Good morning. My name is Christa, and I will be your operator today. At this time, 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, Christa. Welcome, everyone. Thank you for joining us for CN's third quarter financial and operating results conference call. Joining us on the call today are Tracy Robinson, our President and CEO; Pat Whitehead, our Chief Operations Officer; Janet Drysdale, our Chief Commercial Officer; and Ghislain Houle, our Chief Financial Officer. As a 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 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. It's now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson.

Thanks, Stacy, and hello, everyone. Now before we turn to results, I want to take some time here at the outset to talk openly with you about what we see and to give you some facts and context on how we're responding. And when I joined CN, we launched a new operating plan. We moved to a scheduled operating model that would drive velocity, efficiency and strong customer service. And this was to be the foundation for driving value, both by capitalizing on volumes inherent in an expanding economy and those created by some unique opportunities that leveraged our network. We've executed well in many parts of our plan. I'm proud of the work that we've done and the results that we're delivering. And what we didn't do well was predict the volume environment we've encountered since then. And yes, we can rightly point to the challenges of a markedly worse macro and the impact of unanticipated shocks from tariffs and labor, which have impacted CN more than other rails. But the reality is the lower volumes have prevented us from delivering on the full earnings growth we forecasted. Now we can do better on guidance, and we will. We're not alone in facing a challenging growth environment, but it's important to remember that even with the unique shocks we faced, we've delivered. Over the last three years, revenue and EPS growth CAGR is at or near the high end of our North American peers, and we have consistently delivered top or near top margins. The macro headwinds have been an industry issue, but our operating ratio has been more resilient than most over this period. That said, I know we can do more. Over the past 12 weeks, we've been intensely focused on adjusting our approach to address the ongoing macro challenges while continuing to position CN to deliver for customers and shareholders, regardless of the economic backdrop. Now we've initiated several actions that I want to point you to today. First, we're announcing that we're setting our capital spend in 2026 to $2.8 billion, down nearly $600 million from this year's level. Now this will put our spend at mid-teens from a percentage of revenue standpoint, and we expect it to remain at or about this level going forward. The vast majority of the change in spend is driven by the completion of capacity expansion projects and our locomotive and railcar fleet upgrades. And this is no regret capital needed to address capacity bottlenecks in the West and to get our fleet to the right place. The work we've done here is important, and these investments will pay dividends. That said, both the network and the fleets are now properly sized for this volume environment. Now we're also driving efficiencies in our capital execution, and we're getting real traction. There's more to realize here, and we're going to continue to push hard. And second, the team is doubling down on productivity efforts. Now adjusting cost structure is critical, especially in a soft macro environment, and we're pursuing all opportunities across our full workforce and asset base, including taking $75 million out of management labor costs as part of our plan to continue to drive improvement in our operating efficiency. And we know there's more to get here, and we're after it. Third, we're increasing intensity around enhancing shareholder value. Now free cash flow will continue to accelerate in 2026, as capital spend is reset and costs remain in check. This incremental cash will be returned to shareholders. We accelerated our share buyback in Q3. It's the right thing to do given the attractiveness of our share price. And we're committed to returning excess capital to shareholders while balancing a continued focus on maintaining a strong balance sheet to preserve dry powder in what is a very uncertain macro environment and in an industry with an eye to M&A. And finally, on guidance, you can expect us to provide full year 2026 guidance when we report Q4 results. Now I know how we've handled guidance over the past two years. It's been a pain point for many. We've heard this, and we're listening to shareholders about what items truly matter to them, and we'll have more on this in January. So with that said, I want to give a few thoughts on the year ahead. As we look to 2026, we see another year of limited volume growth with a weak outlook for North American industrial production and housing starts and some mix headwinds given the continued impact of tariffs on forest products in particular. Now we're not accepting the macro reality as our fate. We're just going to have to work harder to achieve our goals. We've announced Janet as our Chief Commercial Officer. Congratulations, Janet. She's been working with the commercial team for three months now, and I'm impressed with the change in level of urgency and focus. Now Janet has launched an intense boots on the ground sales program that is chasing every opportunity, no matter the size. This effort has brought in $35 million in Q3 and is closing in on $100 million in Q4, and it's helping offset weakness in other areas. We know where our capacity is, and we'll be aggressive in selling into it. She'll give you an update on the markets in a few minutes. We are open-eyed about the environment in which we are operating and about our performance. We have a strong foundation, and we're already in flight on the efforts needed to deliver an improved set of returns. We're finding ways to deliver no matter the backdrop. Now with that, let's turn to Q3 results, which were strong and reflect the early impact of the changes we've made throughout the year. During the quarter, we achieved 6% growth in EPS and an operating ratio improvement of 170 basis points to 61.4%. Our network continues to perform well. We're seeing the best levels of many of our operating metrics in the last decade. Our operating performance has been strong and consistent, and it continues to deliver for our customers. Pat will take you through the details shortly. And we delivered volume growth in the quarter of about 1% in RTMs and 5% in carloads. Overall, volumes were a little softer than expected, especially in merchandise segments due to the macro and tariff overhang. And we ran lean in the quarter as well. We've managed crews and assets tightly through this year, and we did the same in Q3. Coupled with some targeted management adjustments, this positions us well for the future as the organization continues to flex on managing variable costs. Ghislain will dive deeper into the savings we are delivering and the impact of the reductions in capital. We're seeing the benefit of this in free cash flow, which is up 14% year-to-date, a sequential acceleration that will continue into 2026. And last point, I want to address something I know is on many of your minds, M&A activity. The industry does not need a merger to provide better service to the North American economy. What we need is more cooperation and less regulation. Now no level of mitigation can offset the reduction of options and the increased cost of service to customers. Now that said, we intend to be an active and engaged participant in the merger review with a view of protecting our franchise and more broadly, competition. And if the regulator decides to approve the merger, we will, as we always do, entertain all options to create value for our shareholders. So to sum it up, we've taken significant steps to move CN into a position that is tighter and front-footed to deliver for our shareholders. We've taken decisive action and we'll continue to do so. Our commitment to delivering value for customers and shareholders is steadfast through all economic cycles. Now our actions and increased focus on commercial intensity, operational agility, streamlining costs and realigning capital to reflect current realities began to deliver. So with that, I'll turn it to Pat. And as I do, let me say something on the change in approach to COO. The dual COO structure was important for us. It was a forcing mechanism to balance our day-to-day delivery with some critical work we needed to get done on the forward plan and capital efficiency. We're seeing the benefits. It's time to bring this back together. I'm excited for Pat to elevate the impact that he's been having over the past two years with his focus on network excellence, capital efficiency and disciplined execution. Congrats to you, Pat, and over to you.

Thanks, Tracy. I'm excited to step into this role after two years as our Chief Network Operating Officer. During that time, our collective efforts have been focused on operating a disciplined scheduled railroad. The momentum we've built together is powerful. Now as we look to Q4 and 2026, I'm eager to channel that energy towards our new priorities, beginning in our yards and intermodal terminals to continue driving strong, sustainable performance with an emphasis on safety, as always. A great example of this is our cross-functional terminal reviews where we go to key locations on a regular cadence and optimize staffing and resources to fit volume. We believe we can further improve our cost structure, making necessary tweaks to our operating plan to optimize total car handlings without sacrificing exceptional service to our customers at the first and last mile. We're aiming for constant improvement and will never be satisfied with the status quo. We're confident this effort will continue to yield positive results. Now let's turn to Slide 7. On safety, our year-to-date reportable injury and accident ratios are up 4% and 14%, respectively. We responded swiftly with targeted campaigns focusing on the most frequent occurrences and saw improvement through September and into October. Heading into winter, our leaders are out in the field, visible, engaged and helping teams prepare. Now on to operational performance. The team delivered another strong quarter in Q3, and we're carrying that momentum through Q4. Car velocity for the quarter was 211 miles per day, a great indicator of network fluidity. Our yards were in good shape and through dwell improved 1%. Local service commitment performance remained robust at 95%, underscoring the consistency and service reliability for our merchandise customers. It's clear the network is delivering and it's doing so with a sharper focus on costs. Turning to Slide 8. On the resourcing side, training engine labor productivity improved 20% year-over-year, the result of disciplined crew management and acceleration in furloughs through the quarter where volume has softened. We continue to hire in our hardest to staff locations and are pacing onboarding in step with what the commercial team is seeing for demand. Our equipment story follows the same playbook. We've added back locomotives and cars to support grain, but stayed measured, keeping over 6,000 system cars and roughly 160 high-horsepower locomotives or about 10% of our fleet parked and ready. On the motive power side, the productivity gains are clear. Locomotive dwell and failures are both down 12% year-over-year, pushing locomotive availability to 93%, a full point improvement. We're also seeing gains in fuel efficiency, which improved 2% in the quarter. These are the results of steady fleet modernization and predictive maintenance. We have gone from the oldest fleet eight years ago to the middle of the pack. Again, we're running lean, not light. By investing in our people and equipment, we've cut contractor spend by approximately $120 million year-to-date and reduced overtime to its lowest level in a decade while also improving our train operations with both fewer planned and unplanned delays across the network. The same cost discipline extends to our infrastructure. Despite inflation pressures, we've reduced our installed cost per tie by over $15. Annualized, this amounts to around $20 million in savings. On Slide 9 and staying with infrastructure, the capital projects I touched on in Q1 are advancing as planned. Our yard, siding and double track projects, namely on the Edson sub, are scheduled to come online in the fourth quarter. Reflecting on our progress since 2022, we've lifted West Coast throughput substantially. Capacity is up 25% between Edmonton and Jasper and about 20% to Vancouver and Prince Rupert. Our EJ&E investments have increased fluidity around Chicago and reduced the crew start to Western Canada, a direct cost and efficiency gain. The investments we've made are delivering. Locomotive availability is strong. The network has headroom and our teams are operating with precision. When budgeting, we collectively discuss the right level of investment by reexamining every project in place and every dollar being spent. Our $2.8 billion budget for 2026 reflects a continued commitment to efficient maintenance CapEx and a list of growth projects that continue to exceed our return requirements. These consider a downside pressure to volumes. With a strong foundation in place, we've delayed select projects to reflect a softer economy. We're focusing on maximizing the value of what we've built, protecting cash, preserving flexibility and positioning the company to accelerate when the market turns. When demand is there, we'll be ready to move quickly. With that, I'll pass it on to Janet.

Thank you, Pat. Good afternoon, everyone. I want to start by thanking our customers for their support and collaboration. Turning now to Slide 11. Revenues in the quarter grew 1% on 1% higher RTM and 5% higher carloads, reflecting growth in Intermodal. Volumes were softer coming into the second quarter than expected, mainly due to transitory issues in refined petroleum products and in frac sand. The Canadian grain harvest was also slower to come off the fields this year, especially in CN's draw territory. Having said that, weather conditions were just right in the final weeks of growing, and we are now expecting a record crop. Intermodal was up on a year-over-year basis given last year's labor disruption, but not as strong as we expected given ongoing tariff challenges. Throughout all of it, our service continues to perform exceptionally well, and rails are hustling boots on the ground and getting every carload we can, including some recent market share wins in chemicals and plastics. Same-store pricing continues to come in ahead of our rail cost inflation. I'll provide a few key highlights on the quarter before moving to the outlook. Petroleum and chemical volumes rose across most major segments. Plastics and chemical RTMs were up 8% on market share gains. NGLs were up 4%, driven by increased export volumes via Prince Rupert and crude was up 6%. Within Metals & Minerals, iron ore shipments were impacted by a mine idling in late Q1. Lower frac sand volumes were due to reduced drilling in BC, and we saw less cross-border shipments of aluminum steel, although we were able to partially mitigate the impact with more intra-Canada and intra-U.S. moves. We also had higher volumes of scrap metal and pipe. Forest products, especially lumber, saw a year-over-year decline, mainly due to weak demand and the impact of duties, which more than doubled on August 1. In terms of Intermodal, domestic units were up 18% and international units were up 14%. Volumes across all Canadian ports were up, benefiting from easier comps given last year's rail labor issues. Notably, Prince Rupert volumes were up a full 30%, driven by the new Gemini service. In domestic, our strong service continues to help us win market share. Turning now to the outlook for the remainder of the year on Slide 12 and starting with Intermodal. For domestic, transporter shipments remain soft, but we are focused on market share gains in Canada by leveraging our strong service. For international, we expect to see year-over-year growth given last year's port strikes and given the strong Gemini volumes through Prince Rupert, which should be roughly consistent with Q3. Canadian grain is expected to run hard to year-end. In Petroleum & Chemicals, the last of the refinery outages are now behind us, and we are seeing positive momentum going into Q4 across multiple segments. In Metals & Minerals, we will continue to help our steel and aluminum customers find alternative markets. Frac sand demand is expected to be tempered for the balance of this year, but we continue to have very high conviction in the growth potential of the Montney Shale region for frac sand and natural gas liquids. The auto outlook for Q4 is stable. In Forest products, we expect a step down in the Q3 run rate for lumber with the additional 10% tariff that came into effect on October 14. So to close out, while the macro environment remains challenged, there is still plenty to be excited about. Our service is strong. The team is selling into our capacity, and we're chasing wins by being strategic and pragmatic. Ghislain, over to you.

Turning to the quarter, we reported an EPS of $1.83, reflecting a 6% increase from last year's EPS of $1.72. Revenues rose 1% year-over-year, supported by 1% higher RTMs. Our operating team has performed exceptionally well, providing outstanding service to our customers and achieving a year-on-year improvement in the operating ratio of 170 basis points, now at 61.4% compared to 63.1% last year. Volumes for the quarter were slightly below expectations, particularly in the merchandise segment due to macroeconomic factors and tariff impacts, yet we still managed to grow volume. Additionally, we faced a fuel price challenge that impacted EPS by $0.03 and was 30 basis points unfavorable to the operating ratio. On a positive note, we are pleased with our effective cost management, aligning our resources with the volume trends. In Q3, we began to see initial benefits from the increased cost discipline implemented throughout the organization, as well as steps taken to reduce capital expenditures in response to the ongoing volume softness. Our teams have united in response to the need for heightened productivity, identifying significant cost-saving opportunities at all levels and actively managing our spending. Regarding operating expenses, labor costs rose 2% compared to last year, primarily due to increased incentive compensation and wage inflation, though this was somewhat mitigated by a 5% decrease in headcount. Our workforce reduction plan is set to be completed in Q4, which includes capital expenditures aimed at positioning the organization for long-term agility and sustainable value creation. Purchased services and materials fell by 1%, thanks to effective cost control, particularly with lower repair and maintenance costs from our engineering team. Fuel expenses decreased by 20% year-over-year, aided by the removal of the Canadian federal carbon tax, a 2% dip in price per gallon, and a 2% improvement in fuel efficiency. Other costs increased by 7%, mainly due to higher incident-related expenses. We are cultivating a mindset of productivity throughout the organization, not just as a one-time initiative. Alongside the increased cost savings achieved this quarter, we anticipate reducing our capital expenditures by $150 million year-over-year. As a result of these strategies, we generated over $2.3 billion in free cash flow up to the end of September, marking a 14% increase from the same period last year, and we expect continued sequential growth through 2026. At the end of Q3, our leverage stood at 2.54 times, maintaining our target of 2.5 times adjusted debt to adjusted EBITDA. We ramped up our share repurchase program during Q3, buying back nearly 8 million shares for just over $1 billion. We will continue to pursue our share buyback program opportunistically until February 3 of next year. Looking ahead to 2025, we anticipate the uncertain macroeconomic conditions we've faced this year will likely continue for several more quarters. Our year-to-date RTM volumes are almost flat compared to last year, and we maintain our full-year volume growth projection in the low single-digit range. We expect West Texas Intermediate prices to remain between $60 and $70 per barrel and anticipate foreign exchange rates to be between $0.70 and $0.75 for the remainder of the year. Our effective tax rate is expected to be in the range of 24% to 25%. As a result, we are reaffirming our guidance for mid- to high single-digit EPS growth in 2025, with our capital expenditures projected to be around $3.35 billion by year-end. For next year, while the environment remains uncertain, we do not expect significant changes in macroeconomic conditions. We are looking at a capital budget of $2.8 billion for 2026, which aligns our capital spending with our U.S. peers and will enhance our ability to generate strong free cash flow. In closing, we are satisfied with our Q3 results and feel well positioned to meet our full-year guidance. Our network continues to function effectively with robust operating and service metrics. We expect volume growth in the fourth quarter as we move past last year's port labor disruptions. We have intensified our cost initiatives to ensure the long-term competitiveness of our business. Our capital budget for 2026 is set at $2.8 billion, reflecting our solid position and continued short-term volume challenges.

Thanks, Ghislain. Christa, we'll go to questions.

The first question comes from Walter Spracklin with RBC Capital Markets.

Congrats on the good results here and the proactive measures you're taking. Zeroing in on one of those, the CapEx cut that you're announcing here this morning. Obviously, whenever we see the immediate concern is that it may jeopardize some of your capacity or your ability to flex up in a rebound. I know you spoke to some of that, but I love to get a little bit more color on what kind of projects are going to be cut. I know at Investor Day, you zeroed in on some very attractive CN specific growth opportunities. And so when we see a recovery, I just want to make sure we're not jeopardizing your ability to capitalize on those when that recovery comes. Appreciate that.

Thank you for the question, Walter. When I joined CN 3.5 years ago, we faced several challenges. We experienced significant congestion in the western part of our network, where we see the greatest growth potential, and we had the oldest locomotive fleet in the industry. These issues have been addressed. Over the past three years, Pat has worked on the Edson sub, the Vancouver corridor, and Northeast BC, leading to over 20% workload growth in the Vancouver corridor since the last peak. He has built enough capacity to manage that increase and even more. Currently, more than 60% of the Edson sub is double tracked, which has not only handled our existing volume but has also enabled the addition of seven more trains per day. This expansion has improved our speed across a critical bottleneck in our network and enhanced our resilience and reliability. Our locomotive fleet is now average in the industry, and importantly, we are executing our capital program more efficiently. As you heard from Pat, we are more effective in our approach. In the current environment, we are in a strong position to handle this volume and have room to grow in the western part of our network. It’s essential that we rein in capital spending and set it appropriately for next year.

Your next question comes from the line of Fadi Chamoun with BMO Capital Markets.

Look, I think, like you indicated, Tracy, you've been railroading quite well in recent years. You're in the middle to the top of the pack there. And the bigger issues have been really volume and a lot of challenges, obviously, outside of your control. So really, my question is to Janet, like do you see an opportunity here to reenergize how CN goes to market in terms of the commercial strategy? And if you can talk maybe about any unique opportunities that you see that you want to tackle as you go into 2026? And any high-level maybe thoughts about how we should think about the volume in '26? Is there an opportunity to grow volume next year if the economy doesn't really help you or economy is flat from where we are today? And by the way, congrats on the new role, Janet.

Before Janet addresses that, Fadi, I would like to mention that given the current macroeconomic environment and our outlook on tariffs, we do not anticipate a significant improvement. Next year is likely to reflect more of the same. However, within that context, we have a very diversified portfolio. There are several areas of notable strength that Janet is leading in the energy sector. Our agricultural sector is also robust, along with many industrial products. This is somewhat countered by challenges we face from tariffs and economic conditions, particularly in the forest products sector. Still, I want to reiterate how impressed I am with Janet's proactive approach. She is making a considerable impact out there. Janet?

Yes. Thanks, Tracy, and thanks, Fadi. What I would say is that our go-to-market strategy doesn't change. We're going to continue to provide the service that helps our customers to win in their markets. We're going to price to the value of the service that we provide. Now where I do see opportunity for change is really our level of intensity and urgency. We are driving decision-making down, and we're out there the whole team with boots on the ground, knocking on doors, competing hard for every opportunity and listening to and collaborating with our customers. So you all know the macro challenges. We're going to have to work harder, and we're going to have to work faster and smarter, and that's exactly what we're doing. And I will say it's working. We've had recent share gains in domestic intermodal. We've captured recent spot moves of soybean meal, plastics and coal. And we're also innovating in the products that we're moving. We actually just moved our first unit train of scrap iron. It was a test move. I'm very pleased to report that our operating team hit it out of the park. In support of the Toronto Blue Jays, I am going to try and use as many baseball analogies in my answers today. So I just want to reiterate that the operating team hit it out of the park. They beat our own aggressive service plan, and we're going to keep working with our customers to innovate and win. So stay tuned. There's more to come. We are all in the same environment, but we're going to work harder, smarter, faster, and we're going to get more of what's out there for our growth.

Your next question comes from the line of Ken Hoexter with Bank of America.

Good luck tonight in the game. So Tracy, a lot of talk about negative impact to the Canadian rails from M&A since you opened up the subject. There's a desire to move more U.S. origin. Can you talk about the risk you see there? And is there any move instead of waiting for transcon? Any thoughts of being involved or proactive before options disappear? And I guess just to hit on that, the lowest CapEx to revenue since 2002, is that limiting your growth going forward in some fashion?

Thank you for your question. There are several aspects to address. I'll begin with the last point since we covered it earlier. We closely monitor our network, particularly the work Pat has done on the Western corridor. We have made some adjustments with the EJ&E that will enhance our efficiency. Our main focus on capacity has been in the western region of the network, where we can expand, extending over the Edson sub into Rupert and Vancouver. There are two remaining projects scheduled for completion by the end of 2027: one siding near Vancouver and the Zanardi Bridge in Rupert. We are confident in our ability to grow without limitations. Our network provides significant advantages, with a robust origination network and abundant natural resources. While we have observed some impacts from tariffs, particularly in fields like forest products and energy, the trade balance has shifted. Trade between Canada and the U.S. has decreased, while trade with the U.K., Europe, and Asia has increased. With our network offering the most extensive port access in Canada, and our capabilities for deeper penetration into U.S. markets and global markets, we are optimistic about our growth potential. Regarding mergers and acquisitions, we believe they are not necessary for the industry and pose more risks than benefits. However, should the situation change, we will act swiftly to protect our network and leverage our position to further penetrate U.S. markets when the opportunity arises. Looking ahead, we are optimistic about our long-term positioning and flexibility in response to M&A developments and global trade dynamics.

Your next question comes from the line of Brian Ossenbeck with JPMorgan.

Just to follow up on M&A real quick, Tracy. There's a website now that both you and your peers have helping shippers voice their concerns if they would like to. So is that created because there have been some concerns that have been voiced. Maybe you can give a little bit more background on that. And then maybe for Ghislain and Janet, in terms of forecasting better, you're going to give more details in a couple of months, but we've heard that a few times now. I mean, it's obviously difficult this year is an example of that. But what are some of the building blocks to help be able to do that better? Is it communications? Is it technology? Maybe you can give some thoughts on how to deal with this constant volatility.

I'll start, Brian. Everyone in this industry aims to grow sustainably, which means capturing market share from the trucking industry. To achieve this, we need to provide more competitive options rather than fewer. The best way to attain these options is through enhanced collaboration and service innovation. We believe that forming pro-competitive alliances is the most effective and lower-risk approach compared to pursuing a large merger. Janet, would you like to discuss forecasting?

Yes, for sure. Thanks, Brian, for the question. So what I would say is forecasting in this kind of environment is very difficult, particularly point forecasting. So when we think about going forward, I think we're going to try and be more in a range. And we'll try and share more of that with you as well, Brian. What are the things that could bring us upside? What are the things that could bring us downside so that you can follow what's going on in the macro or with certain customers and understand whether those are good or bad for us. I think part of what we need to do, though, as well is get better at our agility in responding to changes in actual volumes. The other area where I'm very preoccupied is just the ease of doing business and making sure that we're out there as aggressive as possible, getting what we can. So I think it's a whole mix of things. The team is fully engaged in this, but I don't want the commercial team looking backwards, trying to explain why things didn't happen or did happen. I need them looking forward and being out there and selling. To your point, there were some really difficult things for us to call out there, whether that was the repeated port disruptions, whether it was the rail disruption, whether it was the size and scale of what's gone on in the tariffs. And frankly, just the unpredictability of the tariffs. It's on, it's off again, it's back on. So we're going to focus on being agile, being responsive and remaining really close with our customers and also giving you a better sense of the range of potential outcomes.

Your next question comes from the line of Chris Wetherbee with Wells Fargo.

I guess, Tracy, maybe if we could zoom out a little bit and think about what you think sort of the growth algorithm is for CN going forward. So CapEx coming down to mid-teens, similar to your U.S. peers, you generally sort of had a higher growth profile than the U.S. peers. I guess in an environment that maybe is a little rocky, I guess, two questions. Are you assuming that we just kind of stay in a slower growth volume environment for CN for the foreseeable future? And if that's the case, maybe what is the sort of EPS growth algorithm for the world that you see today? Just want to get a little bit of sense of how you're thinking about because clearly, you're making some, I think, more structural changes to how you're operating the business financially.

We have a highly diversified business portfolio, likely larger than that of many of our competitors. Our natural resource base is substantial, including metallurgical coal and a significant agricultural portfolio, along with our energy portfolio and potash and fertilizer. These commodities are less influenced by the macroeconomic fluctuations and the ups and downs of the North American economy and consumer behavior. They tend to reach markets effectively, whether globally or within North America. Thus, we are in a strong position with substantial growth opportunities in these areas. LNG Canada has recently announced the activation of Train 2, and the government of Canada prioritizes accelerating Phase 2 of LNG Canada. This momentum supports our extensive frac sand expansion and our NGL expansion, which increasingly involves exports through the Port of Prince Rupert. Additionally, we've experienced notable growth in refined products, creating significant areas of opportunity enabled by our network, our positioning in the north through agriculture, and access to ports like Prince Rupert and Vancouver, as well as eastern routes. Janet is firmly focused on this structural, partnership-driven, strategic growth as we move forward. Examining components of our system more closely tied to the macroeconomic environment, especially in North America, we see that sectors like forest products are affected by housing starts and tariffs. We've observed a 60% decline in this sector since its peak some years ago. There's a necessary structural adjustment occurring, and while we've managed to backfill that volume effectively in the past, it remains to be seen how that sector will perform when housing starts in the U.S. and across North America eventually pick up. In the auto sector, it'll be interesting to consider future trends, although our U.S. franchise remains robust. Some merchandise commodities are more directly linked to macroeconomic factors, so we will need to monitor that closely. We have been proactive in preparing for a slower macro environment, ensuring we have the proper network and required capacity in place. From a capital perspective, we are becoming increasingly efficient. Throughout this year, we've taken early actions and have been focused on improving productivity for three years, tightening our operations consistently. This commitment is reflected in our resilient operating ratio, which has ranked first or second in the industry for the past three years and again in this quarter. Our proactive approach to productivity is ongoing and will continue to strengthen. This strategy enables us to generate free cash flow even when overall volume growth is limited, allowing us to position ourselves for improved returns as macroeconomic conditions recover. Thus, we are well-positioned to benefit from increases in volume. Looking ahead, while we cannot predict when the economy will turn or the outcomes of trade deals involving Canada, the U.S., or China, our responsibility is to be prepared for whatever environment we find ourselves in. I believe we have done what is necessary to be ready, and we are committed to further advancing our position. I'm optimistic about our standing, our network, and the long-term strategic initiatives we’re pursuing, and you can expect us to continue moving forward.

Your next question comes from the line of Cherilyn Radbourne with TD Cowen.

As it relates to the decision to streamline to a single COO structure, can you talk about what impact, if any, that has on sort of the make the plan, run the plan philosophy? And particularly for Pat, just how much time you spend boots on the ground now as part of your day-to-day?

Thanks, Cherilyn. As I mentioned earlier, the dual COO structure has proven effective for us, and I'm pleased with the positive impact it's had. It pushed Pat to concentrate fully on the network and capital efficiency, ensuring we had a solid plan in place. We had Derek, an excellent operator, managing the day-to-day operations. This has created momentum. Pat has spent much of his career in transportation and has been a Chief Mechanical Officer. Now that he has dedicated two years to deepening his engineering expertise, it's time to consolidate into one COO. I believe he will elevate his role further. Our strategy remains unchanged; we continue to make the plan, run the plan, and sell the plan. The key change will be the increased productivity he is expected to drive.

Absolutely. Let me start by saying, first of all, I'm extremely excited and honored to lead the operations team here at CN. I have the utmost confidence in this team of professional railroaders to safely deliver exceptional service that our customers demand. Look, for the past two years, Derek and I have worked hand-in-hand. We are in a good place from an operations standpoint. And I want to be clear and reiterate Tracy's comments. There is an urgency around this entire organization as it relates to safety, service, productivity, developing our people and cost. I've been in this industry for 33 years. Tracy outlined, I've spent most of that in transportation, boots on the ground. I started in the train and engine craft, as did my father. I spent a lot of time in mechanical and I've been overseeing engineering for two years. I know what I've seen over that time, and that's what works, a clear plan, disciplined execution of that plan and our leaders staying very close to their operation. The work we've done has paid off, and I’ll just outline a few things. Our shops are more productive with fewer people per repair, and our locomotive availability is at an all-time high for this railroad. The material inventory levels in our shops are down 20% since 2023. In engineering, our operating cost per track mile has completely absorbed inflation and foreign exchange, and we have our lowest overtime levels in over a decade. Most importantly, our lost time days from injuries are down 23% from last year, a record low. Our goal, my goal is for everyone on this team to go home the same way they came to work every single day. As Tracy said, the strategy does not change. We're building on what's already working. The railroad is running very well and efficiency is improving across the entire organization. Our goal, my goal now is to take it from better to best-in-class consistency. As it relates to operations, the next thing that we're going to spend time on is tightening the dwell in our yards, removing non-value-added costs and really focusing on cars spending less time waiting and more time earning a return for us. So strategy is unchanged. We're just taking it to the next level. Thank you for the question.

Your next question comes from the line of David Vernon with Bernstein.

Pat, Janet, congratulations on your appointments. Tracy, I'd like to ask a big picture industry question, if I could. If you look at the structure of the railroad industry in Canada, you've got sort of the CNCP controlling about 95% of RTMs, something close to 90% of freight revenues. The broad question I have for you is, why is that industry structure good for Canada, but not good for the U.S.? I think that in a network business like a railroad or an airline, where you have greater connectivity, more local traffic, you produce more opportunities to grow, you produce more reliable service, you produce better service levels. And I think most investors would agree that comparing the U.S. rails against Canadian rails on a 15-year view, that's largely been true. I'd just like to understand kind of why you think that further consolidation is a bad idea in the U.S.?

Well, if you want to compare the Canadian kind of industry to the U.S. industry, we are structured a little bit differently. But what you get with that kind of transcon network is you get a very different regulatory environment. And if we're going to be successful if we're going forward as an industry, particularly if the focus is to be nimble enough to take trucks off the road, which is the next big growth area, then we need less regulation, more competition. We need to be able to be more nimble, more innovative in how we go to market. And so that's going to be critical. So going down the path of creating big transcon is going to inevitably attract a different regulatory structure. I don't think that, that's going to enable that sustainable growth that we all want. So we got to be eyes wide open about what we're walking into here.

Your next question comes from the line of Scott Group with Wolfe Research.

So Tracy, there have been numerous management changes. Are we feeling confident now that we have moved past that? I have heard you address the macro challenges regarding volume and mix, but I didn't hear much about pricing. Can you discuss how the current macro environment is affecting pricing? Ultimately, considering everything, are we confident that we can achieve margin improvement looking ahead to next year?

Thank you for the question, Scott. I have confidence in this team right now. We have a plan, we are focused and aligned, and we feel a strong urgency to execute it. Regarding pricing, I will make a general comment before handing it over to Janet for more details. We have seen robust price performance over the past three years, which has contributed to our results, and we anticipate this trend will continue. Janet's goal is to maintain pricing in relation to service while staying above rail cost inflation. Janet, would you like to elaborate on that?

Thank you, Tracy, and thanks, Scott, for your question. First, I want to emphasize that we have a deep understanding of our customers, our available capacity, and the service levels we provide. Therefore, our pricing strategy remains stable. We prioritize pricing according to the value of our services, selling within our capacity, and making sure we keep our prices ahead of rail cost inflation, which is about 3%. I also want to mention that we have clear visibility on our pricing for the remainder of this year and into 2026. Specifically, our pricing for regulated grain for the 2025-2026 crop is approximately 1.7%, compared to nearly 6% last year. This is something to consider in your modeling. In short, yes, we are continuing to raise prices ahead of our expense inflation.

Your next question comes from the line of Konark Gupta with Scotiabank.

Just on the cost side of things, Tracy, I wanted to understand, you have a $75 million program here. How much of that you expect to be recognized in 2025? I mean, I think your guidance is unchanged. And I mean, it sounds like you're expecting a pretty good Q4 here. So I mean, some of that might be from lapping of comps perhaps in November from the strikes and all that, but also some of these costs, right? And then for Ghislain, the leverage ratio philosophy, does it change with the CapEx reduction for next year?

So we have been working at productivity improvements for three years, and we've been working on it Konark all year this year. The smaller part of it is this management adjustment or adjustment to our management workforce. We're in the middle of that right now. So yes, you will see some benefit of that in Q4, but I think it's going to be smaller. It's really intended for full year impact in 2026. And Ghis, do you want to take?

Yes, thank you for the question, Konark. Out of the $75 million that Tracy mentioned, a small portion will go towards CapEx, but the majority, nearly 90%, will be allocated to OpEx. Regarding our leverage, we ended up at 2.55, while our target is 2.5. This is an ongoing discussion amongst management and our Board about whether our leverage is appropriate. We prefer to have a strong balance sheet, but the question is how strong it should be. Currently, we are managing towards 2.5, especially considering the weak macroeconomic environment and ongoing consolidation. We want to ensure we have some flexibility, but this is something we regularly discuss.

Your next question comes from the line of Ravi Shanker with Morgan Stanley.

Tracy, Prince Rupert is a pretty unique asset. Obviously, huge growth over the years and opportunity as well. How do you see the outcomes there, whether there is a permanent change in the U.S. or not? Do you think there's more opportunity to grow? Do you think there's less? And how does that influence your capital position as well?

So Rupert is a very unique asset, and we've been seeing it grow over the years. What has really been interesting about Rupert is to watch it go from a pure intermodal play to more and more of a carload play. And as we think forward about what's going on in the energy sector and in other sectors, ultimately plastics, grain, we see that continuing to increase. And as we look forward and contemplate how global trade flows may adjust from an export perspective and all of what kind of the Canadian government is contemplating, we can see Rupert playing a bigger and bigger role in that as we go forward. We watch our capacity very, very closely. And I'm satisfied right now that we have the capacity in that line. The pinch point was the Edson sub, and Pat's taking care of that. As I said, we've got 7 more trains capacity by the end of this year than we did in this year. So we're well positioned for the capacity as we go forward. We're finishing off the Zanardi Bridge in Prince Rupert, which is going to give us more capacity in the local area. So we are positioned to respond to the growth, both in the immediate and the longer term at Rupert right now.

Maybe I could just add a little bit, Tracy, on that. In terms of the intermodal as well, I would reiterate we have a very competitive service offering through Prince Rupert. And you have to remember with intermodal, it's not just the rail, it's the end-to-end supply chain. And so we've seen great growth with Gemini, because of our service consistency and some of the other products that we're doing at Prince Rupert, Tracy mentioned the grain and the plastics. This actually helps us load more containers to go export. And so it's really an ecosystem of competitiveness that we have at Prince Rupert that we think is going to continue to make us successful there. Thanks for the question.

Your next question comes from the line of Brandon Oglenski with Barclays.

I'm not sure if this is for Ghislain or Pat, but it seems like CN might be more mature in the network now. Does that change how you approach operational planning for next year, particularly regarding headcount and cost management? I realize this is a bit of an open-ended question, but I appreciate your insights.

I'll take that. As we assess the network, we believe we have made the right investments over the last few years. We've invested in the Edson sub to unlock capacity west of Edmonton, along with the NTCF and CN funding for landing capacity at West Coast ports. I am very confident in the condition of the network. We have invested in two projects on the EJ&E around Chicago, enhancing our competitive advantage in that area by reducing crew starts in the corridor between Chicago and Western Canada. Additionally, we have quickly adapted to the impact of the duty and rest period rules and made necessary adjustments. We have been responsive in adjusting our workforce during periods of softened volumes while continuing to hire in the most challenging locations. Overall, I am optimistic about our resources and our capacity to grow and optimize our network. Ghislain, do you have any comments?

Yes, I would say as well, it's productivity everywhere, Brandon. It's not only productivity from the operating side, but it's productivity at the headquarters side as well. So we're looking at everything. We're looking at automation in some of the back-office systems that we have. So it's everywhere. We're turning every rock, and this team is focused, and we know we have a weak volume environment. So we need to address costs everywhere, and that's what we're doing.

Your next question comes from the line of Stephanie Moore with Jefferies.

I was hoping you could talk a little bit about some of the cost actions that you guys have undertaken and your thoughts in terms of those going into the fourth quarter and then also into 2026, the sustainability of those.

Thank you, Stephanie. Over the past 12 weeks, we've intensified our efforts in response to the macroeconomic environment, but we've been focused on improving productivity across the organization for the last three years. This focus has made us resilient as we've faced different economic and operating conditions. Recently, Pat and his team have been enhancing our response to incoming volumes while increasing productivity through various means, such as train starts, crew management, and ongoing capital productivity initiatives. Additionally, in head office management, we've reviewed our organization to identify consolidation opportunities. We are currently in the middle of this program, which aims to tighten our operations. This process is a part of our business approach in railroading, ensuring we efficiently respond to incoming challenges. A significant aspect of our work includes adjustments in our contractor workforce, primarily assessed by Pat in engineering, but extending beyond that scope. We've managed to cut around $120 million in contractor expenses year-to-date while investing $20 million in our employee base. These improvements are representative of incremental progress throughout the organization, and we expect to see this trend continue month after month.

Your next question comes from the line of Tom Wadewitz with UBS.

I think historically, if you go back, kind of CN was the original OR leader and great carload franchise. I think the kind of biggest miss versus the growth targets of a couple of years ago has really been on the intermodal side. And so I wonder if there's more of the opportunity is Western Bulk, maybe carload, do you get back to kind of an algorithm that produces a stronger OR? Is that a reasonable way to think about it, just looking at carload or bulk as just being naturally stronger OR business. So kind of, I guess, a broader thought, but you think we can see OR improvement and maybe go from low 60s to high 50s, something like that, if your mix of growth is a bit different with more carload and bulk?

Yes, we are very pleased with our merchandise portfolio, and it is a strong business. Currently, we are facing some challenges due to tariff impacts on forest products within our merchandise segment. However, there are significant growth opportunities for us in merchandise. For instance, we have potential in the energy sector, which Janet will discuss shortly. I believe intermodal will also be interesting to monitor. I have consistently thought that the ideal operating ratio for our company starts with a 5. At this moment, we are highly reliant on volume growth. We have taken the necessary steps regarding costs, and this focus will persist. We will continue to prioritize this area. Looking ahead to 2026, given the macroeconomic conditions, we plan to operate efficiently and maintain a lean structure. However, we will be ready to ramp up as volumes increase, whether they relate to intermodal international traffic or merchandise. Janet, would you like to add anything?

Look, I would just say, Tom, I want all our business to grow. Intermodal, merchandise bulk, everything. And so we're going to be pushing on all levers for growth. There's nothing I would like more than to load up the network and have Pat make some more investments or figure out how to run faster, smarter and better going forward. So mix is something you deal with. But from a proactive perspective, we're going to go out there and we're going to try and get every piece of business we can. In fact, the mantra for the sales team is every carload counts, and I use carload loosely there. That means intermodal units as well. So we're after everything. Thanks for the question.

Your next question comes from the line of Kevin Chiang with CIBC.

Congratulations to Janet and Pat on their roles. Perhaps this is a question for Ghislain. Considering a mid-teen capital expenditure intensity, how does that impact long-term return on invested capital, which appears to be stuck in the 13% to 14% range, as well as your increasing depreciation intensity due to capital spending? Is it reasonable to assume that this will eventually decrease? Additionally, could you summarize what this means for incremental operating leverage as volumes recover? Does the outlook improve with the adjustments related to lower capital expenditures?

Yes. Thanks, Kevin, for the question. As you know, ROIC is very, very dependent on earnings because your denominator is the entire asset base. And the ROIC has reduced in the last few years because earnings have been challenged a little bit. So as earnings come back, which they will, I mean, eventually, the economy will get stronger and we will be able to flex up, I think that you will see the ROIC improving. In terms of depreciation, you're right. We've had depreciation headwind year in, year out. I think that sizing up now our CapEx the way we are. And as Tracy said, we see this going forward, I think that, that will help on a year-over-year basis in terms of depreciation. Thanks for the question.

Our last question is going to come from the line of Benoit Poirier with Desjardins.

Congrats on the results and for Janet and Pat for the new roles. Tracy, you've been taking some action, putting in place a leaner and more nimble organization with a sense of urgency, as Janet discussed. Looking at the regions, you made some changes with Nicole in charge of Southern region, Brad in charge of Western region. So are you still looking to break down the network in three regions? And could you talk about what you expect from these new leaders?

Hello, Benoit. Yes, we are continuously reviewing our organization. As you know, I prioritize talent development highly, and the entire team shares this commitment. Nicole has had the chance to oversee the Western corridor for a couple of years, and we have asked her to examine the Southern region with a fresh perspective, where she will also encounter new opportunities. Brad is well-suited to take over the Western region. He knows it very well and has been developed in various areas beyond transportation and mechanical. We are confident he will excel in this role. Our focus is on providing our key leaders with new development opportunities and consistently bringing in fresh perspectives for different areas of our organization. Pat has been very deliberate about how he wants to structure this. Yes, we will maintain three regions, each with its own unique operations and opportunities. Every time a new leader is introduced, they are given the chance to look at it from a fresh angle. This approach will be integral to how we operate moving forward, with a strong emphasis on team development. I have a lot of confidence in our operational bench strength, which continues to grow stronger. So, go ahead, Christa.

This concludes the question-and-answer session. I would now like to turn the call back over to Tracy Robinson.

Thanks, Christa. Now just before we conclude here, I want to take the opportunity to thank the entire CN team for all your contributions, your focus and your resilience as a team, we have a plan. We're driving forward. We are in the markets, Janet, next to our customers, driving for every carload of freight. We're being proactive about positioning our costs and our capital for the environment that we're in, and we're increasing cash flow and returns. Now we know that we have an advantaged network that sits atop an incredible resource base that's well positioned in the future no matter how trade flows evolve, and we're committed to driving value through all cycles. Thanks for your time today, and we'll talk to you soon.

The conference call has now ended. Thank you for your participation. You may now disconnect.