Good afternoon. My name is Margo and I'm your conference operator for today. I'd like to welcome everyone to CPKC's Fourth Quarter and Full Year 2024 Conference Call. The slides for today's call can be found at investor.cpkcr.com. All lines are muted to minimize background noise. After the speakers' remarks, we will have a question and answer session. Now, I would like to turn it over to Chris de Bruyn, Vice President of Capital Markets, to start the conference call.

Thank you, Margo. Good afternoon, everyone, and thank you for joining us today. Before we begin, I want to remind you this presentation contains forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described on Slide 2 and in the earnings press release filed with Canadian and US regulators. This presentation also contains non-GAAP measures outlined on Slide 3. Please note, in addition to our regular quarterly financials, there's supplemental Q4 and full-year combined revenue and operating performance data available at investor.cpkcr.com. With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, our Executive Vice President and Chief Financial Officer; John Brooks, our Executive Vice President and Chief Marketing Officer; and Mark Redd, our Executive Vice President and Chief Operating Officer. The formal remarks will be followed by a Q&A. In the interest of time, we appreciate if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Okay. Thanks, Chris, and thanks everyone for joining us this afternoon to review our fourth quarter and full year results as well as what our views are and what we see as an exciting year ahead in 2025. As always, I want to start by thanking the 20,000 strong world-class railroaders we call our CPKC family for their efforts to produce these results over the course of what was a historic first year as a combined company. And I can tell you as a leader, it remains my honor to represent these results that we're going to cover on behalf of the entire CPKC family. So, for the quarter, the team delivered revenues of $3.9 billion that was up 3% and volume growth of 2% in the quarter, an operating ratio of 57.1, which was 160 basis points improvement, core EPS of $1.29, up 9% versus last year. For the full year, total revenues of $14.5 billion, which is up 5%, volume growth of 3%, an industry best, an operating ratio of 61.3, 70 basis-point improvement. Core EPS of $4.25, up 11% versus last year. And I can say all that despite a number of challenges, we delivered on the guidance that we set out at the start of the year, to produce double-digit earnings growth. And we did it safely. I can tell you, Mark will elaborate on the points, but I'm extremely proud that CPKC continues to improve on our personal injury frequency ratio and again this year, we lead the industry with the lowest train accident frequency. Looking at the year ahead, there's certainly no shortage of uncertainties that are out there from the macro to trade policies, but we're focused on controlling what we can control. From a guidance standpoint, with the opportunities that we have in front of us, opportunities that this network uniquely enables we expect to deliver another strong year of growth as outlined in the press release, in 2025, we expect to deliver mid-single-digit volume growth and earnings growth of 12% to 18%, which is in line with the multi-year guidance that we set out at our 2023 Investor Day. On the initiative side, we continue to invest in safety and service to support the growth in the fourth quarter. I'm extremely happy to say we completed the construction of the second span of the Laredo Bridge. Next week, I'm excited to go to Laredo to host an opening ceremony where we'll christen the Patrick J. Ottensmeyer International Rail Bridge. As many of you know, Pat's vision and leadership were instrumental, not only in this project, but also the creation of CPKC, we carry on his legacy in the work that we do every day at this company. That investment as well as others that we're making across our network will continue to support the growth that we're bringing into the network in a safe and efficient manner, growth that's uniquely enabled by this network, growth like MMX 180/181, again the fastest and most reliable single-line rail service from Chicago to Mexico in the industry. Connecting new origins and destinations across our ECP, MMC and Grain portfolios, and automotive utilizing our closed-loop service solution, which is creating tremendous value for our suppliers in CPKC. In fact, I'm very happy to share with the group that CPKC was just recently last week named GM Supplier of the Year for finished vehicles in 2024. Some would say, is that impactful? I would suggest, yes. I've been at this for 34 years. It has never occurred in any of my service in the industry. And just to order of magnitude, out of 20,000 suppliers, only 100 are picked on an annual basis. So that's a meaningful recognition from a voice of a customer that means a tremendous amount to our team and certainly illustrates the strategic value of strategic partnerships. Credit to the commercial team and the operating team that have marketed and executed this industry-changing solution delivering the service that's unparalleled in the industry. Again, the award is just an example of the many service benefits that our customers are enjoying from this new unique network. So in closing, I'm going to say short-term things are out there, certainly uncertainties from the macro to the trade policies. We've entered into 2025 with a tremendous amount of momentum that we fully expect to build on as we move throughout the year. The long-term fundamentals of the North American economy and trade between the three countries this network uniquely connects remain unchanged. CPKC's value proposition is as strong as it ever was. We're extremely proud of the results we produced in 2024 and we're excited about those that lie ahead of us in 2025 and beyond. So with that said, I'm going to turn it over to Mark. He'll elaborate a bit on the ops. John will bring some color to the markets and Nadeem will bring it back to me after he elaborates on the numbers. Over to you, Mark?

Yes, thank you, Keith, and good afternoon. I'm extremely proud of the performance the operating team delivered this quarter and also throughout 2024. I'd like to thank each one of them for their hard work and dedication in delivering best-in-class service to the customers and their unwavering commitment to safety. As I look at the results in the fourth quarter, we continued to drive year-over-year operating improvements. Just looking at train weight and length, both improved by 4%. Locomotive productivity improved by 1% while our fuel efficiency improved by 2%. These results speak to the efficiency of the network and they are worth highlighting given the impacts of the work stoppages we had at Port of Vancouver and also the winter weather we dealt with in the fourth quarter. Despite these challenges, we rebounded quickly and had a strong end to the year, while we continue to deal with weather across the parts of the network today, our resources are properly sized, and to meet demand and we are efficiently handling strong start of the volumes in this year. Looking at safety, our FRA personal injuries were 0.84, 26% year-over-year improvement for the quarter, and our FRA train accident frequency was 1.03%, which is a 5% improvement year-over-year. I'm very pleased to note that for the second year in a row, CPKC led the industry with the lowest FRA reportable train accident frequency among the Class 1s, building on the legacy of 17 years of consecutive for industry-leading for CP. And although we will never stop striving to do better, I'm proud of the team and the results. So turning to capital, in 2024, we made several key investments to drive capacity and efficiency. The engineering team is delivering efficient improvements by leveraging technology to help us more accurately plan maintenance and capital investments across the network. During the year, we in-serviced eight new sidings as part of our merger capital and commitment to the STB. We also invested in Mexico with new infrastructure targeted toward Mexico capacity and fluidity. These investments are paying off. As performance has been stable throughout the year, we are delivering strong service to our customers. Finally, I would share my enthusiasm as well, Keith, with the opening of the Patrick J. Ottensmeyer bridge. The bridge is more than doubling the capacity on what is already the safest and most reliable US-Mexican border crossing. The increased capacity is allowing my team to optimize border crosses and improve the efficiency at the border. Now looking at 2025, our plan is to continue to support safe and efficient sustainable growth through pinpointed efficiencies and capital investments across the network. We continue to make upgrades of the legacy KCS locomotive fleet, which will allow more assets to lead trains in Canada and improve our flexibility in directing our power north. We're also investing in new capacity, including merger sidings, merger CTC along with targeted investments in Mexico and Kansas City to improve fluidity in these key corridors. Our timing service these investments is aligned closely with our growth outlook, ensuring that our network performance and growth and our volume growth are lockstep. We also were taking delivery of 100 new Tier-4 locomotives this year that would support our growth, improved reliability and fuel efficiency. In closing, we are carrying positive momentum in 2025 our network is strong and resilient, poised to deliver mid-single-digit RTM growth, along with the efficient reliable service that our customers expect from CPKC. With that, I'll pass it over to John.

All right. Thank you, Mark, and good afternoon, everyone. The team overcame certainly several challenges this quarter including disruption at the Port of Vancouver, the weather impacts that Mark spoke to and an uncertain macro to deliver solid growth, strong pricing, and unique value to our customers. We closed 2024 out strong and 2025 is off to a good start. Our network is performing well and I feel good about the setup heading into this year and our ability to deliver mid-single-digit volume growth. Now looking at our Q4 results. This quarter, we delivered freight revenue growth of 3% and 2% increase in RTMs. Cents per RTM was up 1% with strong pricing continuing, partially offset by fuel and mix. Now taking a closer look at our fourth-quarter performance, I'll speak on an FX-adjusted basis. Starting with bulk, grain revenues and RTMs were up 11%, a record Q4 performance. Canadian grain volumes were up 18% with increased grain to Vancouver and Thunder Bay driven by the improved Canadian grain crop. We also saw higher volumes of Canadian grain move into Mexico as our network continues to deliver on these new synergies. Now looking forward, our comps for the first half of the year remain favorable in this area, that coupled with our regulated grain pricing of approximately 6.5% and continued synergies has us well-positioned for Canadian grain. US grain volumes grew 5% over the prior year. Our US grain franchise continues to benefit from a solid harvest, steady demand and growth in new lanes as we expand our market reach. In 2024, as an example, we moved over 130 trains from legacy KCP's grain franchise to markets south of Kansas City, most of which are completely new markets for these customers. In potash, revenues were down 4% on a 7% volume decline. Now despite solid potash demand in the quarter, our volumes were impacted by the strike and the challenging weather. We moved record levels of potash though in 2024. And with positive demand fundamentals and Canpotex fully committed to strong levels through Q1, we are well-positioned for another strong year of growth in 2025. And to finish out our bulk business, our coal revenue was down 3% on an 8% decline in volume. The decline was mainly driven by US coal volumes impacted by a specific customer outage, while the work stoppage and weather impacted our Canadian coal shipments. Now moving on to our merchandise franchise; energy, chemicals, and plastics grew 2% on 1% volume growth. We continue to deliver volume growth across multiple commodities in this area, fuel oils, LPGs, biofuels, driven from a variety of opportunities, self-help, and synergies. This growth though was partially offset by lower crude-by-rail volumes in the quarter. Now looking ahead to 2025, we see solid demand fundamentals coupled with continued wins in plastics, LPGs, and renewable diesels delivering another strong year in ECP. Forest products revenues were up 1% on a 5% increase in volumes. Now despite a soft base state demand environment, we are delivering unique synergy growth and extended length of haul in this space, including lumber shipments moving from Canada all the way down to Texas. We continue to work with our customers and supply-chain partners in this space to deliver unique service solutions that will position this business for accelerated growth as the housing market and broader macro improves. In the Metals, Minerals, and Consumer Products area, revenue was down 4% on a 5% volume decline. A softer demand environment, coupled with production challenges at a customer facility impacted our volumes in the quarter. These declines were partially offset with higher volumes of frac sand. Now similar to Forest Products, with our development of two new aggregate transload terminals and the start-up of Aluminum Dynamics new facilities on our network in Mississippi and Mexico, we are well-positioned in MMC to benefit from these strategic network developments along with further growth as the broader macro continues to improve. Moving to automotive, revenue was up 16% on 23% volume growth. Another record quarter and a record year in automotive. This team continues to raise the bar and I'm extremely pleased with our sustained differentiated performance in this space. Benefiting from our unique closed-loop service model that Keith spoke to and key network developments and investments such as our Dallas auto compound, growth and synergies are tracking well ahead of expectation with line-of-sight to future opportunities. In 2025, despite increasingly tougher compares, we expect our auto franchise to continue delivering steady growth as we benefit from new contracts and the ramp-up of market-share gains. On the intermodal side of the business, revenue was down 6% on 1% volume growth. Starting with domestic intermodal, volumes were up 4%, driven by growth in our refrigerated business, and our US Mexico MMX service. Looking to 2025, we have strong line-of-sight to continued growth in domestic as several opportunities start to take hold. Our business with Schneider and others on the MMX service accelerated to peak levels in Q4. And we expect continued growth in 2025 as we add our direct service between Mexico, Texas, and the Southeast US with CSX. Additionally, Americold's cold storage warehouse co-located in our yard in Kansas City will start ramping up midyear. This facility will serve as the anchor along with new CPKC rail-served co-developments now in Mexico and at the Port of St. John which Americold announced yesterday. This builds these projects build on our strategic collaboration with Americold as we further expand our reach of our unique rail-served temp-controlled supply chain. On the international intermodal front, volumes were down 1%, primarily due to the labor disruption at the Port of Vancouver. The decline was partially offset by growth from a new contract that continues to ramp up and higher volumes for the Port of St. John. Now looking to 2025, we see a lot of opportunity in this space from increased customer utilization of our CPKC ports and growth through our differentiated service offerings. So to close, we rebounded quickly after the work stoppage and weather impacts, our network is performing extremely well and we feel good about delivering mid-single-digit RTM growth in 2025. And while the macro remains uncertain, we are confident in our unique growth from synergies and self-help, along with our continued ability to achieve pricing that reflects the value of our servicing capacity. 2025 is going to be an exciting year and I look forward to sharing success in the coming quarters. With that, I'll pass it over to Nadeem.

Thank you, John, and good afternoon. I want to express my gratitude to the CPKC team for their exceptional efforts during our first full year as a combined company. Our skilled team has consistently delivered outstanding results. Now, as we review our fourth-quarter results, CPKC's reported operating ratio was 59.7%, and the core adjusted combined operating ratio improved to 57.1%, a 160 basis-point increase from the previous year. Diluted earnings per share stood at $1.28, and core adjusted combined diluted earnings per share was $1.29, reflecting a 9% rise from last year. For the full year, CPKC's reported operating ratio was 64.4%, with a core adjusted combined operating ratio of 61.3%, showing a 70 basis-point improvement year-over-year. Diluted earnings per share was $3.98, and core adjusted combined diluted earnings per share reached $4.25, marking an 11% increase compared to the previous year. Looking closely at our expenses, the compensation and benefits expense was $619 million, or $625 million when adjusted for acquisition costs and tax recovery. The decrease from last year was mainly due to lower share-based compensation and efficiency improvements from heavier train weights, partially counterbalancing inflation, incentive pay, and volume-driven increases from higher GTMs. For 2025, we anticipate a slight increase in our average headcount, which will boost labor productivity in line with our projected mid-single-digit RTM growth. Fuel expenses were $459 million, down 13% year-over-year, driven by reduced fuel prices and a 2% improvement in fuel efficiency from operating longer and heavier trains, generating $6 million in savings for the quarter, although partially offset by volume-driven increases. Materials expenses totaled $116 million, or $115 million adjusted for acquisition costs, with the year-over-year rise primarily resulting from a long-term parts agreement initiated last quarter. This agreement has led to higher materials costs due to a subset of maintenance work being in-sourced, although we are recognizing favorable offsets within PS&O for net savings this quarter. Equipment rents were $94 million, with the increase attributed to inflation and contrasting against pooled equipment credits received in 2023. Depreciation and amortization expenses rose by 6% year-over-year due to a larger asset base. For purchase services and other expenses, we reported $538 million, or $517 million adjusted for acquisition costs. The decline from last year was mainly due to savings from the long-term parts agreement, efficiency gains in IS consolidation, and reduced casualty expenses, with some offsets from inflation and increased maintenance costs. We continue to excel in efficiency and cost synergies as we head into 2025, where we expect these improvements, paired with lower anticipated inflation, to sustain and enhance our cost structure. Moving on to net periodic benefit recovery, we recorded $87 million in Q4 due to a lower discount rate compared to 2023. We anticipate this figure to rise by $76 million in 2025, starting from $352 million in 2024. Net interest expense was $203 million, or $197 million excluding the effect of purchase accounting, reflecting a lower debt balance year-over-year. Income tax expense amounted to $246 million, or $353 million based on an adjustment for a decrease in Louisiana's state income tax rate and a tax recovery. For 2025, we estimate CPKC's core adjusted effective tax rate to be around 24.5%. We generated robust cash flow this year, reaching $5.3 billion in cash from operating activities for 2024. Our commitment to safe and disciplined growth is demonstrated in our capital investments, totaling $2.8 billion, modestly exceeding our initial forecast of $2.75 billion for the year, influenced by a stronger US dollar against the Canadian dollar. Our strategic investments in safety and capacity across our network position us to effectively support the growth enabled by this merger. For 2025, we project approximately $2.9 billion in capital expenditures, slightly above previous outlooks due to anticipated FX impacts. We achieved $2.7 billion in adjusted combined free cash flow for the year and have strategically allocated free cash flow post-dividends towards debt repayment. I'm pleased to announce Moody's has recently upgraded our credit rating back to our target BAA1 level, bringing us closer to reinstating shareholder returns. In summary, our team is maintaining strong discipline in pricing and cost control, showcasing exceptional execution and industry-leading results. We have solid momentum as we approach 2025. While the macroeconomic landscape and trade policies remain somewhat unpredictable, we expect to achieve 12% to 18% core adjusted earnings growth in 2025, supported by mid-single-digit RTM growth. We also plan to generate strong free cash flow while investing in our network and reintroducing our share buyback program. Overall, CPKC presents a distinct investment opportunity, combining our unique growth prospects with best-in-class execution to drive the positive results we've shared today. I'm excited about the opportunities that await us in 2025 and beyond. Now, I'll hand it back to Keith.

Okay. Thanks, gentlemen, for the color. Let's take the balance of our time and open up for questions. Operator, over to you.

Thank you. Your first question comes from Chris Wetherbee with Wells Fargo. Please go ahead.

Yes, hey, thanks. Good afternoon, guys. Maybe we'll start on the RTM outlook, and so John, you gave us some, I think, helpful color there, but maybe we can unpack it a little bit more and kind of curious how you think about sort of first-half, second-half cadence of that and if you can break it out, how much you might be getting from specific new opportunities, KCS related or merger-related opportunities or what you're seeing kind of in the underlying book of business with core customers?

Sure. A couple of comments on this. At a high level, think about a 2% to 3% contribution from synergies and another 2% to 3% from our base organic business and initiatives related to the core railroad. I'm not really counting on macroeconomic factors and I'm hoping for a potential boost in the second half if things improve. It’s really about self-help. I anticipate a stronger performance in the latter half of the year, but we’re off to a solid start similar to 2024. Especially in the first half, our bulk franchise looks promising. I believe we can outperform in the first half and then see how the second half unfolds. The comparisons in grain look favorable, we have a positive outlook for potash, and Elk Valley is also expected to do well with coal. On the initiatives and synergy front, I’m very optimistic about international opportunities. We have a lot going on there, and Saint John is set to be a significant enhancement for us. Americold's new facility has been announced there, and we’ll introduce new services from Gemini at Port Saint John. Additionally, the combination of this area with our operations at Lazaro and growth in Vancouver gives me confidence. The automotive sector continues to perform well despite some surrounding uncertainty. We feel well-positioned; our closed-loop system is delivering results as mentioned by Keith regarding GM, and we have new partners coming on board in 2025, which should yield benefits. Lastly, our intermodal service, particularly the new route with CSX, will offer substantial opportunities for our new auto facility in Dallas for both finished vehicles and potentially parts. We’re really excited about its impact on our dry van and refrigerated business in and out of Mexico. I hope this gives you a good overview of the balance between synergies and base initiatives.

Yes, very helpful. Appreciate the color. Thank you very much.

Thank you. And next, we're going to go to Fadi Chamoun with BMO Capital Markets. Please go ahead.

Thank you. Just maybe follow up on Chris' question. So the 4% to 6%, I guess, volume kind of band that you've highlighted. Is this kind of how we should think about the volume kind of range versus the EPS range? I'm just trying to think of what would be required, I guess, to be at the higher end of the range versus the lower end of the range and wonder it's the volume band or not? And really my question is, maybe Keith can provide some kind of perspective from your conversations with customers on the potential for these trade policies changes maybe affecting behavior and do you feel that this mid-single-digit kind of volume growth this year is quite independent from anything that happens on that front?

Let me address the latter part of your question first, and then I'll let John add some insights. John and his team, along with all of us, have devoted considerable time to understanding the potential impact of tariffs. The reality is that the outcome remains uncertain. However, what we do know is that, despite this volatility, our investment strategy is steadfast; we're not pulling back but rather doubling down. One key strategic customer, whose business was enabled by our recent merger, is committing to long-term growth by expanding its facilities. This is a significant commitment that reflects confidence in our direction, recognizing this as a long-term investment rather than something short-term. While we will need to navigate these challenges and maintain close relationships with our customers, trade among these three countries has never seemed more crucial. President Trump negotiated tough agreements that were pivotal in reshaping US trade policies at the onset of the pandemic. The pandemic exposed vulnerabilities in supply chain security, which has since accelerated trends like nearshoring and ally-shoring and has integrated our supply chains across various sectors, including automotive. For instance, a large portion of automotive parts produced in the US is sent to Mexico, where vehicles are assembled and then returned to the US market, highlighting the interdependence in our economy. With this level of interaction, we believe the range we provided is prudent but does account for some risks. If market conditions are more stable than anticipated, we may see figures outside of that range. It is our duty to ensure our investors are well-informed; we're actively involved in discussions with business communities and governments across Canada, the US, and Mexico to advocate for our shareholders and customers. We are committed to supporting the objectives of strengthening America and improving trade balances, which I believe will lead to significant growth across the three nations. Furthermore, I pay close attention to the sentiments expressed by leaders. The President has voiced concerns regarding immigration and drug trade issues that need addressing. I have observed responsible actions taken by Canada and Mexico in response. Recently, I met with Mexico's President Sheinbaum to discuss how we can align our business interests with Mexico's goals while enhancing trilateral trade relations. Ultimately, while we cannot predict exact outcomes, we believe our represented range reflects due diligence. I would be surprised if results lean toward the lower end rather than the higher end unless unforeseen volatility arises. A pragmatic approach will be beneficial, positioning us for positive outcomes.

Fadi, this is John. So, maybe I'd just add a little bit to that. I've spoken to dozens and dozens of customers here over the last month or so. And I think the reality is the growth platform and the initiatives that we have line-of-sight to aren't really going to be impacted. I mean, we are going to be focused on delivering those unique, whether it be synergies or base opportunities we're going to be fostering the base railroad demand in our bulk franchise that I spoke to. And frankly, if you look back to 2018 and 2019 during the last set of tariffs, I think the reality was that these supply chains are very complex. It's commodity by commodity, it's lane by lane, it's customer by customer. And ultimately what happens, and I think what we saw is there wasn't a lot of change. It's hard to change these complexities overnight. So, we're going to keep laser-focused on the opportunities ahead of us. Just like any sort of volatile demand environment, this team will be ready to adapt and react, if something material does change in one direction or the other and otherwise, we're going to be laser-focused on delivering the growth that we just spoke to.

Appreciate it. Thank you.

Thank you. And your next question comes from Brian Ossenbeck with J.P. Morgan. Please go ahead.

Hey, thanks. Appreciate you taking the question. Maybe one for Nadeem, you sit here looking into next year, can you give us some of the assumptions or maybe your visibility into the inflationary environment or hopefully disinflationary environment on some of the bigger line items? And maybe also some commentary on expectations for the buyback and how I should think about that starting up and at what pace and at what time? Thank you.

Thank you, Brian. Inflation has certainly affected the industry over the past two years, making it challenging to fully adjust pricing as contracts expire and prices rise above inflation. We've absorbed much of this on the expense side, including labor, purchased services, and materials, with key factors such as steel prices, commodity prices, and a tight labor market. However, we've observed some moderation in inflation, particularly in non-labor costs, closer to 2% to 2.5% over the past year, which is a more normal level. In Canada, inflation has decreased to about 2%. On the labor side, we've seen moderation starting with around 3%, compared to the pressures we faced with the PEB. Overall, the inflationary environment has become much more normalized. We expect to achieve pricing in the 4% to 4.5% range for the year, which presents opportunities for margin improvements in 2025. Regarding the buyback, we aim to lower our leverage below 3 to around 2.5. We've made significant progress, having repaid nearly $7 billion of debt by the end of this week following our announced transaction. While the depreciation of the Canadian dollar has impacted our balance sheet and leverage, if we consider a long-term average, we’re closer to a 2.5 to 2.6 level. We're excited to return to the market, and this year we plan to invest about $2.9 billion back into the network. We also intend to review the dividend, as our yield is currently around 0.7%, which is quite low. We aim to strike a balance in returning cash to shareholders. Our model generates a significant amount of cash, which we will use for share buybacks, and we have previously mentioned that our long-term goal for buyback is approximately 3% to 4%, factoring in our capital expenditures and a dividend payout closer to 25% to 30%. This is what you can expect from us going forward.

Okay. Thanks very much, Nadeem.

Thank you. And your next question comes from Steve Hansen with Raymond James. Please go ahead.

Yes, good afternoon, guys. Thanks. Appreciate the time. Look, if we think back on to 2024, you were obviously hit by a whole host of diversions and disruptions across the network. I don't need to go through them all here, but if I can stick the tariff issue aside for a minute, I mean, how do you feel about the repeatability of those types of events going forward, whether it's strikes at ports, the terminals, the workers themselves on the railroad, I guess we won't predict wildfires and things like that. But I mean, how do you feel about the normalization of that effect into 2025?

I believe the challenges we faced were sporadic. The multiple labor strikes at the ports in 2024 were particularly tough, but I don’t anticipate these issues will repeat in 2025. This optimism comes from some very encouraging developments. Just this week, we reached an agreement with Unipor and another with BMWE, and we will also be meeting with USW next week. I commend the union leadership for their professionalism and wisdom in crafting agreements beneficial for our customers and employees. This is vital for reliability, as Canada has faced strike and labor fatigue, which has impacted its reputation as a dependable supply chain partner. It’s reassuring to see that the union leaders and employees recognize this. Our workforce desires fair treatment and compensation and wants to contribute to a growth story that benefits both their families and our clients. Pending the ratification of these agreements, I foresee a positive outcome that fosters reliability, with no work stoppages anticipated for 2025. It allows us to promote a fluid railroad, helping our customers succeed, which is a great position to be in. This level of reliability hasn’t been seen for some time. It's also worth noting that these agreements last for four years, providing stability and a solid foundation for growth in our railroad operations moving forward, especially in light of 2024.

That's exciting. Appreciate the time.

And your next question comes from Daniel Imbro with Stephens Inc. Please go ahead.

Yes. Hey, good evening, everybody. Thanks for taking our questions. Maybe to follow up on our earlier topics. So you mentioned in the script, you're well ahead on synergy capture, you have line-of-sight into some more opportunities. I think you mentioned 2% to 3% extra growth or growth this year from synergies. But could you just expand on what's running better than planned where you see these opportunities maybe increasing? And then while not providing a more formal outlook, should these top-line and cost synergies continue into 2026 and beyond? Should we expect that there's more than you initially thought or we're just finding the synergies earlier in the process? Thanks.

Yes, Daniel, this is John. First of all, the opportunity pipeline we identified at Investor Day remains strong. I'm confident in what we have ahead of us, which has reflected in our performance. We are currently ahead of where we anticipated at this stage. I believe we can close out 2024 with a run-rate exceeding $800 million, and I'm very pleased with our progress, which has even surpassed that target. Looking ahead to 2025, I see no reason we can't achieve an additional $300 million on top of that, given the opportunities we have across all lines of business. Our automotive sector has been particularly successful, but we're still in the early-to-mid stages of development, with numerous opportunities available not only with OEMs but also in the auto parts arena, where we have just begun to explore our potential. I've mentioned the growth of our MMX service in our franchise, which I expect to continue. We are also awaiting the Americold facility in Kansas City, which presents a significant opportunity in our reefer business. This is an important part of our strategy that we presented at Investor Day, focusing on a market that is largely truck-dominated. The combination of our Kansas City facility, our route to Atlanta, and the new operations with Americold set to be developed in Mexico in 2025, along with the facility in Port Saint John, will create the ecosystem we envision in the reefer sector, where we still have much potential to tap into. Additionally, I want to highlight the new facilities with aluminium dynamics in Columbus, Mississippi, and Mexico, which will open around the middle to end of Q3 this year. These will create new opportunities in the steel and aluminium sectors for us and will enhance synergies between our productions in Canada, Mexico, and the US. I'm thrilled about this progress. Lastly, the team has been dedicated to strengthening our customer relationships in the Dallas market, where we currently have several transload facilities. I believe there is a significant chance for growth in that area, which will become more evident in the latter half of this year. This opportunity will help us connect our franchises across three countries and improve the distribution of goods in one of the fastest-growing cities in the US. I hope this provides more insight into our strategic direction.

Yes, appreciate all the detail. Best of luck.

And your next question comes from Tom Wadewitz with UBS. Please go ahead.

Yes, good afternoon. Nadeem, you mentioned that inflation is easing somewhat and that the pricing outlook looks positive. It seems to be in line with the 4% to 5% range similar to last year. What are your thoughts on the pace of operational performance improvement? Are we approaching a rate of 58 or 59? Looking beyond 2025, do you think there's potential for continued improvement at a rate of 100 basis points per year, or do you expect the pace to slow down as we approach 57 or 58? We're really looking for some insights regarding operational performance. Thank you.

Certainly. We're coming off 57 in Q4, and there is some seasonality in Q1, especially in the North, along with incentive compensation accruals. Additionally, there is less capital work available in Q1, which creates some sensitivity. Last year's first quarter was very challenging, and the current operating environment is more favorable. There's likely more snow in Florida this year compared to Calgary. Overall, I believe we can expect continued benefits in the operating ratio year-over-year in Q1. Considering the numerous one-off situations we faced last year, including stoppages, outages, and casualty costs, which we don't anticipate repeating to that extent, there are opportunities ahead. I expect pricing to rise above inflation, and with the ongoing efforts from Mark and his team to improve network velocity and productivity, particularly in Mexico, we should see operating leverage. As we increase volume, it should reflect positively on the bottom line, potentially leading us below a 60 operating ratio again. Looking ahead, we've discussed targeted improvements of 100 basis points as part of our Investor Day, which emphasizes operating more effectively and maintaining continuous improvements, a principle instilled by Keith in our management approach. Achieving 100 basis points improvement annually should be the goal, reflecting efficient and safe operations. As for long-term goals, let's aim for sub-60 first before determining the next steps.

Okay, great. Thank you.

Thanks, Tom.

Thanks, Tom.

Your next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead.

Yes, thanks very much, operator. Good afternoon, everyone. I want to come to automotive. You've seen a really strong growth in your automotive segment in 2024. Just curious now is going forward, do you see potential tariffs impacting your business there? And I know Wylie has been a big part of your growth in automotive, do you have any perspectives that you can share with us on the Norfolk Southern purchase option in the Wylie Terminal?

I'll share my thoughts on the Wylie option, and then I'll let John discuss the tariffs related to the automotive sector. For context, back in 2006, when the Meridian LLC was established in partnership with KCS and NS, there was an option to acquire the Dallas Intermodal Terminal, which was proposed to be located at Zacka Junction. This option was a one-time opportunity that will close in April 2024. It's essential to highlight that this applies only to that terminal. Many of you have visited our Wylie terminal, where we have recently launched a new automotive terminal adjacent to the intermodal terminal, covering roughly 500 acres, with about 90 acres specifically for that purpose. So, if the option is exercised for the purchase, that terminal will essentially operate independently. Currently, we own and operate it, while they are the customer who pays the slip rates. If they decide to buy it, we will accept their payment at an agreed price, allowing us to reinvest the capital and generate revenue. We will then transition to being a customer with equitable treatment, just as we do now. To me, there is no reason for concern. The true value lies in how we package and create total value for the customer. Historically, this terminal has not been a significant growth driver for NS and KCS. The data shows that since 2018, about 95% of the business originating or terminating at that terminal has always been linked to NS terminals. Although we've made some changes, growth has not surged because the main competitor for that terminal has been Interstate 20. The trucking capacity's fluctuation means rates will vary, but this does not diminish its value. The real potential arises when combined with an automotive compound, creating a robust ecosystem for producing finished vehicles that utilize our strong automotive network within the industry. I've heard perspectives from NS shareholders about unlocking potential value there. I sincerely hope they can achieve it because our involvement will be part of that growth. Regardless of their success or challenges, our dedicated team, along with John's marketing group, will collaborate with strategic partners like Schneider and CSX. We'll focus on moving traffic off the roads, utilizing our unique network to drive growth. We plan to expand into Dallas and Mexico, ultimately growing towards the Southeast effectively. So, if they choose to exercise the option, we will accept their offer, reinvest the funds profitably, and continue to compete with them. Our situation remains strong, regardless of how things unfold.

Walter, so just a couple of comments maybe on the first part of your question, but I would maybe start by just emphasizing Keith's comments. The real growth across that Meridian Speedway and into the Southeast is in and out of Mexico. And it is an untapped lane in which the speedways in our route with both those carriers can compete every day against trucks when it's marketed and sold the right way. And also the amount of vehicles that are being short-seas out of Mexico and customers looking for solutions against that is going to be also a big part of that growth over that railroad. If you think about the tariffs, and again, we're staying very close to the OEMs. I'm looking at the opportunities we have in 2025 and 2026 and very much isolation right now relative to a lot of the tariff talk and we're laser-focused with those folks on delivering solutions. The fact of the matter is we've had significant uptake in this product because it's giving these customers a world-class product that frankly, they have not enjoyed from other routes and they can count on the car supply and that matters. So I have a lot of conviction that we'll continue to deliver these opportunities and projects. And look, at the end of the day, North American sales are what they are. They're 16 million, 17 million vehicles a year. The reality is the US has production capability as we sit here today and maybe 10 million of that. The demand to fulfill the need in the United States for vehicles has got to come from somewhere. And whether it's the European markets, the Mexican markets, the Canadian markets, we're going to be there to provide a solution. And that's where we're going to continue to be laser-focused on.

That's fantastic. Appreciate the color.

Yes.

Thank you, Walter.

And your next question comes from Scott Group with Wolfe Research. Please go ahead.

Hey, thanks. Afternoon, guys. Couple of things, really big carload RTM spread in 2024. How are you thinking about that this year? And then maybe, Keith, longer-term on the operating ratio, I totally get Nadeem's point, let's get to sub-60 and then we'll sort of figure out where we go. But when we started this journey, we were thinking mid '50s, even some people may be thinking low '50s on OR. Is that just the wrong way to think about where we can go over time or is that still somewhat over time still in the cards?

I haven't envisioned the low '50s number. The operating ratio was an outcome. If we grow revenue effectively and maintain a fluid railroad, reaching the potential of our network beyond 2028, then low '50s is a possibility. I'm not planning for it, but it's within the realm of possibility. As for the other guidelines, achieving that double nickel is certainly feasible. There is uncertainty ahead, with market volatility. However, if we manage things well and continue executing effectively, growing strategically with our customers without oversubscribing the network, we can run efficiently. This network is designed for low-cost, sustainable operations that can deliver strong earnings growth, possibly achieving the best operating ratio in the industry.

Scott, I'd like to make a comment on this. We hold an annual meeting at the end of the fourth quarter where we allocate significant funds from the operating department to initiatives aimed at cost reduction. These adjustments help improve our operating ratio. When I consider our capital deployment, the metrics in Mexico indicate significant speed enhancements, thanks to our investment in critical bottleneck areas. This allows us to keep local traffic off the mainline, enabling smoother train operations. We can serve our customers effectively, enhance customer satisfaction, and also improve fuel efficiency with our locomotives, utilizing heavier and longer trains without frequent starts and stops. Additionally, as we bring new, fuel-efficient locomotives into service this year, the positive impact on fuel savings is noteworthy. Currently, we are making impressive progress in reducing costs associated with locomotive operations in Mexico.

Yes. I think you're being modest. Scott, I'll share with you just to kind of sneak peek here. If I look at legacy KCSM or CPKC network year-over-year, raw network speed improved 22%, dwell 8%, GTNs per operating horsepower almost 24%, car miles per car day almost 13%. And that's without the full benefit of the six, what I call productivity infrastructure projects that we executed in 2024 that literally have just came online towards the end of the year. So things are moving more fluidly. The culture is evolving. We've got a tremendous amount of pride. We're driving capacity. We're becoming better railroaders every day. The better railroaders in Mexico is such an untapped diamond in the rough that is evolving every day to become better and better. And I say all those improvements, if you look at like GTNs operating horsepower, our standard legacy CP, we want to go close to 200, is the number. That number with 23% improvement is still at an 80. Now will we ever it to 200, no, because there's a lot of industrial work, the length of fronts aren't the same. The mix is different. But think about if we just improve it from 80 to 120. And the number of locomotives we use in Mexico. And as we grow, the number of locomotives will continue to increasingly use in Mexico. So it's exciting. And again, Mark is being modest, it's a lot of hard work to get it done, but they're pulling the right levers, driving the right culture, making the right investments strategically and these are the outcomes. And when you do that, you control your cost. And bring it right to the bottom-line and however you want to measure it, it's pretty impressive on the operating ratio side and on the earnings growth side.

Thank you guys. Appreciate it.

And your next question comes from Brandon Oglenski with Barclays. Please go ahead.

Hey, good afternoon. Thank you for taking the question. Maybe for Keith or Mark, I mean, you guys have gone through a lot of labor agreements now. Is there any harmonization that you're seeking to achieve here longer-term between Mexico, the US, and Canada? And are you working towards some of those longer-term productivity goals on these contracts?

I would suggest that for the US, we are looking at how to deploy capital gains throughout the year instead of having reduced resources in the winter months. We are still negotiating some of the hourly agreements related to the KCS property, and we will continue to work through those over the next year. Regarding Canada, we are still in discussions with TCRC and will resume conversations next week. As for Mexico, we cannot make changes overnight. There will be gradual improvements each year that will assist with locomotive size, fuel optimization, and related areas, but it will require time. However, there is certainly potential for growth in that area.

Thank you.

And your next question comes from Kevin Chiang with CIBC. Please go ahead.

Good afternoon. Thanks for taking my question. I guess I was just wondering when you think of tariffs and maybe what that means for the energy patch here in Canada, I think that the view is that could result in a widening of differentials. Just wondering how you might think that plays out for your crude-by-rail franchise and as those potentially widen out if we do get tariffs as we did.

Well, I think so far, Kevin, what we've seen is the uncertainty has created a little bit more of a narrowing and looking at some of our customers in the US looking for alternatives. Now we'll see maybe some certainty bring some opportunity back or allows the market to sort of settle out and think about it differently. Now the other interesting thing is we've seen it spur more in-bound type shipments and more folks looking at opportunities from Canada all the way down to Mexico as a potential alternative growth area separate than the United States. So right now, I think the uncertainty has hurt the markets a little bit. We'll see what the numbers and how the tariffs end up looking and certainly adapt and adjust from there for that space.

That's great color. Thank you, John.

Your next question comes from Ken Hoexter with Bank of America. Please go ahead.

Hey, good afternoon. Congratulations on achieving an impressive 57 OR. However, we did face some challenges towards the end of the quarter due to harsh winter weather and port strikes. Nadeem, can we discuss the short-term outlook? You may have mentioned this before, but is there a normalization expected beyond what you've already accounted for? What are your thoughts on the cost impact for the quarter as we consider the transition from Q4 to Q1 in relation to normal seasonality? Additionally, does the growth target of 12% to 18% take into account the buyback, or is that an additional component of the target?

Yes. I'd say that part of providing the range is to consider that a buyback is included in the guidance, but its timing is uncertain. If the buyback occurs later in the year, its impact on 2025 will be less significant, while it will have a greater effect in 2026. We do have a buyback factored into the guidance, but it won't have a substantial impact. The actual benefit will depend on the number of shares bought back before July 1, especially considering interest rates. We anticipate some modest benefit in the 12% to 18% range. The 57.1 could have been better, certainly, but we faced challenges due to the strike, which increased some costs. Additionally, we dealt with winter weather in Northern railroad. Mark and his team managed to navigate these immediate challenges, and we won't use the weather as an excuse. Regarding the sequential operating ratio, I would typically consider a range of about 300 to 400 basis points. There are some fluctuations with stock-based compensation timing. We enjoyed a benefit from stock-based compensation in Q4, which helped us, but we expect a headwind this quarter. Keep that in mind when you think about quarterly operating ratios.

Very helpful. Appreciate the time. Thanks.

Thank you. And your next question comes from Ari Rosa with Citi. Please go ahead.

Hi, good afternoon. So you guys mentioned the MME offering several times. I just wanted to get a sense for where that is in terms of the rollout of that kind of levels of customer receptivity, the levels of competition you've seen from depressed truck pricing and where that maybe could go in 2025 and the kind of support it could provide to Intermodal volume growth? Thanks.

Yes, Ari. I believe this is an important part of the story. I'm very pleased with our current position, but you are right that it has been in the context of a challenging market, quite tough out there. To provide some perspective, we experienced about 12% growth from Q3 to Q4 year-over-year, and if we exclude some of the short-haul business that we are currently surpassing, we are up about 33%. I'm happy with how the team has grown it, but there is a lot of opportunity remaining to fill that train and enhance its value. Additionally, we've been transparent about the new route over to the CSX where we identified the potential for one train a day in that corridor. As Keith mentioned, the discussion with customers changes when we can talk about the fastest route in the market between Chicago and Central Mexico, while also incorporating connections to Atlanta, Charlotte, and some of the Southeast markets. We are very excited about the potential that brings. Finally, there is also significant upside in the reefer business, and we're just at the beginning stages of exploring that product. So, a lot of opportunities are still ahead in the MMX.

Thank you. And we have reached our allotted time for Q&A. I would now like to turn the call back over to Mr Keith Creel.

Thank you, operator. I want to express my gratitude to all of you for taking the time to let us share our results and story. We are all aware of the uncertainties in the world that we are currently navigating. However, one thing is clear: this company and this team have a solid track record of managing both the highs and lows. We will focus on what we can control. We have a very unique network with distinct opportunities that, despite the macro challenges, will allow us to create something exceptional, leading to industry-leading margins, growth, and importantly, earnings growth. Have a safe day, and we look forward to sharing our results on our next call. Take care.

This concludes today's conference call. You may now disconnect.