(Audio Gap) I'll be your operator today. (Operator Instructions) At this time, I would now like to turn the call over to Jamie Lockwood, CN's Vice President of Investor Relations and Special Projects. Ladies and gentlemen, Mr. Lockwood.

Thank you, Christa. (Foreign Language) Welcome, everyone. Thank you for joining us for CN's First Quarter Financial and Operating Results Conference Call. Joining us today on the call 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. You can turn to Page 2 of the presentation, which includes our forward-looking statements and non-GAAP definitions for your reference. These forward-looking statements reflect our current information and educated assumptions and include estimates, goals and expectations about the future. These involve risks and uncertainties, and actual results may differ from what we expect. As a reminder, forward-looking statements are not guarantees and factors such as economic conditions, competition, fuel prices and regulatory changes could impact actual outcomes. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson.

Thank you, Jamie. (Foreign Language) Thanks, everyone, for joining our call. I'm pleased to walk you through our first quarter results. This was a solid quarter where we delivered on plan. This is reflective of our continued focus on execution and performance across the entirety of our operations. We're doing exactly what we said we would do at the outset of the year, and the results can be seen across the business. We're increasing our commercial intensity, and we saw volume growth in the first quarter. We're executing with urgency, and we're not done. As we look at the quarter, our performance is best understood through key commitments we laid out around execution, financial discipline and guidance. Now let me walk you through each of those. First, on execution, we committed to pulling every lever we have in the areas we control to deliver regardless of the macro backdrop. We have leaned into workforce productivity, asset utilization and operating efficiency, and the railway is running well. All of our key operating metrics improved year-over-year, and this has contributed to a structurally improved cost base. At the same time, we continue to intensify our commercial execution in this environment where every carload counts. The team is delivering by staying nimble, empowered and responsive, capitalizing on our strong service. Now second, we committed to strengthening free cash flow and returning excess capital to shareholders while maintaining a strong balance sheet. In the quarter, free cash flow increased by about $275 million. We repurchased 6 million shares and increased leverage to 2.7x. This reflects our confidence in the underlying earnings power of this business. Expect this focus to continue. And third, we committed to providing directional guidance tied closely to volume trends rather than precise targets. Now we're encouraged by the start of the year, and our view remains that earnings will grow above volumes on an annual basis. It's too early to change our outlook for the year. But if volumes come in stronger, we're confident we will deliver earnings leverage in the business. Now as we exit the first quarter, the business is positioned for better financial progression, not just as comparability becomes less demanding through the balance of the year, but in anticipation of the operational leverage that will come through as and when the volume environment improves. So let's turn to the quarter. We are pleased with how we started the year. I am proud of how the team is performing. It speaks to the strength of the network and to the quality of the operating model we've built. We're handling volumes more efficiently with fewer people and locomotives. And that matters because it positions us to convert growth more effectively and improve financial performance as the year unfolds. And from a commercial perspective, volume growth was led by grain, potash, natural gas liquids and intermodal. In fact, we set a new first quarter record for grain movements, and we continue to see our service reliability and commercial intensity creating opportunities for us in the marketplace. Janet will walk you through the key revenue puts and takes in a few minutes. Our productivity is a key focus for us, and we're hard at work pulling every lever. Our fast-track initiative, which Pat will speak to in a moment, is progressing as expected as this cross-functional review further drives network efficiency. Q1 was set to be the toughest year-over-year comparison of 2026, and the quarter came in largely as we expected. Now the benefits to EPS from our commercial and operational execution were impacted by a few factors that are not reflective of the underlying performance. Ghislain will provide details on those. In addition, fuel and FX had a combined $0.07 drag on the earnings in the quarter. The engine is running well, and you will increasingly see the benefits drop to the bottom line as the year progresses. The one area in which we're not satisfied in Q1 is safety. We have consistently improved our safety performance over the last number of years. However, in Q1, we fell short of our expectations. We remain fully committed to continue improving our safety outcome, and we're already seeing improvements in both accident and injury rates in April. Pat will speak to our safety performance in more detail. Now looking forward to the rest of the year, our priorities remain unchanged: disciplined execution, increased commercial intensity and continued focus on cash flow. Longer term, the opportunity in front of CN remains compelling. Our advantaged network, our extensive port access and the natural resource base uniquely positioned on our network provide us with an incredible opportunity to grow beyond what the broader economy alone can deliver. We remain bullish, especially on agriculture and energy with the potential for increased egress opportunities for Canadian energy to be positive for our NGL business and our frac sand franchise. We're seeing green shoots and potential in these sectors. Recent announcement around natural gas projects in Western Canada reinforce that view. The investments we've made position us very well to support our customers in both existing and new markets. And as we go forward, we'll remain disciplined, but our focus on execution is working. Q1 has delivered to plan through better service, productivity and asset utilization. We're sharper and faster and the organization is well positioned to deliver going forward for our customers, employees and shareholders. Over to you, Pat.

Thank you, Tracy. Once again, this team delivered another disciplined quarter in Q1, building on the consistency we've been driving across the network. That consistency matters because it allows us to handle volume efficiently, make better use of our resources and support better financial performance as the year unfolds. It's another proof point that the model is working and that this network has durable advantages. I feel very good about where we stand operationally and about the progress the team is making, and I want to thank the entire CN team. Turning to the next slide, let's look at some of the key operating measures. Compared to Q1 2025, we improved network fluidity through solid execution, driving car velocity up 6%, dwell down by 4% and train speed up 6%. We maintained good customer service with local service commitment up 1%. We ran longer and heavier trains by 2% and overall, we moved 3% more GTMs. While winter conditions were less severe overall, our performance reflects continuous improvements in the elements under our control, supported by sound decisions and deliberate investments we have made over the last few years. Capacity investments have structurally improved the resilience of our network, allowing for faster recovery from cold stretches. At the same time, our unique air car fleet enhances asset utilization by optimizing the size of our trains and redeploying locomotives in the right trains. The key point is the better operating performance and more consistent service are creating opportunities for Janet and her team to go win business. Janet will touch on some in a minute. The operations and commercial teams are tightly aligned. We jointly evaluate incremental opportunities and determine where it makes sense to pursue them. Looking ahead, we use forecasted volumes to anticipate our needs, including how many people, locomotives and railcars we require. This allows us to plan proactively and ensure everything operates efficiently across the network. What this process leads to, and you can see it on the next slide, is improved asset utilization. Looking at it year-over-year, our T&E productivity is up 12% and more importantly, T&E labor costs per GTM is down 7%. Our locomotive productivity is up 8% with locomotive availability remaining at 91%. Locomotive fuel productivity improved 3% with our best ever Q1 on record. These results and the ones of the last few quarters reinforce our ability to grow volumes without a proportional increase in cost, and they are not accidental. They reflect a predictable approach to operations and disciplined management of our people and assets. And we're still early in the journey with a clear line of sight to further efficiency and value creation. Our cross-functional reviews, fast track are helping us further improve both our operations and resourcing. This is a progression of our scheduled operating model, highly focused on matching demand with our existing assets, running lean and staying nimble. The resource management metrics we just discussed are early proof points of that work. We are approximately 1/3 of the way complete of the major terminals on our network and remain on track to complete the work through the summer. Finally, one area where we were not where we wanted to be in Q1 was safety. Safety performance in Q1 fell short of the high standards we set for ourselves and that demands our full attention. Accidents were up year-over-year. And while this comes in comparison to last year's exceptionally low levels, no incident or accident is acceptable. We take this very seriously and are actively addressing it. One important finding so far is that there is no single underlying cause driving this increase. Some incidents relate to wheels, some to track conditions and in one instance, a landslide impacted a train. We have taken targeted and concrete actions to ensure that the learnings from each of these incidents are fully understood and translated into safer outcomes in the quarters ahead. Taken together, this quarter reinforces my confidence that a scheduled operating model, disciplined execution and accountable leadership will continue to deliver strong, reliable and durable performance. With that, Janet, you're up.

Thanks, Pat, and good morning. Overall, Q1 finished on solid footing. Volumes were slightly ahead of our expectations, supported by strong execution across the network. Revenues were down 1% year-over-year. They were up 2% when adjusted for foreign exchange, and they were up 3% when adjusted for foreign exchange, fuel surcharge and the Canadian carbon tax. Revenue ton miles increased 3% and carloads increased 2%. Mix was a headwind that offset same-store price. Now on pricing, our strategy remains consistent: price for the value of our service, sell into our capacity and price ahead of our rail cost inflation. This reflects continued pricing discipline as we grow volume. Now as I've said before, in this environment, every carload counts, and the team is bringing it home. I am extremely pleased and proud of the team's agility and the tight alignment between operations and sales, which enabled us to seize new opportunities. We have converted about $100 million in revenues in Q1 from our boots on the ground pipeline. Our wins have been across commodity segments, including, for example, plastics, asphalt, fertilizers, aggregates, scrap steel and steel billets. Our service in Q1 also supported incremental volumes of international intermodal and potash as well as record shipments of Western Canadian grain. I'll briefly walk through how the performance showed up across the portfolio. We delivered an excellent quarter on grain. Canadian grain benefited from robust demand and strong service, including grain car cycle times that were 15% better than the prior year. We also benefited from the reduction of Chinese tariffs on canola. In the U.S., growth was driven by a strong soybean program following the agreement between the U.S. and China. Potash was above our expectations on resilient operational execution and aided by favorable year-over-year comparisons related to last year's terminal outage in Eastern Canada. In petroleum products, volumes increased across the portfolio. We delivered a 16% increase in NGL RTMs, driven by weather-related demand for propane, strong exports to Prince Rupert and our ability to capitalize on spot butane shipments. Refined products benefited from increased gas and diesel into the Greater Toronto area, including our first unit train into the Phase 2 expansion of the Toronto fuel terminal. Intermodal delivered a solid quarter, driven by the Gemini service at Prince Rupert and service-related gains in domestic. Results were more challenged in metals and minerals as reduced gas drilling in Western Canada impacted frac sand demand. Steel and aluminum continued to be affected by tariffs, but we were able to partly offset the impact with new long-haul shipments of steel intra-Canada and new moves of scrap steel. Q1 was the final quarter impacted by last year's closure of an iron ore facility. Forest products continues to face a difficult environment, driven by weak demand for lumber and the ongoing impact of tariffs and duties. Finally, coal volumes declined due to unfavorable market conditions for thermal exports. Turning to Slide 10 and looking ahead to the balance of the year, we remain appropriately cautious. Visibility is still limited this early in the year, and the geopolitical environment remains volatile. By segment, grain remains very constructive. We do expect that our record Q1 performance included some pull forward. We continue to be bullish on energy-related commodities and global energy disruptions are expected to drive sustained long-term demand for Canadian products. CN is extremely well positioned to serve this market. We have several projects and expansions that are scheduled to come online later this year, and we're very excited about our future prospects. Rising thermal coal prices driven by the Middle East conflict could support improved export demand for thermal coal. Year-over-year comps get tougher for international intermodal volumes in the second quarter, but should improve in the second half. Consumer demand bears close watching, but CN's service reliability remains a key differentiator. In automotive, near-term demand remains pressured, but we are encouraged by recent share gains that position us well for the back half of the year. For metals and minerals, we expect demand to continue to be bumpy. We have strong conviction in our frac sand franchise, and we will benefit from the new unit train receiving terminals that have come online in Northeast BC. More recently, we are also seeing higher demand for U.S. frac sand shipments. We are expecting increased intra-Canada and intra-U.S. steel moves along with higher shipments of scrap metal. Cross-border shipments of steel remain challenged. In forest products, it's difficult to foresee improvement in the near term given muted housing activity in addition to the dampening effects of tariffs and duties. So let me wrap up. Our strategy is consistent, stay close to our customers, grow volumes that fit our network and maintain our pricing discipline. CN is very well positioned to deliver strong incremental margins when the demand environment improves. Ghislain, over to you.

(Foreign Language) Starting on Slide 12, we began the year on solid footing. We delivered financial performance that was in line with plan through our continued focus on asset and labor productivity. First quarter reported diluted EPS was $1.87, up 1% from last year, while adjusted diluted EPS was $1.80, down 3% from last year or $1.83, 1% lower on an exchange-adjusted basis. These results reflect 2 notable adjustments: a $66 million pretax gain tied to the sale of our new market subdivision and a $17 million in adviser fees related to industry consolidation. There are also some year-over-year factors that are not reflective of the underlying performance. That includes a higher effective tax rate this quarter as well as last year's remeasurement of CN's investment in Iowa Northern. These factors negatively impacted year-over-year adjusted EPS by $0.06. And as Tracy mentioned, fuel and FX were an additional $0.07 of drag in the quarter. As Tracy said, the story of the quarter is free cash flow. We generated around $900 million in Q1, approximately $275 million or 44% higher than last year. This was mainly driven by lower capital expenditures, the proceeds from the disposal of our new market subdivision and higher net cash from operating activities. As we outlined in January, we have taken advantage of our strong free cash flow generation to increase returns back to shareholders. Across our current share repurchase program, which runs from February 1, 2026, to January 31, 2027, and the previous NCIB, we repurchased a total of 6 million shares for $870 million in the first 3 months of the year. Our leverage ratio increased to around 2.7x at the end of the first quarter. Given the current macroeconomic environment, we expect the leverage ratio to stay at this level through 2026 before coming back to 2.5x in 2027. Turning to Slide 13. Let me walk you through a few key operating expense categories for the quarter on an exchange-adjusted basis. Labor was 1% higher, driven by general wage increases, which were largely offset by 4% lower headcount and strong labor productivity. Fuel expense was more than $10 million lower than in the same period last year with the positive impact of the removal of the carbon tax in Canada, partly offset by higher fuel prices and record fuel efficiency essentially offsetting the impact of higher volumes. We are monitoring fuel prices very closely. With the sharp increase in oil prices in March, fuel negatively impacted EPS by $0.04 in the quarter and had an 80 basis point unfavorable impact to the operating ratio. Purchased services and material was up 9%, driven by higher snow removal costs as a result of harsh winter storms across much of the network, advisory costs and higher material trucking and transload costs. Other expenses were up approximately $50 million with over $30 million of that driven by higher-than-expected incident costs. Moving to Slide 15. Let me provide some visibility to 2026. We are tightly managing costs in this uncertain geopolitical and macroeconomic environment, controlling what we can control. If anything, the uncertainty has heightened since our last January call. We have updated our view of WTI from USD 60 to USD 70 per barrel to $80 to $110, with a wider range driven by higher fuel volatility. We have also updated our FX assumption from $0.715 to the current spot rate of $0.73 for the balance of the year. Our effective tax rate continues to be in the range of 25% to 26%. With that context, we are maintaining our directional guidance of flattish volumes with earnings slightly exceeding volume growth for 2026. So in conclusion, let me reiterate a few points. We continue to deliver strong operating and financial performance. We have a renewed commercial intensity. Our customers continue to benefit from our excellent service and strong operating performance. We are very pleased with our Q1 results, a solid start to the year and the footing to deliver on our guidance. Let me pass it back to Tracy.

Thank you. Christa, we will go to questions.

(Operator Instructions) The first question comes from Walter Spracklin with RBC Capital Markets.

I think you touched very nicely on the operating leverage, which was the key question here, Tracy. So maybe if I turn over to capacity, obviously, you saw some excellent improvement in your Edson Subdivision, removing that as a pretty elevated pinch point. It also gave you some service opportunities. I'm curious, you've got two more meaningful projects going on Zanardi Bridge and Glen Valley Abrahamson projects. When those come out, are those causing a big pinch point right now? And really my question is when those are completed in 2027, are you expecting to see a nice pickup in service and fluidity there? And as a result of that, also, would you see another step down in CapEx in 2027 when those are completed? Or do you have other projects that would likely fill in that CapEx envelope?

Walter, on the operating side, I am very happy with the operating leverage that this team is producing. You saw us do it through last year. We had a great quarter in the fourth quarter, and this is a continuation of that; the railroad is running extremely well. To your question, we, as you know, came to not the end, but the end of a piece of our big investment program in the middle of last year. Edson sub now is, what, two-thirds double-tracked. We have seven incremental trainloads of capacity there that we can sell into. And what remains, as you say, is the Zanardi Bridge in Rupert and a siding just outside of Vancouver. As we complete those at the end of 2027, the main benefit will be in Rupert: it will facilitate the ongoing volume expansion that Janet is driving into Rupert. It will be critical for us in that last mile at Rupert, and it will allow capacity and volume growth. In Vancouver, this investment will continue to allow us to get the next increment of both volume and productivity or velocity through Vancouver. Vancouver is very tight, as you know, and I think you have probably seen this through your tours of Vancouver. So those are both no-regret projects, and we're looking forward to their completion at the end of 2027. As we go from there, Janet and the team are out selling pretty hard and looking to put trains into that capacity. As we move into that, we'll see where we are from a capacity expansion perspective. We're always looking across the network to see where our pinch points are. I'm not expecting to find the next ones from a network perspective in the next few years. But we will be spending a little on technology; there are some great opportunities there for the next generation of productivity. As we go forward, we'll see what that holds, but I'm not expecting a dramatic increase or decrease in capital expenditures. Pat, did you want to add any comments on that just before we go on?

I would add, Walter, as you saw on the tour, first of all, no, neither of those points where we are investing neither Zanardi nor Glen Valley Abrahamson are currently a pinch point. And I would say what you can see in our performance is the work we have done on the Edson sub has had a significant impact, positive impact on train speed and velocity in the Western region. The work we did around the Thornton Yard to get around the yard and kind of hit that and thread the needle of that gauntlet to landing at the customers. Those coupled together have really helped that throughput through Vancouver. Again, neither of these are creating a pinch point currently. But as we see volumes uptick and really the value of Glen Valley Abrahamson is as you get out of the DRZ with CPKC, it is the last section of single track, and we will fill in that, create that double track, and we will be able to get all of those trains closer to navigating those final few miles as we land at the customer. So very excited about those projects. But no, not creating a pinch point and what we've already seen with the Edson sub and the uptick in speed, we would expect to see the same impact from these projects.

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

Janet, I was hoping that you could elaborate a little bit more on some of the short-term opportunities from higher energy prices. But more importantly, if we are in a higher for longer energy price environment, what kind of growth opportunities might that open up?

Cherilyn, I'm going to start off by just giving Janet and her team a little bit of kudos. Janet has unleashed her sales force into the marketplace, and they're doing a great job of capitalizing on what is some really strong service; you see that in share and in some of the opportunities that Janet will talk to you about. But they're also creating their own opportunities. That presence in front of our customers, the boots on the ground, you heard talk about what we're accomplishing on that is creating opportunities. Janet, do you want to...

Yes, happy to. Thanks for the question, Cherilyn. So we are seeing some near-term benefit across a number of segments related to the higher prices. So we've seen an increase in the NGLs getting pushed into Prince Rupert and the comments that we just made on the capacity are really important because we see a long-term play at Prince Rupert for continued NGL export growth. We've got a little bit more crude that's moving. We've got some customers that have brought on some additional sets. We've got strength in refined products. We have maybe a little bit more at the margin in terms of domestic potash as nitrogen-based fertilizers have increased because of the Middle East disruption, we see a little bit more farmers switching to more potash applications. So we'll see how that plays out. It's also been positive at the margin in terms of sulfur. That's another segment where Canada is just so well positioned to meet the changing global demand. Now I don't have a crystal ball, so I don't know how long higher prices are going to last and what the broader impact may be on the macro. And I think that's why we're remaining appropriately cautious. But near term, we've actually seen some nice segments with some benefits that we're certainly capitalizing on. Thanks for the question.

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

So it sounds like Tracy had a bunch of safety call-outs, not used to hearing that much from CN. But you've averaged about a 330 basis point improvement in the operating ratio from first quarter to second quarter last few years. So maybe given Janet's thoughts on the volumes, some tougher comps coming up on some of the volumes, anything that would let you to underperform or outperform that historical average? I don't know if there's accident carryforward costs or anything else that you want to walk through, but just give us an idea of kind of what we can expect to go forward on the cost side.

Ken, let me say this, and then I'll ask Ghislain to comment on the numbers. The engine and the underlying business model performed really well in Q1. We knew it would be one of the toughest quarters on a year-over-year earnings comparison because of some specific prior-year benefits and the incidents Pat mentioned. Here's what makes me optimistic as we look to Q2 and beyond: network fluidity, asset and labor productivity, and commercial execution all improved and continue to improve. So the underlying engine is performing well. In Q2, the year-over-year comparison is less of an issue, and for the remainder of the year we expect an acceleration in driving bottom-line results. Ghislain, do you want to comment on Q2?

Yes. Thanks, Tracy. Ken, you're right. On a seasonality basis, the operating ratio in Q2 is generally better than Q1. The dark cloud I see right now in Q2 is fuel. If fuel prices remain at current levels for the rest of the quarter, that could be a hit on the operating ratio of more than 200 basis points and a small hit to EPS of a couple of pennies. That's the cloud I see, and obviously we don't control fuel prices. That's a timing issue, because if fuel stays the same for the rest of the year it would become a tailwind in the second half. We'll see, but that's the dark cloud. From an operational standpoint, however, we're quite confident in how we'll deliver in Q2. Thanks for the question.

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

So, four months into the year and your RTMs are up about 3%, which is a pretty good outcome from a growth perspective. It sounds like you are more positive on the volume picture today; correct me if I'm wrong. Is there still a path to improve the operating ratio this year if we continue to see this volume trajectory? Looking at your four-week moving average in volume, you are probably tracking in that same range for the rest of this quarter. My second question is on commercial intensity. It was mentioned several times—maybe Janet can give us a little insight into how exactly you have changed, or are changing, your approach to commercial strategy for CN?

So I'll start with that, Fadi. We are really happy with how the year started. But as we sit here, we have officially 1 quarter. We're coming up to 4 months, as you know, behind us. Our expectations of our commercial team remain very high. And I think that Janet and the team are performing to that out in the marketplace. I'll let her make some comments in a moment. The prudent thing for us to do right now is just given the extent of uncertainty out there, just to see how the next few months unfold before we take a different view. I'll tell you this, however, Pat has this operation running really well. And it's more productive as every quarter passes. We've talked about Janet and the team being focused on securing every available opportunity. But that, I think, on the back of service, and that is on volume and on price. But the entire organization is leaning into driving value to the bottom line. And so we are leaning in very hard. We are being cautious given how much uncertainty is out there. We've experienced this. Things can change pretty quickly. We'll be ready for that. We're placing a high value on being nimble. Janet, do you want to make some comments on what you're doing differently?

Yes, I'm happy to. Thanks for the question, Fadi. So I think commercial intensity, what we really mean by that is speed of decision-making. And so what we've done is we've tried to really drive down decision-making to the front line so that when the account manager is sitting across the table from the customer, they feel empowered to figure out what that customer needs, how it fits on our network, how we price it appropriately and how we service it appropriately. And so that has been extremely helpful. We have implemented a new sales incentive plan for our regional sales team that is really focused on getting hunters out there in the marketplace and the boots on the ground and the knocking on the doors. We've also, I think there's a couple of things I want to point to in terms of the quarter. We had some really big benefits from the strong quality of our service, okay? So we had big wins, and those are some of the things that we talked about in the context of grain, and I'm going to take a little minute to brag on grain. My team sent me out this morning to let me know that April, even though we still have 2 days left, will be another record month for Canadian grain shipments. Seven out of the last eight months have been all-time records. January was our second best. So that's a strong performance. I gotta credit Pat and his team. I mentioned it in my formal remarks that the grain car cycle times were 15% better than last year. Now the crop is a crop. So do I think that some of this is maybe pulled forward? Possibly. But we also had some resolution around the Chinese tariffs on canola, and that's helping. And I gotta say, when your service performs that well, you get more business on your railroad. We had a little bit of incremental business as well that was service related in the context of potash and even some international intermodal up at Prince Rupert. So all of that performed very well. Some of it was related to that service benefit in Q1. Now where I'm really, really pleased is just those base hits. And it's the team out there, every carload counts, getting a hit, getting a hit here and there. I gave you, I think, six examples in my remarks. I had a list of about 12 and then the IR team told me that was maybe too long of a list. But it is broad-based. I think that's the key message I want you to take away: the team is out there getting wins. We really understand well the capacity that we have in our network. And so we're being really smart about selling into that capacity, getting those five, ten extra cars on the merchandise trains. So we're moving business at a low incremental cost. And even on the intermodal side, we've been really strategic about filling out the trains that are moving on non-peak days. So we know where we have capacity and we can sell into that, both in intermodal and carload at a low cost. So Fadi, the team is super energized. Like Tracy said, we've been unleashed, and we're out there doing everything that we can, and we want to make sure that maybe Pat will give you some capacity pinch points in the future. So with that, I think we should address the OR part of Fadi's question.

I think OR follows volume. When you watch what we are seeing on the productivity side, there's no barriers there. And really, as you all know, OR is an outcome of some volume growth and some tight management of costs and a little pricing action. So I think we'll see it follow.

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

Ghislain, do you have any updated view on the full year EPS impact from fuel and FX based on your revised assumptions? And I just really wanted to ask one question from Pat and team on your capacity, I guess. I mean, do you need to relook at your capacity investments and CapEx as these new opportunities that Janet was talking about, they come to fruition over the next few years?

Yes. Thanks, Konark. So on fuel, as we said in my opening remarks, there was a headwind of about $0.04, or 80 basis points, negative to OR in Q1. In Q2, if fuel prices remain where they are, it would be a headwind of a couple of pennies on EPS and an OR impact of over 200 basis points negative. In the second half of the year, if prices stay where they are, it will be a tailwind of about $0.15. So when you put that all together, it could be a tailwind of about $0.10 to EPS, but it would be negative to OR by about 20 basis points because fuel surcharge and expenses are added at 100% to OR. So even if it's a tailwind on EPS, it could be a headwind on OR. That's the impact. Fuel is extremely volatile. A couple of days ago, WTI was in the $90 range; today it's up over $100. This is why, in the guidance we maintain, we're not assuming that second-half tailwind. We're being conservative because we don't know where it's going to go, so we're assuming the price would go back to what we assumed in the plan. I hope that answers your question, Konark.

Okay. Pat, comments on the capacity.

Yes. I would say, Janet, I certainly hope that capacity is challenged over the next few years because that's where railroaders demonstrate their greatness — when you are up against capacity, you show just how well you can handle that volume. But let me say this: the heavy investment cycle we've had in the last few years has significantly improved our capacity in the West. You can see it in the metrics, the positive uptick in speed. We are poised for that growth and ready for it. We have the projects we've outlined, both into Vancouver and Prince Rupert, that we will complete over the next couple of years. We're ready for the growth and we want to see it come on.

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

I guess we're about 1/3 of the way through the year. RTMs are still positive. I know you're talking about flattish for the full year. So maybe, Janet, if you could give us a little bit of perspective on how you think the shape of the rest of the year plays out? I guess there's maybe sounds like there's maybe a little bit of grain that was pulled forward into this really strong performance we've seen over the last couple of months. So maybe that's one area. I know there obviously is some trade and other dynamics playing out. And then sort of along with that, I guess, as we think about the moving parts in yields or cents per RTM, obviously, negative with some obvious headwinds in the first quarter. How do we think that plays? Because obviously, that's going to be very key in terms of getting that revenue growth up and that operating leverage dropping through. So just some thoughts on volume and yield going forward.

Thanks, Chris, for the question. So there are a lot of moving pieces here. And we kind of give you the art and science of the chart in the slides. What I would say is when I look at Q2 and I look at the half 2, there are a couple of headwinds that we're watching in the second quarter. So we have potash, for example, where in Q1, we had a bit of an easier year-over-year comp because we had a terminal in the East Coast that was shut down in the first quarter. They're going to take a similar shutdown, but this time, it's in the second quarter. So I'm mindful of that. The frac sand volumes were weak to start the year, which is unusual, but the natural gas prices in Canada had been low, and there was a slower ramp-up than I think we thought for the egress of LNG and of the West Coast that kind of impacted drilling. What I'm seeing more recently is actually an uptick in frac sand volumes in the U.S. We've significantly increased the number of trains that we're moving on the U.S. side into the Marcellus Shale region, likely another benefit related to the Middle East. As I mentioned, grain has been strong, but I feel like that's pulled forward. What I'm telling you is we just don't have a whole lot of visibility on the second half. You called out trade, and Tracy may want to make some comments on that. If you can give me a high confidence level about how long the Middle East situation is going to last and how long oil prices are going to be high, I might be able to give you a better sense of volume. That's where we're still kind of being mindful of that macro environment. But I'm pleased, really pleased with the way the volumes have come in so far. And like I said, some of it's these big wins in Q1 and a lot of it's these base hits. Q2 may be a little bit more challenged. I'll call out another segment, international intermodal, where remember last year, we had a tougher winter. And so we had some ground count to work through in the second quarter. And then we had pull forward of the tariffs. We actually had record shipments in the second quarter last year to Toronto. So that will be another segment where the year-over-year comp is a little bit tougher. And then, of course, we have in Q2 still the higher tariffs hitting our metals and minerals segment. Those tariffs were applied last year at the beginning of June. And so I've still got to work through a little bit of that noise level. I am encouraged, again, cautiously optimistic around aluminum coming back into the U.S. We've seen some shifts there where it was going offshore and some of those shipments into the U.S. have resumed again. So it's a lot of moving pieces. I've been in this business 30 years. I don't think I've ever seen so many moving pieces. But Tracy, maybe you want to comment on the trade.

Yes. I would say, Chris, as we put our plan together for this year, it's impossible to predict where the whole discussions on the USMCA or the trade flows, even on the broader tariffs outlook will land. So we've assumed and continue to assume as we look forward that nothing will change on that front because it's the only thing we can assume. But I would tell you this, over the last year, in conversations with the administrations on both sides of the United States and Canada, it is clear to me that in both administrations, this agreement is important and that a constructive path forward would be positive for all. And you can see some of the jockeying in the press as we go forward. But I think that although the time line isn't yet clear, those conversations will take place. And we're going to remain close both to the process and what's going on as well as to our customers as they respond and make or adjust their plans. I know Janet is sitting next to them on all of that. So as we go forward, it is one of the things that could have a positive outcome, could have a more problematic outcome, but we'll be ready to manage it. Thanks, Chris.

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

So Janet, I think last year, you called out about $350 million of revenue hit from tariffs. I'm just wondering if there's a way you could help us think about what that tariff impact is going to be on a '26 basis year-over-year? Is it getting better? Is it getting worse? And then in the metal side, this offer to the U.S. administration has made to exchange tariff relief for commitments to move production. If you could comment at all on how that's resonating with customer base and kind of what that could mean going forward, I'd appreciate it.

So I think on the actual financial impact of the tariffs, as I mentioned, we're coming into the second quarter, and after the second quarter we'll be lapping the worst of the tariffs. So you should think about it in that context. I would also say that I'm particularly pleased with the way the commercial team has worked so closely with our customers to mitigate the impacts and to find new trade flows. For example, we found new business moving steel within Canada, and we've got more scrap business moving within the U.S. We're finding the way; water finds its way. The team has been able to work with customers to help them mitigate a lot of that. So I would say the tariff impact from that sense is lessening because we're figuring out how to work around it, how to find new markets, and how to do different things. In the context of the latest commentary around trade negotiations and the trade-off of tariff relief and production, it's a bit early to comment on that. I think we'll take more of a wait-and-see approach. Thanks for the question.

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

Obviously, we'll have the updated merger application from UP and NS tomorrow. So maybe Tracy, you can give us a little bit of thoughts and maybe some background of the things you've been posting on your website to kind of call out some of the analysis and some issues that you found with that. Do you think that's going to get more or less resolved here when we get an updated document with perhaps some new information? And maybe just secondly, what are the key things you're looking at when we get that updated document tomorrow as the review really starts to kick off with a fresh start, I would assume, with a bunch of new documents and information. So any thoughts there would be helpful.

Yes, Brian, it's an interesting topic, isn't it? We are eager to see the application when it comes out tomorrow. And I think Jamie recently confirmed that it would be tomorrow. Our position on the concept of the merger hasn't really changed. We believe strongly in competition. And the merger proposal to be accepted needs to demonstrate, as you know, it's in the public interest and that it enhances rail competition. Now it's a high bar, granted it's as yet undefined, but it's a pretty high bar. And the first application, in our view, fell really far short of demonstrating that the merger would achieve this. And so it also had, and this is what we were pointing out in our submissions, a number of issues in the data and the approach used in the analysis, not in the model that they use, but just in the quality of the data, which can impact things like the sufficiency of the operating plan and the environmental assessment, those types of things. So we're looking forward to seeing the revised application. Our interest is to make sure that this is fact-based, high-quality facts and that it is a rigorous review. We do believe that remedies will be required and considerable remedies. But we also believe that if this is to go forward, there's a meaningful opportunity to use our network in a manner that would introduce further competition, benefit the global economy, our customers and our business. So we'll be watching this very closely. I think our guys have a big weekend ahead of them as they get the merger and go through it and look for what adjustments have been made. This is the most consequential thing that's happened in our industry in the last 20 years, and it's something that we're paying very close attention to and will be actively engaged in. Looking forward to seeing what it holds. Thanks, Brian.

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

Maybe on that point, Tracy, regarding remedies: do you think there's a path to negotiated remedies, or is this about waiting for the STB to prescribe them? Any thoughts or color there? And Janet, you keep saying every carload counts while also emphasizing pricing discipline. How do you balance wanting incremental volume with being price disciplined? While operating ratio follows volume, I would think it follows price even more. Thoughts on those two things?

Okay. Scott, thanks. I'll start and then Janet, you can take the second half of the question. Listen, I think we've got a long path to go; a negotiated outcome requires two interested parties and two parties that are willing to negotiate. And so far, I don't think that has happened, but we'll see how that unfolds. It is a very long put to imagine the concessions or the remedies that would have to be in place in order to have this merger application reach the hurdle that we believe is contained in the new rule. So with that, I have full confidence in the STB and the rigor of their assessment. And I do think that there's going to be lots that come out of that part of the process as well. I'll leave it at that, and we'll see what comes out in the application tomorrow. Janet?

Thanks for the question, Scott. So for me, what counts the most is contribution dollars. And there's a way to get contribution dollars from pricing, and there's a way to get it from volume. And what I'm asking my team is to use both levers smartly, strategically and get it from both so that we grow contribution, and that's what will help OR. Thanks for the question.

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

Tracy, just a follow-up on your initial thoughts on USMCA. Can you help us bracket what the bull case and the bear case here might be to your understanding kind of when you think about the potential kind of opportunities here, what kind of volume growth are you trying to size for and that the network can carry? At the same time, what are the potential kind of negative outcomes here? And how quickly can you adjust for that?

That's a big question. As we've gone through all of the analysis on what can happen on this front over the last year, I would tell you there's a very wide range. But what we've also come to understand is how important the trade between the three countries involved in the USMCA is to each of those countries. And as we increasingly get into a world where the geopolitics are more uncertain and tensions are higher, I think that just reinforces the importance of what we can do as North America. Having said that, there are lots of discussions ahead before we arrive at what the actual outcome is going to be. We are spending a lot of time. I spend a lot of time with the administration. Janet spends a lot of time with our customers. We're deep in what the options are. The government in Canada, of course, is very focused not only on the USMCA, but on establishing or increasing global trade — diversifying into more global trade while not reducing North American trade. We are really well and uniquely positioned to capitalize on that given where our network is across North America, sitting on top of natural resources that the world and North America needs. And so we're involved in a lot of discussions around the capacity at Rupert, the capacity of Vancouver, in Montreal, in Halifax and beyond as well as in the Gulf Coast. That's very encouraging to us. As we think about the impact of what's going on in the Middle East, the whole question around the importance of energy and the sources of energy globally has intensified across the globe. Over the longer term, as Janet says, that presents significant opportunities for us. So I think that the question around the immediate review and renewal of the USMCA is important. I think on a broader basis, what's happening across the globe that will drive trade patterns is even more important. There is without a doubt some risk there, but there is also, I would say, significant opportunity, and we're excited about that. What is going to be a premium through all of this is our ability to be nimble, to be close to our customers, and to be able to respond. That's why Pat is so focused on the fluidity and the velocity of the operation, because we need to be unlocking our pinch points so that we have capacity no matter where our customers need to adjust. We've made that a priority for the last few years, and we're capitalizing on that now. So we're excited as we look forward.

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

I wanted to ask, probably for Ghislain, two questions on the cost side. First, casualty and other expenses were pretty elevated in the first quarter. I know there's volatility related to weather, accidents and similar events. How should we think about that line going forward? Is that the run rate we should expect to continue, or is that an unusual spike that will come down, recognizing seasonality? Second, regarding costs, there was commentary about terminal work: one-third is done now and the remaining two-thirds will be completed over the summer. How should we think about the potential cost benefit from that? Is it a modest ongoing improvement of $5 million to $10 million, or could it have a bigger impact?

Tom, thanks for the question. I missed the first part of your question. Can you repeat the first part of your question, please?

Yes, on casualty and casualty costs in the quarter in 1Q is elevated. So how do we think about that line going forward?

As you know, I called out in the prepared remarks that incident costs were higher by over $30 million. The overall variance is over $50 million. In there, there's always, and there's also some IT costs as we continue to migrate into cloud computing. So those are the big variances. As we move forward, as you heard Pat, I'll transfer it to him so he can talk about fast tracking. We're focused on safety and on our incident costs. I'm hopeful and very confident that these costs will come down going forward. Typically, from a seasonality standpoint, Q1 is always a bit tougher on safety because of the snow and the ice and so on. But I would assume that this will come down going forward in Q2 and the rest of the year. Pat, I'll turn it over to you for fast tracking.

Let me start by addressing the accident cost and say this: Safety is our number one priority. It is the foundation on which we build our entire operation, and I want to make that clear. I was raised in this business over the past three-plus decades to believe, and to lead my team from the front, on the premise that all incidents and accidents can and must be eliminated. So let me say that first and foremost. Our safety-critical maintenance remains fully funded. We're fully resourced from a people perspective, and in fact we continue to in-source more of our capital work with CN people. Now, as we transition over to Fast Track, I have very high expectations for this project and the team is delivering. We've already captured $40 million in run-rate savings, and we're about one-third complete. As with any project, we started with the largest terminals first. The upside and the savings from this initiative are coming from better and higher terminal productivity, lower dwell within the terminals, and frankly just all-around tighter operating discipline. While we do this work, we also evaluate all of our facilities and our rubber-tire fleet to drive further utilization and cost improvements. As we continue to roll through the remaining sites, we see a clear path to unleashing more savings and better service reliability. I am very excited about Fast Track, and we are delivering with this initiative.

We have time for one more question, and that question comes from Benoit Poirier with Desjardins.

My question is for Janet. You've been successful with $100 million of revenue conversion this quarter. Could you talk maybe about your bidding pipeline? What do you foresee this year and whether you see a pickup in intermodal discussion given the fuel dynamics and tighter truck market? I know it's a much longer length of haul at CN versus some of your U.S. peers, but just curious to get your perspective on this.

Benoit, thank you for the question. So a couple of things. On the visibility around this kind of boots on the ground growth pipeline, this is a dynamic list, okay? I get updated every week. We look at it. I've got almost 200 initiatives at the moment that are sitting on that list. And I have good line of sight on about $100 million again for next quarter. As I said, the second half, well, we'll see when we get there. In terms of truck pricing, you're right, we are a little less exposed in our Canadian franchise from a trucking perspective. We have very long lengths of haul in our domestic intermodal business, probably upwards of 1,600 miles. That being said, we are seeing the capacity tighten in truck markets, both in the U.S. and in Canada, and that is supportive of pricing. So we're pleased to see that. Thanks for the question.

So let me just make a couple of comments as we close today. We are very happy with the quarter that we just delivered. We are delivering on plan. I want to thank every member of this team for continuing to lean in. Our railroad is running very well. We continue to get more productive. The commercial team is creating opportunities, capitalizing on strong customer service and our focus on free cash flow is generating results. So this engine is running well, and we are poised to capitalize on a stronger demand environment and some considerable operating leverage if and as the economy recovers. Thank you all for joining us today.

This concludes today's call. Thank you all for joining, and you may now disconnect.