovery of volumes lost from last year's labor disruption and the remaining assumes a bit of a lift in the economy. We do expect the shape of the volume growth through the year to be more back-end weighted as we lap last year's disruptions. We're guiding for a CapEx program of $3.4 billion for 2025 to ensure a safe and efficient operation as well as to support growth. As Pat will discuss, we're doing the work to improve the efficiency with which we manage our engineering program and we're very focused on locomotive availability and reliability. The year is off to a positive start as we expected. We have the momentum we need to demonstrate the strength of this network and franchise. And Derek, you're up first on the condition of the operation.

Thanks, Tracy, and good afternoon, everyone. Turning to Slide 7. From an operating perspective, the fourth quarter was really a story of two halves. During the first half of the quarter, we had ideal operating conditions in terms of weather. The team handled strong demand very efficiently. We kept pace with customer orders and did not have any backlogs. Unfortunately, we began November with two weeks of port labor disruptions, both on the West Coast affecting Vancouver and Prince Rupert as well as in Eastern Canada at Montreal. This was impactful to our intermodal network due to the staging of trains and balancing of equipment, but the rest of the railway continued to run well. Now during the second half of the quarter, just as we started to see volumes ramp up after the labor stoppage, we started a long stretch of really cold weather across much of the Western region, our busiest. As we have said in the past, we are the rail to the north when compared to our fellow Class 1s and no strangers to cold weather at CN. Therefore, we activated our winter operating plan, which is our blueprint for how we manage extreme cold. That said, I would just remind you that winter came late the prior year as we had zero days operating under trade restrictions in November and December of 2023. That was compared to 28 days of trade restrictions to close out those same two months in 2024. When coupled with the mainline disruptions that occurred in the Western region, you can certainly see the impact on our key statistics when we look at the monthly. Car velocity dropped from around 220 to 191 miles per day for the month of December. Through dwell increased from a very strong October at 6.5 hours to 7.8 hours going into the holidays. 32-hour cars also spiked to around 8,500 during the December time period. When the weather finally broke after operating under 14 consecutive days of trade restrictions to essentially end the year, the railroad recovered nicely. We cut our 32-hour count by more than half down to 4,000 cars in early January, quickly restoring yard fluidity. Through the end of January, car velocity was approaching 200 miles per day with many around 210, which is not bad for winter railroading. Dwell also averaged just over seven hours. And we did all this while doing over 15% more daily GTMs than we did last year. Closing with customer service, we continue to serve our customers extremely well and achieve a slight increase in our local service commitment measure. The West Coast ports had some supply chain challenges at the end of December with vessel bunching and the port holiday shutdown along with our trade restrictions limiting train length due to the cold weather. Now, the ports are in good shape. Rupert is fluid and we've got inbound vessels on the way. Vancouver inventories and dwell times have also improved to more normalized levels. I'll end by thanking the entire operating team for their dedication and efforts through 2024. It was a healthy dynamic year with lots of things thrown at this railway, which proved the resiliency of this network and this team. Pat, over to you.

Thanks, Derek. I want to begin with safety. Our injury and accident ratios for the year were the second-best in our history, which is a significant achievement. That said, we know there's still work to be done. We are not satisfied with how both quarterly measures ended below last year's levels and we are committed to making improvements in the months ahead. Further to Tracy's comments, I want to emphasize that our plan is sacred. We strategically deploy resources to power the network, allowing us to quickly get back on track and serve our customers with predictability. This is evident in our origin train performance, which came in at 90% for the full year, 1% better than 2023, even in the face of disruptions. Next, let's turn to crewing. We've remained disciplined in managing headcount, adjusting to the economic and political uncertainties that shape our workforce needs. These adjustments are already underway, ensuring we align with demand in a volatile environment. Where volumes are growing mainly in the West, we continue to hire with furloughed trainees on standby to quickly respond to demand. This approach has enabled us to improve crew cost per GTM by 4% compared to Q3, despite a 3% increase in GTMs. Additionally, our productivity measured by GTM per employee grew by 7% compared to the previous quarter. Having covered our most recent performance, I now want to highlight how we're deploying capital to achieve sustained predictable service and cost performance moving forward through both our maintenance and capacity expansion initiatives. Starting with locomotives, we've made significant progress in our DC to AC modification program. To date, we have converted 160 older DC units to modern AC propulsion units. Just to put it into perspective, two modernized units deliver the pulling power of three of our older DC units across most of our network. This enhances fleet reliability, fuel efficiency, and improves availability with fewer failures. Looking ahead, we're also exploring emerging locomotive technologies. Earlier this month, we launched a small pilot in partnership with Knoxville Locomotive Works for a medium horsepower hybrid unit. This will be tested over the next six months in yard and branch line service, allowing us to prepare for future innovations in a cost-effective low-risk manner. We've also partnered with OEMs more broadly on alternative propulsion methods and we are staying close with our peers with the objective to maintain interoperability down the road. Turning to engineering, 2024 saw improvements in how we plan and execute our work. We streamlined the material deliveries and standardized our production gains, reducing our reliance on third-party contractors. These efforts led to a 10% improvement in tie gain productivity compared to the first half of the year and a 6% improvement year-over-year. On inventory management, we've made substantial strides by reducing both engineering and mechanical inventory quantities by $35 million, we've improved asset utilization and reduced our carrying costs. Lastly, on the capacity front, we've advanced our multi-year capital plan, bringing on key projects in the Chicago and Vancouver corridors. In December, we successfully delivered a new section of double track on the former EJ&E property in Chicago, which will improve fluidity and increase capacity by roughly 20% in the area. Similarly, the project that came online in May provides about 30% more capacity in the BC South between Kamloops and Vancouver. Later this year, we're looking forward to completing two additional sections of double track on the Edson sub west of Edmonton, increasing capacity by 25% through this critical link, supporting our growth to the West Coast. With that, I'll pass it on to Remi and he will tell you how he plans to fill up that capacity.

All right. Thank you, Pat. We're marking this quarter with strong volume in grain and refined petroleum, and we kept the momentum with our expanding franchise for frac sand and NGLs in Northeast British Columbia. But as my colleagues indicated, we faced disruptions from extended port labor disruptions and significant operating restrictions with the early onset of Canadian winter. Combined with lower potash shipments against an opportunistic record comp and softer demand for forest products, overall volume and revenue fell by 3%. This also reflects the considerable headwind from fuel and a slight tailwind from FX. Let me hit a few of the Q4 segment highlights before turning to our outlook. Despite the slightly smaller crop, we capped a record year for grain shipments with a strong fourth quarter on both sides of the border, reflecting robust Canadian canola and wheat exports from our draw territory, higher U.S. corn and soybean export and domestic volumes, and crush volumes from a new facility in Iowa. While grain RTMs were 15% higher in Q4, the impact was more than offset by giving back some potash from the 2023 opportunistic gains from the Portland terminal outage. We saw continued growth in refined fuels and NGLs in the P&C business, thanks to projects like the Greater Toronto Area fuel terminal and propane exports through Prince Rupert. But that impact was offset by crude shipments lost to new pipeline capacity and two chemical plant closures. Sand volumes finished flat, which was better than expected and caps an excellent year of growth, surpassing $500 million in revenue. Some of the commodities we serve faced a bit more of a headwind, including soft conditions for lumber and export iron ore and the impact to autos from two CN-served plant closures for retooling earlier in the year and a tough comp against dealer restocking. So I'd say that the quarter would have played out largely as we expected, but for the impact of the unexpected Western port strike which, among other things, hindered our ability to regain intermodal share following the Teamsters work stoppage this summer and the late quarter operational restrictions with the early onset of Canadian winter, which means that we ran out of track to catch up. Let me pivot to 2025. While we expect modest North American industrial production growth in 2025, there's considerable uncertainty around the impact of potential tariffs. You will see very close to customers to support them as best we can through this challenging period. We're forecasting RTM growth in the low to mid-single digits range to provide for volume variability and for more than half of it to come from our specific growth initiatives. We expect that the single biggest contributor will be international intermodal as we normalize for 2024 disruptions and fight to regain U.S. mix through western gateways. We aim to capture the full year benefit of key 2024 customer wins and grow our customer base by selling end-to-end supply chain efficiency. We're also very excited about new frac sand terminals in Northeast BC to support the robust exploration and production forecasts for the year. U.S. grain on renewable and crush and the ramp-up of Western Canadian met coal, to name only those. And with the Iowa Northern acquisition, we have incremental opportunities in grain and ethanol. Let me briefly speak to our view by business unit. We expect momentum to build in international intermodal after the first quarter and Chinese Lunar New Year, which we otherwise expect to be slightly up from last year. Similarly, for domestic, we expect the first quarter to be flat to slightly down but to show benefit in H2 from joint line services, icing truck capacity and improving market conditions. For now, we expect lower automotive volumes in Q1 and the year due to lower production forecasts amid market uncertainty. We're optimistic around all grades of petroleum and chemicals for the year and for Q1, supported by share gains in projects like propane exports through Prince Rupert and the Greater Toronto Area fuel terminal. In fact, the GTA terminal is performing very well, and we're excited to see excellent progress on its Phase 2, which should receive its first shipments by September. Although we see strong demand for frac sand, we're more cautious on metals with uncertain North American demand and unfavorable iron ore export markets. In all, we're assuming just a slight uptick in metals and minerals in both Q1 and the year. Difficult to see any significant improvement in forest products this year, particularly as lumber continues to struggle with a sluggish market plus the threat of additional tariffs. But we expect to see better panel and OSB demand and an increase in pulp and paper volume after Q1. We're expecting growth in Canadian met coal now operational Quintette line, but the sector will be somewhat tempered by a weaker U.S. exports and utility demand for an overall site uptick. For Canadian grain, we see a stronger Q1 but softer Q2 and Q3 on a tougher comp, even with a slightly larger crop. We will face a Q1 headwind in potash due to a customer's terminal outage against a strong comp, but we should grow thereafter. The U.S. program, on the other hand, should benefit from stronger domestic and export corn demand and new crush projects, particularly in the first half of the year. Let me close by underscoring that we delivered more than 1% RTM growth in 2024 despite a very uneven macro environment and numerous external disruptions. And with these disruptions now in the rearview mirror, the resiliency that Pat and Derek talked about, together with our commitment to efficient and reliable service, clearly resonated with our customers. We delivered record on-time performance to yards, and they rewarded us with our best-yet loyalty scores measured through our comprehensive Net Promoter Survey, all while earning same-store pricing ahead of rail inflation. That's what it's all about. And with that, I'll pass it over to Ghislain.

Turning to Slide 14. As Derek mentioned, the quarter started under favorable operating conditions, enabling the team to respond to strong demand. Unfortunately, our volumes and costs were adversely affected by labor-related outages at the West Coast and Montreal ports. While we began addressing the backlog from these outages in late November, early winter weather hit Western Canada and persisted for most of the quarter. Extended tier restrictions hindered our ability to manage the backlog at West Coast terminals, resulting in inventories and grain orders carrying into early January. For the quarter, our adjusted earnings per share decreased by 10% compared to last year. The operating ratio increased by 330 basis points to 62.6%, while revenues declined by 3% year-over-year. I will share more details regarding some operating expense categories for the quarter, which I will examine on an exchange-adjusted basis. Labor costs rose by 7% compared to last year, mainly due to general wage increases and higher payroll taxes. We also experienced reduced capital credits and increased short-term unproductive costs year-over-year due to the earlier arrival of winter compared to 2023. Fuel expenses dropped 17% compared to the same period last year, thanks to a 15% decline in price per gallon and a 4% reduction in gross ton-miles. The net effect of fuel prices was approximately $0.10 unfavorable to earnings per share and accounted for 80 basis points of the operating ratio this quarter. Purchases of services and materials rose by 6%, influenced by higher material, repair, and maintenance costs, as well as winter-related expenses such as snow removal. Other expenses increased by 17%, primarily due to the annual adjustment of our legal claims provision. Moving on to our full year results on Slide 15, we achieved an adjusted earnings per share that was 2% lower than last year, accompanied by a 1% revenue increase. Our operating ratio stood at 62.9%, up 210 basis points year-over-year. On an exchange-adjusted basis, labor costs increased by 8% for the full year, driven by general wage increases, a higher average headcount, and greater pension expenses. Expenses for purchased services and materials grew by 2% relative to last year, primarily due to rising material and repair costs, as well as increased incident-related expenses. Full year fuel expenses decreased by 3% largely due to lower fuel prices. I would like to note that the overall impact of fuel prices for 2024 is anticipated to be unfavorable, around 100 basis points of the operating ratio and about $0.35 of earnings per share. We generated nearly $3.1 billion in free cash flow for the full year, approximately $800 million less than last year, mainly due to higher capital expenditures and lower net cash from operating activities. Under our ongoing share repurchase plan, which runs from February 1, 2024, to January 31, 2025, we have purchased over 13 million shares for just over $2.3 billion as of the end of December. Moving to Slide 16, I want to provide insight into 2025. We anticipate that the economy will perform slightly better than last year, with an expected growth of around 1% in North American industrial production. However, we are closely monitoring the tariff situation. Fortunately, we are experiencing labor stability with our core partners, which will support international intermodal growth, especially through Western Canadian gateways. Therefore, alongside our specific growth initiatives, we expect our volumes in terms of RTMs to fall within the range of low to mid-single digits. We have retained much of our manifest train package, and there is capacity on our current intermodal trains, providing opportunities for operational efficiency as volumes increase throughout 2025. We are projecting a strong foreign exchange rate of around $0.70 and WTI prices between USD70 and USD80 per barrel. In this climate, we foresee 10% to 15% earnings per share growth in 2025 compared to 2024. We are reaffirming our guidance of high single-digit earnings per share compound annual growth rate from 2024 to 2026. We have strategically built resilience into our guidance to accommodate extreme weather and traffic volume fluctuations. Specifically regarding tariffs, our guidance reflects a range of scenarios; however, we do not expect tariffs to trigger a recession. Our effective tax rate is projected to remain in the range of 24% to 25%. Our capital expenditures for 2025 will be approximately $3.4 billion, net of customer contributions. In terms of shareholder returns, we are pleased to announce that our Board of Directors has approved a 5% dividend increase for 2025, marking the 29th consecutive year of dividend growth since our IPO in 1995. The Board also approved a new share buyback program for up to 20 million shares through a normal course issuer bid from February 4, 2025, to February 3, 2026. We will continue to execute share buybacks to align with our target of 2.5 times adjusted debt to adjusted EBITDA leverage. In conclusion, I want to emphasize a few key points. We are well into winter, but the network is operating smoothly. With labor challenges behind us, we expect volume growth to exceed last year's performance. We possess a robust line of resources and can accommodate growth at low incremental costs. Our commitment is to deliver long-term value to our shareholders. Now, I will hand it back to Tracy.

Thank you, Ghislain. Krista, we'll go to questions.

Thank you. We will now start the question-and-answer session. The first question comes from Cherilyn Radbourne with TD Cowen. Please proceed.

Thanks very much and good afternoon. With respect to the volume outlook for 2025, thank you for the breakdown provided in the prepared remarks. I was hoping we could drill down a bit more on the one-third that relates to regaining volumes lost due to labor disruption in 2024, which as, Remi, you indicated, would naturally skew towards U.S.-bound international intermodal traffic. To what extent have you seen market share recovery on the Canadian West Coast year-to-date? And what visibility do you have to further recovery as we move through the March, April maritime contracting period?

Thanks for the question, Cherilyn. Part of the challenge that we faced heading into the year was that the path of recovery following the work stoppage in the summer was hindered by the two-week port strike in the West in November. And we said at the time that the goal was to regain U.S. mix. And so that set us back a little bit, and we kind of missed the peak a little bit. So what we see ahead of us is that we're off to a good start in January. We are talking to customers to encourage them to come back and to grow. But we think we're going to see most of it after the first quarter after we get through Chinese Lunar New Year, and then we can build from there. I will point out on the normalization that if you look at what we did in the first half of last year, we were doing really, really well. And so that's what we mean by normalizing out for the year. You compare sort of how we did in the second half of the year versus the first, and I think when you fill that hole, that's the path that we see going forward to build on.

Thanks, Cherilyn. Next question please.

Thanks for the update. Tracy, in your remarks, you noted there are around 200 basis points of specific challenges expected for 2024. As we look ahead to 2025 and consider the guidance you've provided, could you share your thoughts on the operational performance? Additionally, if you could offer any insights on how the first half, second half, or the initial quarter might shape up, that would be helpful. I'm trying to understand what might return quickly to the network in terms of operational performance and any potential incremental margin we could expect from the growth.

Okay. Chris, thanks. Stacy is going at me across the table. I'm going to try and do this in a way that we're not providing guidance on OR as we go forward. So if you look backwards, as I said, you look back to last year, we've quantified the impact of the one-offs. Now that's including the impact of fuel last year on the operating ratio on our margins. So as we look forward this year, we've got a clear path on labor. The railroad has and continues to run very well. We're looking to drive margin improvement. We've got the right conditions in place. The railroad is returning back to the natural operating cadence that we would have had without the labor disruptions. That's going to restore a level of margin. We have resized the resource base and are focused on driving growth at a low incremental margin. We have, as you heard Pat say, some productivity efforts in place that will offset some of the inflationary impacts in different parts of the company. And then Remi talked about targeting pricing above our inflation. So the accumulation of those is going to drive year-over-year margin improvement. And since the 200 basis points is out there, you're going to see us recapture that. How far we can get with the rest of it is really going to depend on volume. We get more leverage at high volume levels. We get less leverage at lower volume levels. And so that's the way I'd kind of lay it out for you. I hope that helps.

It does. Thank you.

Okay. Thanks, Chris. Next question.

Thank you. Good afternoon, everyone. I wanted to ask about the embedded pricing in the guidance and how much it takes into account the increased level of disruption we've experienced in recent years due to fires and other natural events, as well as weather-related disruptions. It seems your network may be more susceptible to these issues compared to others. I'm curious about how you assess this situation and whether you consider a pricing strategy that addresses these challenges.

So as we think...

Ultimately challenge it, yes.

Okay, Fadi. I'll start addressing that, and then I'll ask Remi to provide some insights. We have made some provisions in our planning for potential events like fires and other natural occurrences that we've experienced in recent years. The fundamentals suggest that similar events are likely to occur in the future, so we have built this consideration into our plan. When we discuss pricing, Remi's directive is to align it with the market, which may sometimes exceed rail cost inflation. Considering the natural disasters we've seen, they do affect our customers' perception of their operational viability. This impact is not directly related to the pricing strategies that Remi implements. Remi, do you have anything further to add?

I think just to echo Tracy, we did well in 2024 to price ahead of rail inflation. And that's the mission going forward for this year. Maybe Ghislain, you want to comment on inflation.

Yes. Yes. I mean when you look at inflation, Fadi, when you look at the labor, which is our biggest cost, is about 3%. And I would say that, therefore, when we here at CN, our rail inflation is in the 3-ish percent is what we have.

And that will incorporate, of course, any of the costs associated with the fires or the other things, Fadi. We hope that answered your question. We will go to the next one please.

Thank you. Good afternoon, everyone. I would like to understand the foundation of the earnings guidance. Specifically, considering factors like foreign exchange and the challenges we faced last year, such as pension issues, how much of the earnings growth can we confidently attribute to these elements? Is there a way to quantify this? Additionally, given the difficulties from the past couple of years, I assume there’s been some added margin for uncertainty. Can you provide any insights on how much of a buffer there is or what assumptions are being made regarding potential repeat challenges from last year? I want to feel assured about the earnings guidance based on recent experiences.

The guidance we provided reflects the range in volumes, as well as the variability we anticipate in fuel and foreign exchange outcomes. We have taken this into account and included provisions for various operating conditions we may encounter throughout different seasons. Ultimately, what will significantly influence our results will be volumes, which can be affected by numerous factors. We've shared our expectations for low- to mid-single-digit volume growth, with half of this attributed to our specific initiatives and the other half related to past labor disruptions. Currently, we are assuming only a modest improvement in the economy. However, if the fundamentals suggest a stronger economy and improved consumer sentiment, we could see better outcomes. These are the factors we considered when formulating our guidance.

Thank you.

Next question.

Thank you, Operator. Good afternoon, everyone. Ghislain, I have a question for you. Regarding the buyback, I've noticed some variability in how you've ramped it up and held it back. You mentioned that you plan to use the buyback to manage the leverage at 2.6 times. Are you budgeting a specific dollar amount for the buyback this year? Additionally, are you considering the option of leveraging a bit more, given that some of your peers are moving towards 2.75 or higher? Is that something you'd consider to increase your buyback while still keeping your current ratings?

Yes, thank you, Walter. The use of our balance sheet is something we discuss both internally and with our Board. At this point, we have chosen to be cautious, which is why we will continue to manage our balance sheet to a leverage of 2.5 times. We believe this is the right balance for us. We intentionally did not set a specific budget, so you can calculate the numbers on your own. We appreciate buybacks because they allow us flexibility; we can increase or decrease them as needed. We will keep discussing how to best utilize our balance sheet, but for now, we feel comfortable maintaining it at 2.5 times.

Thanks, Walter. Next questions.

Hey, I'd like to follow up on Scott's earlier question. You mentioned the drivers. Can you elaborate on the factors affecting both the high and low ends of the outlook, specifically regarding the tariffs? Are the fluctuations tariff-related? Tracy, you mentioned volumes; could you clarify what the driving factors are there? Also, considering all the comments on weather today, how do you see the first quarter comp? Does that make this quarter potentially more aggressive than what we typically expect? Will seasonality remain normal, given that it is usually a challenging quarter? How should we think about the near-term outlook? Additionally, what prompted you to include economic growth in your outlook at this stage, considering the circumstances of last year? Tracy, I'd like to hear your reasoning for wanting to include that rather than taking a more conservative approach.

Thank you, Ken. Let me begin with the last topic about economic growth. We are anticipating very modest economic growth. Most of the growth we are projecting is due to the recovery from last year's labor issues and specific initiatives related to our company. While there is potential for upside if economic growth occurs, we are not factoring that into our current guidance. The primary factor that will push our guidance towards the upper end will be volumes. Tariffs play a role, as mentioned by Ghis, mainly because they will influence volumes. That's our current perspective. Ghis, do you have any additional thoughts on this?

Yes. As I mentioned earlier, our guidance takes into account a variety of scenarios, including different tariff situations, but it does not factor in a recession in Canada. To clarify, we are assuming an exchange rate of $0.70, which is our current spot rate. Regarding pensions, for this year, 2024, it presented a headwind of approximately $30 million. However, in 2025, it is expected to be a tailwind of about $50 million, mostly below the line. Additionally, as Tracy pointed out, much of this will be linked to volumes.

Great. Appreciate the color.

Thanks, Ken. Next question.

Yes, good afternoon, guys. Question on the labor picture for you today. I think you described some of the actions you've been taking, but just trying to get a sense for where you're at from the context of earlier quarters referencing some imbalances that you had in the system in the sense of too many people in the East, not enough in the West. It sounds like you're still hiring. How far along are you in that process? Are you scaling back in all verticals right now? Or maybe just a broader sense for that late picture today and how much more work you need to have to do.

Yes. No, Steve. I would say is right now, we have 800 people furloughed across the network. That's mostly T&E folks, but there are some mechanic folks in it that as teams work hard on from an efficiency point of view. We're watching that hiring very carefully. And we took very decisive action last fall when we saw the volumes not coming where they needed to be when we got that intelligence with it. And then I'll maybe let Pat talk about the East to West movement of people.

Thank you, Derek. We still have furloughed employees available, especially in the West, where we will continue hiring as needed to support our growth. While we have a smaller number of furloughed employees in that region, we can also reposition our staff within the Western area. We intend to hire according to our needs and recall employees as necessary, and we believe we are well-prepared to accommodate the growth in the West.

Okay, thank you. Next questions.

Hey, good afternoon, guys. So Remi, I wanted to maybe dig into a couple of the CN-specific growth initiatives to try to see if we can bracket some numbers on two specific sets of projects. As you're thinking about the nat gas liquids opportunity off the West Coast, there's been a lot of investment there. Can you help us refresh our thinking on what kind of incremental volume should look like? And same question on the Jansen potash moment. I don't think there's anything in the guide for 2025-2026, but I think it's a start-up in the three-year window. So if you could help us bracket what kind of incremental volume we're talking about there, that would be helpful.

Thank you for the question. For natural gas, a significant portion of the growth will be incremental. The demand for sand remains robust, and we noticed a late surge in the fourth quarter that helped us perform better than anticipated. The first quarter also appears strong, as drillers are constructing terminals and are optimistic about their exploration and production programs for the year. The major boost for exports through Rupert will occur when the AltaGas Vopak project comes to market. The final investment decision was made last year, so that won't come into effect until later in 2026. We expect incremental growth in natural gas for this year, with the substantial increase happening a bit later. Regarding the Jansen potash mine, construction is ongoing. I was in Saskatoon a couple of weeks ago, and while construction is progressing, we are still awaiting more details and announcements. The start date is anticipated for the third quarter of 2026, if I recall correctly. More information will follow, but that is also contingent on a market share announcement that has not yet been made.

Can you provide a specific figure regarding the significant progress with AltaGas?

I don't have it in front of me, but I'd have to double-check and come back.

Why don't we follow up, and Stacy can reach out to you afterwards if that's okay? Thanks. Next questions.

Good afternoon. I wanted to ask a labor-related question. I believe you previously discussed the location of your labor and some movement in that area. Should we expect headcount to remain relatively flat as you absorb some of this volume, particularly if you're on the lower end of the volume range? You mentioned having some capacity available in your existing train network. Additionally, could you elaborate on compensation and benefits per worker? How should we consider the two main components of the overall compensation and benefits expense?

Like we said, it was 800 people furloughed across the network, obviously, it's more tilted to the east than the south. So in those two cases, we're really watching the hiring. We don't need to do that. We don't see line of sight to have to do that because we can recall those current people. As Pat said in the West, we're ready to handle that growth. We can recall some of those folks that are there. But we are looking at some targeted hiring in those places that growth may come. So I feel we're well positioned on the train package, to your point. We can grow to incremental costs of the manifest package and even with the intermodal package as some of that comes back. And I'll turn it to Ghis on the comp question.

Yes. Tom, on the comp side, I mean, I'm happy to report that we did into agreement with our signals and communication people. And again, the pattern in Canada is 3%. So that's what we continue to assume.

Okay. Thanks, Tom. Next question.

Thanks for taking my questions. Just want to come back to the customers, Remi. You mentioned you're trying to kind of bring it back. How difficult is it to bring them back to the network, especially with all the tariff noise and even potentially change of government in Canada? I mean, how are shippers thinking about this year?

Yes, the challenge is that looking back over 2024, we've faced several disruptions, particularly related to labor. The main issue is ensuring that Canadian gateways are attractive, which is an ongoing effort. We are collaborating with shipping lines and engaging with the DCOs to establish and promote the reliability of these gateways. Our advantage lies in the services we provide, and we are eager to promote that. For instance, we refer to Rupert as the quickest route from Shanghai to Chicago. For customers seeking growth and a dependable product, we believe this is very appealing. It’s a continuous process that involves connecting with customers and restoring our credibility after a challenging 2024 in terms of labor issues.

Next question.

Hey, good afternoon, everyone and thanks for taking my questions. Maybe I'll direct this at Derek or Pat, or maybe both. I mean you guys had so much start and stop on the labor side last year and some disruption, I think even with some of your partners in Canada. How do you think about the operating plan and maybe even like engineer planning in 2025 relative to maybe what was a more challenging environment in 2024?

Thank you for the question. I would say that our strong commitment to our scheduled operating model has been beneficial. Unfortunately, we gained a lot of experience with it last year, but we have developed the ability to establish the network in a structured way, which allows for a very quick start-up. We know how to effectively allocate resources, leading to a fast launch. Our performance during disruptions shows that we bounce back quickly, with network velocity and car miles returning to normal. This success is a testament to the hard work we've put into our planning. With fewer disruptions anticipated, we expect our productivity to continue improving, especially in the engineering department.

Okay. Brandon, thank you for that. Next question.

Great. Thanks. Good evening everyone. There is a lot of uncertainty surrounding tariffs, and it's hard to predict future developments. However, it appears we are entering a period of sustained disruption in global supply chains and transitioning towards a multipolar world. How are you approaching long-term investment strategies for Prince Rupert and Halifax, as well as some of the international intermodal infrastructure? Are you receiving feedback from customers indicating changes to their long-term plans? Are they postponing projects? How do you envision the future expansion?

One thing we can be certain of as we assess our surroundings is that agility will be highly valued. As we developed our plan for this year, we considered various scenarios and how we would react to them. We feel quite confident in our plan. Remi, do you have any additional thoughts?

In both Halifax and Rupert, there is significant potential for growth. We are currently making substantial investments in Rupert, including adding bridge capacity to enhance flow. Additionally, our customers are increasing their investments in Rupert. Both Rupert and Halifax have opportunities for expansion. Halifax faced some challenges this year due to the Red Sea situation. However, we believe these assets are a strong fit within our network and play a crucial role in ensuring service reliability for our customers, which is very important to us.

Next question.

Hi, everyone. And thanks for taking the question. Just to come back on FX, obviously, thanks for the assumptions you're targeting $0.70 for 2025. So I understand that it could represent a tailwind of about $0.15 on EPS. But I was curious from a debt standpoint in terms of leverage, given the further FX depreciation, just wondering in terms of leverage, how we should be thinking in Q1, whether given the U.S. debt and also given the attractive Canadian dollar, just curious if you have received more inbound calls from shipping line that are interested to engage in discussion, especially since labor issues are behind. Just wondering if it could attract some traffic north of the board for the FX. Thanks.

Maybe I’ll start and then I’ll turn it over to you, Remi, for the second part. Regarding the foreign exchange, you’re correct that it impacts our debt because much of it is denominated in U.S. dollars, which affects our leverage. However, the sensitivity is quite minor. If I remember correctly, each cent affects the debt by about $0.02. We will factor this into our management of the balance sheet to maintain a ratio of 2.5 times. Occasionally, we can go slightly higher; for instance, we finished the year at 2.6. We will manage our balance sheet accordingly, but the effect on deleveraging is minimal. Now, Remi, the second part.

Yes. I think what I'd say, Benoit, is, I mean, obviously, the geopolitical environment is a little bit all out throughout, and currencies are obviously reflecting the strength of the U.S. dollar. I don't necessarily tie inbounds to FX as far as shipping line interest goes. I tie it to service reliability. And the other sort of thing that's changing is that there are reshaping alliances in the OSM world. And so that is opening up some opportunities for us as well.

Next question.

Thank you. Good afternoon. Derek and Pat, I think we've covered the labor resources ad nauseam at this point. But there's other line items like purchase services, equipment rents, casualty and other, et cetera. You've had this big pull-down in volume. You have this anticipation of the second half recovery, a lot of uncertainty. How do you thread the needle on matching the resources to kind of your exit rate 2024 and then also your ambitions for the second half of 2025 while making sure you still have the right capacity and starting to get some incremental margin from that in the back half of the year?

I'll take that. It's Pat. So I would say this, that we made the decisions that we had to make as it relates to resources the last few quarters. We had ramped up to take on the volume that we expected. And when that didn't materialize, we had our disruptions and clearly other factors. I would say this, that as we look at the assets from cars, locomotives and people, as Derek pointed out, we have this 120-plus furloughs in transportation. We have almost 100 in mechanical furloughed. We have well over 120 locomotives in storage. And our car fleet is very productive. We are year-over-year as productive from a car miles per car day standpoint with the car fleet. So we have laid up cars as needed, too, so as to not congest the network. So we feel really good about where we are from a resourcing standpoint to continue to pick up the volume that's out there that we see that thus far in the quarter and the year is solid.

Jon, let me just come in over top of that. The guys are doing a great job, but we're managing our expenses very tightly as we come into this year. But we do have a plan as well of how we would flex up as the volume grows if and when that happens. And so they've been working very hard at that. And I think we're in a good position, but very tight as we start the year, loosen up if the volume arrives as the year unfolds.

Yes, thanks. Good evening, everybody. Thanks for taking our questions. I know we've talked through the volume outlook a lot, but maybe one more on the revenue side. Just on the mix, the international intermodal, I think you mentioned it will be the fastest-growing volume piece. I think that's going to be a negative for revenue per RTM this year. But when you look to the volume outlook on Slide 12, can you just talk through the other puts and takes on mix and then maybe mix within mix as you see the business developing this year, the visibility you have into market share wins? Just what are the headwinds and tailwinds we should be thinking about as we move through the year?

Yes. I would say we are performing well in the petroleum and chemicals sector, particularly with the projects we discussed, such as the fuel terminal in Toronto and the sand supporting the NGLs. On the grain side, we are coming off a very strong year and remain competitive. Looking ahead, we anticipate variations in revenue per RTM across different sectors. Some areas are showing better performance than others, with strong prospects in grain and petroleum and chemicals. However, sectors with lower demand, such as forest products, are experiencing more pressure, along with metals and minerals.

Thanks, Remi. Dan, I want to add to that. You talked about the expected growth in international intermodal. We've developed a portfolio that aligns with our network and allows us to operate efficiently, which ultimately adds value to our bottom line. We appreciate the international business even though it may not have the highest margins, as you noted. It effectively utilizes our network and asset base, making it a crucial part of our business and growth strategy. In Remi's plan, it will be the primary growth driver. Consequently, revenue per RTM will largely come from this segment. Although you might see a slight decline in revenue per RTM in international, it is essential for our bottom line growth and aligns well with our network. Thank you for the question. Next question.

Hi, good afternoon. Thanks for taking our questions. It's Ben Moore on for Ari. Going back to Ken's question about seasonality, your first quarter operational reliability has historically shown a decline or an increase of about 400 basis points from the fourth quarter to the first quarter on average over the last 10 years. Should we anticipate that, or possibly a lower range closer to 200 to 300 basis points increase, given the challenging fourth quarter operational reliability of 62.6%?

Thank you for the question. Considering the unusual nature of last year, where we had a strong volume in the first quarter leading into a solid second quarter, followed by some labor issues, this quarter will be influenced by how the winter unfolds. I expect to see a more typical first and second quarter this year compared to the previous year, with a significant year-over-year improvement in the third and fourth quarters. Ghis, you can observe the trends on a month-to-month basis. Is that the right perspective?

I think you've got it pretty well. Everything staying equal, I think from a seasonality standpoint, Q1 has always had the OR that's slightly the higher. Q4, typically, it depends on when the winter hits. And then the best OR quarters are typically Q2 and Q3. So obviously, 2024 was not normal with all of the noise that we encountered. But this noise, we feel, is behind us. So 2025 should come back more to normal.

Thank, Ari. Next question.

Hi. Thank you for fitting us in. This is Joe Hafen filling in for Stephanie Moore. I have a question regarding the Falcon Premium service, particularly looking beyond the past year. Could you share insights on customer acceptance of that product? Is the adoption rate in line with your expectations, or has customer demand been slower than anticipated? I would appreciate any thoughts you have on Falcon Premium and what trends you're observing.

Yes. I would start by saying that the product performs very well. Derek and his team, along with our partners, are effectively delivering the service we promised. The challenge we face is that it’s a highly competitive market, especially for routes northbound from Mexico. The truck lanes to the major destinations are quite established, and we are competing against that. We continue to collaborate with our partners at UP and Ferromex to drive growth. I anticipate incremental growth throughout the year. There are opportunities and potential there, but it is a tough market.

Okay. Thanks, Remi, and thanks, Krista. Thanks to everyone on the call for joining us. I think as Derek said, 2024 was a hell of a year, but we're turning into 2025 now at full speed to execute our growth plans and to drive that growth to the bottom line. So we'll see you all very soon. Thank you.

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