Good afternoon. My name is Margo, and I'll be your conference operator today. At this time, I'd like to welcome everyone to CPKC's second quarter 2025 conference call. The slides accompanying today's call are available at investor.cpkcr.com. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star, then two. I would like to introduce Chris DeBruin, Vice President, Capital Markets, to begin 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 two, in the press release, and in the MD&A file with Canadian and U.S. regulators. This presentation also contains non-GAAP measures outlined on slide 3. With me here today is Keith Creel, our President and Chief Executive Officer, Nadim Balani, our Executive Vice President and Chief Financial Officer, John Brooks, our Executive Vice President and Chief Marketing Officer, and Mark Redd, our Executive Vice President and Chief Operating Officer. The formal remarks will be followed by Q&A. In the interest of time, we would appreciate if you limit your questions to one. It is now my pleasure to introduce our president and CEO, Mr. Keith Creel.

Hey, thanks, Chris. I want to thank everyone for joining us here today. As I always do, let me start by thanking the 20,000-strong family of railroaders we have across our three-nation network that delivered the results that we get the honor to share with you today. As a leader, it's always my honor with these folks that I work and serve with on behalf of their body of work to represent that. So speaking to the results, you know, for the quarter, the team delivered volume growth to 7%. Revenues were up 3% at $3.7 billion, 110 basis point improvement on operating ratio to a 60.7% and earnings of $1.12, which is an increase to 7% versus last year. From an outlook on the balance of the year perspective, I'm very pleased with where we stand midway through the year. We certainly see a clear line of path to our year-end guidance for the opportunities before us the second half of 2025. So despite all the headlines, all these evolving trade policies, the challenges that we've all faced as an industry, we continue to drive differentiated, sustainable, and profitable growth at CPKC. And as you all know, this is not just a 2025 story. This franchise continues to be positioned to deliver a unique outcome for years to come. That said, let me share a couple of exciting developments in the quarter that underpinned some of that forward-looking thinking. Continued ramp-up of our Gemini partnership, something we're extremely excited about that's creating meaningful international growth for us. 180-181, premium domestic intermodal service, which again grew 40% versus last year. Continued increase in our traffic flows between Canada and Mexico via our CPKC land bridge that we have spoken to, uniquely enabled by this North American network. And then lately, the momentum behind our newly named Southeast Mexico Express Service, which is our partnership with the CSX over the Meridian Speedway through our new gateway to the southeast, again creates an unraveled network bringing new solutions to the market. So now, maybe a couple of comments on maybe the proverbial elephant in the room, or maybe better said, the one that wants to come into the room. Obviously, there have been some recent developments in our industry with yesterday's announcements of this proposed combination between UP and NS. Let me start by saying this team remains focused, as it always has been, on our fiduciary responsibility to maximize our shareholders' value. Our value proposition is unchanged from yesterday's news. This is a unique and powerful network, the only network that connects all three nations in U.S., Canada, and Mexico, a network that will continue to drive differentiated growth, and a management team that certainly has the track record of execution to back up our actions with our words. The value and the position and strength of this network that we've created puts us in a very unique position that's allowed us to produce what we've produced the last two years. That does not change. And similarly, our multi-year outlook and the value proposition is unchanged. The team and the network will continue to deliver differentiated results. On the regulatory front, we'll be actively engaged, as you can imagine, in the regulatory process to ensure, number one, that our customers and our industry interests are protected in this proposed combination. Number two, that the high standards that have been set around mergers is defined in these new untested 2001 merger rules, which require the applicants to demonstrate enhanced competition and consider downstream effects, that standard is met. Rest assured, we'll be a loud voice in the room to ensure that the facts are known, the facts are understood, fully understood, and weighed on by the SDB when they come to their conclusions and their decisions. The other part, in the meantime, when it comes to the regulator, I can say this from experience. We're dealing with a regulator that they take their job very seriously. They will be pragmatic. They will be diligent. They will be fact-based. They will base their decisions, I believe, on the facts that are developed, the truths that are represented and presented, and debated and discussed in a very fulsome way to lead to the right outcomes. That said, in the meantime, outside of that process, you can imagine, And this network is uniquely positioned, as I've said in the past, to compete or to partner with any Class 1. We literally, we're two and a half years old. We've been working hard to develop these alliances and to create these new revenue streams and these new customer solutions, not only uniquely in our network, but also uniquely in the partnerships as evidence in what we've done with the CSX less than a year after we came into existence. I can tell you in this world, that list of opportunities is not exhausted. The list of potential partners still exists, and I can tell you those other partners not involved in this combination are more motivated than ever to have those discussions. And rest assured, we're well into having those discussions. This isn't something we just started. This is something that will only enhance and gain momentum.

So in closing, let me say this.

With our short-term and continued uncertainties from the macro trade policies, we are going to continue to deliver a differentiated outcome. The network, the team, the opportunity is unique. We'll continue to deliver value for our stakeholders. So with that, let me hand it over to Mark. He's going to speak to the operations. John will bring a little color on the markets. Nadine will elaborate on the numbers, and we look forward to the Q&A.

Thank you, Keith, and good afternoon. I'd like to start by thanking our employees for their hard work and dedication in the quarter and for their efforts toward the integration of our operating systems in the U.S. and Canada. This is a major merger milestone and a complex one we're taking. While not without challenges, we have made a lot of progress over the last two months. I'm very pleased with how the team has pulled together to restore service to customers in the southern region of the U.S. network who are impacted the most by the change. The rest of the network continued to perform well through the quarter, and we are carrying operating momentum into the third quarter. I look at the results, turning the results, I've got, we saw 1% improvement in both train weights and train lengths. System-wide dwell increased by 7% in the quarter, driven by the increase in the dwell on the legacy KCSR southern U.S. terminals. Terminal dwell in the region peaked in early June, but largely recovered to pre-cutover levels. Dwell on the legacy. KCSR improved 42% over this two-month time period, and car miles per car day improved 38% as well. Although with regret to the disruption to the customers during this time period, I'm extremely encouraged by the progress we've made delivered over the last two months. As those improvements continue to take hold, We are, our service largely, back to pre-cutter levels, we're expected improvement of efficiency and fluidity to flow through the network and metrics in the second quarter. A look at safety, taking a look at FRA personal injuries were a .77, which is an 8% year-over-year improvement. FRA train accidents a .97, which continues to be a year-to-date record performance. We posted another notable reduction to personal injuries, a testament to the team's dedication to our home safe culture. While our industry-leading train accident frequency increased from weather-related incidents in the quarter, namely our engineering and mechanical-related train accidents continued to decline year over year. This improvement is being driven in part by our increased use of geometry cars and also the wheel bearing management technology we have. Now, looking at resources and capital, now, as I look for the second part of the year, we continue to control our resources and invest in our unique growth that this merger has enabled. From a resource perspective, we're selectively managing headcount to backfill attrition for the volume growth we're bringing onto this network. Our resources remain well in line with the growth outlook, outlook, and headcounts slightly down on 7% of RTM growth is driving strong labor productivity. I'm encouraged by the progress that we continue to see from FRA on initiatives to enhance safety and network efficiencies. We're also making good progress with combining crew districts still today, most recently between Kendalton, Texas, and Laredo, Texas, so we can improve cycle times and deliver more resilient customer service to the key cross-border. As we look at the capital perspective, in addition to the safety investments across our network and capital improvements in this area, we have received the first 40 of the Tier 4 locomotives. These locomotives are supporting our strong growth and improving the reliability and the fuel efficiency of our fleet. So in closing, we have operational momentum heading into the second half. Our network is prepared to safely and efficiently deliver strong growth over our plan. We have resources in place and certainly the management team to deliver and execute on the growth. With that, I'll turn it over to John.

All right. Thank you, Mark, and good afternoon, everyone. Let me say I'm extremely pleased that we delivered another quarter of record volumes and revenue, and I certainly want to thank all of our customers for their ongoing support and collaboration over the last few months. The strength and diversity of this franchise is reflected in our results, and I'm proud of the team for what they do every day to deliver sustainable, profitable growth. Now, despite continued uncertainty from the macro and trade policy, Q3 is off to a solid start, and we are well positioned for continued differentiated growth. Now, looking at our Q2 results. This quarter, we delivered freight revenue growth of 3% on a 7% increase in RTMs. Our pricing results remain strong, as my team is achieving renewal pricing in excess of our long-term outlook of 3% to 4%. Yields in the quarter were impacted by lower fuel surcharge, the removal of the carbon tax in Canada, as well as negative business mix. Now, taking a closer look at our second quarter revenue performance, I'll speak to FX adjusted results. Starting with bulk, grain revenues are up 11% on 13% volume growth, a record Q2 performance. Grain volumes are up 16%, Canadian grain volumes are up 16%, driven by increased grain to Vancouver, Thunder Bay, and down into the U.S. markets. For July and August, our volume growth has decelerated as the remaining stocks in Canada are starting to get low and the farmers have become more reluctant to sell. Now, looking ahead at the upcoming harvest, our outlook is positive, and we currently expect crop size to be in the 70 to 75 million metric ton range, which is in line with the five-year average. We also had a strong quarter in U.S. grain, with volumes up 11% over prior year. We continue to move more grain into Mexico as our network matches our strong areas of production with the demand in the south. While we are watching the impact from potential tariffs on soybean exports this fall, the upcoming crop across all portions of our U.S. network looks very strong and we're well positioned for a strong grain season. Cash revenues were down 8% on 7% volume growth. With positive demand fundamentals, Campitex is fully committed at record levels. We expect a strong second half with a more normalized mix. And to finish out bulk, we closed out the first quarter with coal revenue up 8% on 5% volume growth. This strength was driven by higher U.S. thermal coal and higher Canadian met coal as we moved more volume driven by production improvements at the mine sites and continued inventory drawdowns. Moving to the merchandise business, energy, chemicals, and plastics revenue grew 2% on a 5% volume decline. Our base ECP franchise continues to deliver revenue and diverse volume growth across multiple commodities, from synergies, self-help, and market share gains. That growth this quarter was offset by lower crude volumes, primarily due to an outage at our Hardesty Terminal. from LPGs and plastics in the quarter as our network continues to connect Canadian production with destinations in Mexico, using our network as a land bridge and facilitating new trade. Forest products revenues were down 5% on flat volumes. Volumes in this space continue to be impacted by macro softness to the base demand. However, the team remains laser focused on what we can control to driving synergies and extended length of haul, which is helping to offset some of these headwinds. Metals, minerals, and consumer products revenue was down 3% on a 1% volume decline. Increased tariff quarter steel impacted volumes in the quarter, partially offset by higher frack sand. We continue to be encouraged by industrial development projects in this space, with new aggregate and steel business ramping up the second half of the year. Moving to automotive. Revenue is down 5% and 8% volume growth. This continues to be an area of unique growth for CPKC driven by our advantaged footprint, serving production plants and auto compounds across North America, along with our closed loop service solution. While evolving trade policy resulted in some choppy volumes early in the second quarter, we are staying close to our customers, and we have recent wins in this space that continue to support our conviction and growth in another record year in automotive. On the intermodal side of the business, revenue was up 8% on 18% volume growth, another record quarter. Starting with international intermodal, volumes are up 28% on strong growth from Gemini as this alliance continues to ramp up volumes through our CPKC serve ports at Vancouver, Port of St. John, and Lazaro Cardenas. So although there is ongoing volatility within international intermodal volumes, we continue to see upside for CPKC in the second half of the year. We also deliver strong growth for domestic intermodal with volumes up 8%. Momentum on our MMX continues with volumes on this service up 40% year over year and 20% sequentially from Q1 to Q2 as more and more customers take advantage of the fastest, most efficient cross-border rail solution between Canada, the U.S., and Mexico. Now, looking ahead, there's still a lot to be excited about in this space. We have a strong line of sight to domestic intermodal growth with our partner Schneider as they continue to outperform in the marketplace. Second, we have new auto part lanes ramping up, and volumes out of AmeriCold's cold storage warehouse co-located in Kansas City will start moving in August. And finally, I'm also excited about our SMX service that Keith spoke about with the CSX. This is our newest east-west service product that connects shippers between Mexico, Texas, and the U.S. Southeast. To close, while the macro and trade policy remains uncertain and creates certainly some choppiness across many of our customer supply chains, our unique franchise is proving its resilience, and we continue to produce new volume growth. Now, looking forward, we are confident in our self-help growth initiatives, the strong fundamentals that underpin our bulk business, and our disciplined pricing strategy. And I feel good about our volume outlook as I look towards the full year. So with that, I'll hand it over to Nadine.

Thanks, John, and good afternoon. I'd like to start by thanking our railroaders for their hard work as well and dedication in producing this quarter's strong results. Our systems integration was a major merger milestone. and having combined systems in Canada and the U.S. will make this organization stronger and more efficient, while also creating opportunities for efficiencies and savings as we have better visibility to data and the ability to optimize workflow. Now turning to our second quarter results on slide 12, CPKC's reported operating ratio was 63.7%, and the core adjusted operating ratio came in at 60.7% of 110 basis point improvement over last year. Diluted earnings per share was $1.33, and core adjusted diluted earnings per share was $1.12, up 7% versus last year. Taking a closer look at our expenses on slide 13, I will speak to the year-over-year variances on an FX-adjusted basis. Comp and benefits expense was $659 million, or $652 million, adjusted for acquisition costs. The year-over-year increase was driven by higher stock-based compensation, inflation, and volume-driven increases from higher GTMs. That increase was partially offset by lower incentive compensation, efficiency gains from workforce optimization, and improved train weights. As we look to the rest of the year, we continue to expect our average headcount to be roughly flat, driving strong labor productivity gains against our expectation for mid-single-digit volume growth. was $4.05 million, down 12% year-over-year. The decline was driven by lower fuel price, including the removal of the Canadian federal carbon tax, effective April 1st. That decline was partially offset by higher GTMs from increased volumes. Overall, changes in fuel prices were a two-cent headwind to EPS in the quarter. Materials expense was $124 million, up 29% year-over-year. The year-over-year increase was driven primarily by the long-term parts agreement that was put in place last year, driving higher materials expense with a favorable offset within purchase services and other for net savings in the quarter. Additionally, we saw higher spend on safety materials and volume-driven increases in materials expense. Equipment rents were $103 million, up 23% year-over-year. The increase was driven primarily by higher car payments from increased dwell. Depreciation and amortization expense was up 4%, resulting from a larger asset base. Purchase services and other expense was $560 million adjusted for acquisition costs, down 5% year-over-year. The decline was driven primarily by savings from the long-term parts agreement and other productivity improvements. These savings were partially offset by cost inflation and volume-driven increases. Overall, we delivered strong financial results this quarter. Despite systems integration challenges that impacted earnings by 3 to 4 cents, looking forward with operations largely restored, we expect a second half that fully recaptures the financial and operational momentum that we had prior to the integration systems integration. 14, other income was up $16 million in Q2, driven by lower equity income year over year. Other components of net periodic benefit recovery were $107 million, reflecting the effect of favorable pension plan asset returns in 2024. Net interest expense was $208 million or $203 million, excluding the impact of purchase accounting. The year-over-year increase was driven by interest occurred on new long-term notes. In the quarter, we also recognized that $333 million pre-tax gain on sale of our 50% equity investment in the Panama Canal Railway Company, which was excluded from core adjusted results. Income tax expense was $357 million or $336 million adjusted for significant items. For 2025, we continue to expect CPKC's core adjusted effective tax rate to be approximately 24.5%. Turning to slide 15 and cash flow, Q2 cash provided by operating activities increased 6% to $1.36 billion. We continued our strategic investments in the network for safety and growth with CapEx spend of $743 million in the quarter. We remained strong as we delivered $605 million and adjusted free cash for the quarter. As we continue to generate strong top line and earnings growth for the next several years while holding CapEx relatively flat, we expect continued strong cash flow generation as we reduce the capital intensity in the business. Turning to our share Repurchase Program, we continue to take advantage of the volatility in the market to reward shareholders with disciplined and opportunistic returns. At the end of the second quarter, we repurchased 16.4 million shares, or approximately 44% of the current program. As we look to the second half of the year, John and his team are delivering strong growth, and we are well on track to deliver mid-single-digit volumes for the year. The network is running well, and we continue to deliver discipline on price and cost control, with more opportunities on that front in the second half. We feel very good about our guidance, and CPKC remains well-positioned to once again lead the industry with double-digit earnings growth this year. With that, let me turn things back over to Keith.

Okay, thank you for the color, gentlemen. Let's open it up for questions.

Thank you. If you would like to ask a question, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2. As previously highlighted, please limit yourself to one question. And our first question comes from Chris Weatherby with Wells Fargo. Please go ahead.

Hey, thanks. Good afternoon, guys. You know, Keith, I just want to maybe address, like you said, the sort of elephant in the room. Maybe you could expand a little bit on your thoughts here. I guess maybe the question is, as you see these industry dynamics playing out, I guess, how do you or what do you view CP's sort of role in this process?

Is there something to do from a strategic perspective? Are there commercial, you know, things that you can try to accomplish? And is this something that you sort of push back against, I guess? How do you think about it from a regulatory perspective? So just sort of broad comments on your view of what's happening.

Yeah, I think the answer is yes. Commercially, there's opportunity that's undeniable. This network that we've created, again, the way we connect with and partner with all railroads across all three nations right down the middle of kind of the heart of America, gives us a chance to create unique partnerships and alliances. That's what we've been about doing. That's what we'll continue to do. You know, again, the CSX example is but one example.

So rest assured, this gives us an opportunity.

and obviously the other party's motivation where we can help them win in marketplaces and compete to create new revenues or to protect existing revenues, to provide better service for customers or to win new customers that may or may not be concerned or might, I'd say in this case, might be concerned about the risk that this proposed combination entails. It creates opportunities for us. So we're going to be hard at working those opportunities. You know, I know with the best of intentions, the applicants would say they're not going to be distracted. But the reality of it is, having gone through this, the gravity of what they're pursuing is undeniably enormous. The complexity of it is undeniably enormous. There's going to be some distraction. And even if there were not, I guarantee there's some customers out there that they're sitting on the edge of their seats, looking at their existing supply chains, trying to hedge their bets, thinking, what's at risk? And what do they know? Their memories are not certainly clear from perhaps the condition the industry was in, specifically in the U.S., undeniably three years ago. You know, it was a world where UP was in trouble. BNSF was having challenges. NS was having challenges. CSX is having challenges all coming out of the pandemic and all the associated kind of quasi-meltdown of the industry as a result of all those things. And those customers experience a lot of pain and suffering. So to think about a combination and the risks that unfold before them, consolidating with an industry, and I would suggest, and they said it themselves, two railroads that have part in that problematic history of less than ideal integrations, they'd be irresponsible not to start looking at alternatives. So we're going to help in those discussions. It's our responsibility to. We owe that to our customers. We owe that to our shareholders. And I think the partners that we'll talk to that can play a part in that will feel the same way. And, in fact, I've already had a couple of conversations, and I can tell you the sentiment is aligned with mine. That said, on the regulatory front, Here's the other piece, Chris. This is not a standalone proposal. This does not just affect UP and NS. UP and NS both know this. The regulator knows this. We all know this. This could well be the trigger if this is approved and their facts fully represented, and that's our job to make sure they're fully represented before the SDB, lead them to a decision that says this serves the public interest best. That could well and might likely trigger additional industry consolidation, an in-game scenario. So this downstream analysis that the rules require is taken into consideration, the new rules, which are new to UP, new to NS, they're untested, they're new to all of us. This downstream effect, when you're talking about enhancing competition, that's going to be a fulsome and a broad review. So that application, when it comes to the regulator, has to speak to all those points. Again, it's not speaking to just the isolation and the benefits and the considerations of UPNNS. They're speaking to the entire industry. They're speaking to every customer that ships on any rail network in North America, and it is a North American rail network. So the gravity of this is not to be taken lightly. Jim Vena said yesterday, and I believe Jim, to his word, he hasn't taken this lightly. But at the same time, we have a responsibility to make sure that their view aligns with what our view is, and I'm sure the other railroads would speak for themselves. They would feel the same, that the view is wholesome and full in the case and the evidence is fully represented. So a lot to be said about that. I kind of think it boils down to thinking about that public interest test. The core public interest question will get down to a point of whether or not this two-duopoly structure truly serves the public interest, because it is the trigger that leads us to that potential outcome. The regulator knows that. The regulations have anticipated that. That's the reason they were written in the first place in 2001, and quite frankly, again, I go back to taking people at their word, UP was very active in those comments. They said they believed it to be true then in their comments in opposition to other proposed transactions at that time. So if it was true for UP then and it was factual then, again, how can you deny that it's not factual now? So more to follow. We're going to be active participants. Again, the truth matters, and we've got a little experience making sure that the truth is understood and heard, and we're going to continue to apply that muscle memory in this case as well.

Appreciate the comments, Keith. Thank you.

And your next question comes from Fadi Shemoon with BMO. Please go ahead.

Yeah, good evening. Thanks for the perspective, Keith. Just maybe a quick follow-up, just trying to make sure I and others take the proper takeaway. Through a regulatory process and assuming we have an endgame with trans-con networks in the U.S., is the commercial opportunity for CP neutral or potentially better than they are today? And my main question is, you know, I wanted to ask, like, when you look at the pipeline of opportunity that I think John highlighted, and you highlighted kind of early in the call going into H2 and into 2026, is this mid-single-digit volume run rate that we're seeing? and it looks like you can potentially sustain going into 26, can that be achieved even in a scenario where the economy is stable, not really gaining any momentum from where we are today? Is the pipeline sufficient to kind of say, you know, we can get this level of growth on a sustained basis, you know, going into the next quarter plus 20, 26?

I'll start with answering that. the answer is yes, we see an ability to be able to do that, Fadi. And then let me go back to the question about the merger. Kind of the way I see this as the only way one or two mergers get accomplished is if they meet and exceed the public interest test, which means they've enhanced competition, not just preserved competition, which means they've adequately considered downstream impacts, which means to do that, the only way to meet that standard in my mind is a definition that will ultimately be defined by the SDB that involves concessions. Concessions that when you have a network, again, that uniquely connects north to south, right down the spine of America, connects U.S., connects Canada, connects all these different markets, we have a network and a foundation that, with the right concessions, and rest assured we'll be arguing the case and the need to meet the enhanced competition, perhaps a Houston that we don't have unfettered access to compete into today. We don't have an ability to sell into or sell directly out of Houston. In a world tomorrow, what markets might open up as a result of that that we could uniquely feed with other partners in our network. That's enhanced competition. And you can apply that same definition, go up our railroad to the network, go to Kansas City. What about the industry in Kansas City? Go to St. Louis. What about the industries in St. Louis? Go to Baton Rouge. Go to Shreveport. Go to these common locations which have significant industry bases, which today are not open to our network in an unfettered way, which become unfettered, which have whatever the final definition of open access is, inter-switching to our network, to use our link to follow, to use our reach, to bridge to another railroad, to bridge into Mexico, to bridge into Canada. So again, our network, the strength of this network we put together allows us to compete and win in any of these scenarios. It's that unique that certainly there's going to be puts and takes. Certainly we're going to have to compete. But when you have a great service and a great team and a great network, that should never and will never intimidate this railroad. And we're proud to be able to say that. We worked hard to create this to be able to say that. And we don't say that just for the benefit of ourselves, but equally as important for the benefit of all stakeholders we partner with. And that's our partnering railroads, that's our customers today and tomorrow, and that's our employees and our shareholders.

Thank you.

Thank you. And your next question comes from Jonathan Chappell with Evercore ISI. Please go ahead.

Thank you. Good afternoon. I'm going to bring it back to CPKC. Nadim, thanks for the 3% to 4% impact from the system crossover. From a cost revenue OR perspective, is there a way to quantify that for the second quarter? And then was it fully ring-fenced to that period, or is there going to be some overhang into July? And just how do we think about that sequential impact moving from 2Q to 3Q?

Yeah, so I'd say it's about $30 million to $40 million of revenue impact overall. And then a bit of you saw that some of our operating metrics that were post the day-end period where we had additional dwell velocity as well and impacted fuel efficiency. So the remainder kind of operating income is tied to higher expenses and missed efficiency opportunities. I'd say there's a small carryover into July, but not significant as far as some on the cost side, limited on the revenue side. So we'll start Q3 pretty fresh, I'd say. Thank you.

Thank you. And your next question comes from Tom Wadowitz with UBES. Please go ahead.

Yeah. Good afternoon. So, Keith, you have in kind of a different setting expressed a pretty favorable view on single line service. And I think even looking at the success of the 180, 181, you know, relative to your competitor, single line is important. And do you think that there, I guess when you look at it, you know, you're taking a seemingly a pretty strong position, you know, or a strong view, you know, versus the UPNS. Do you think that there are kind of opportunities they have on sync line intermodal that would not affect CP? Or I guess I just want to understand a little bit better why, you know, there's some things that seem like they could be good for rail service, good for rail markets, that wouldn't necessarily be harmful to you. So is the concern about market power, is the concern about, you know, just want to understand that a little bit better, recognizing that it seems like there is a case for single-line service in broadening rail markets.

Yeah, well, let me start with this. In isolation, I'm never going to argue against the benefits of single-line service for any railroad and any customer. If a railroad can operate their network appropriately and manage their capacity and their service and produce the benefits of a single-line move for a customer, I mean, that's the gold standard. So I'm not going to say that, suggest that what UP and NS has proposed or what any combination will propose that enables that outcome, if it's exercised and produced the right way is not a superior product. It's tough to compete against. I stand by that statement. But the reality is this isn't just a standalone isolated review of single-line service. There are so many more multiple facets and complexities that get created by this combination that have to be weighed into this that will be in our analysis. So if I look specifically at intermodal, their single-line service intermodal, doesn't threaten my single-line service intermodal. They don't have a network in Canada. That's where we're strong. We play to the strength of our network. We have the shortest routes in the most key markets, and we do extremely well with a premium service in Canada. With our combination, we've replicated that same model from Chicago to Mexico. This proposal doesn't impact that. It doesn't replicate that. It doesn't replace that. So, again, I'm not threatened by that at all. So, again, single-line service is the gold standard. If you can do it and execute it the right way and manage a railroad to deliver a service that allows the customer to benefit from reliable service, efficient service that will let you turn assets and take out handlings and car savings, all those are to be true in a formula. I agree completely with Jim in that. We're aligned on that. It's undeniable truth. But, again, this isn't just about single-line service. This is about a whole lot more than that. And, again, all the facts, I have to make sure that they're known and understood as it relates not only to UPNS and their customers that would benefit from that, but also as it relates to a duopoly system of railroads in this North American network. That's potentially what we're going to. That's what this triggers most likely, and they know that and we know that and you know that. How that all shakes out, I don't know. The outcome of that will be determined by the regulator. We'll all be watching closely and we'll all be participating intently to, again, make sure that the best decision, the best facts are presented to the SDB that are fulsome and allows them to serve that public interest test in the end. If they say, yes, this is in the public interest and this being a likely duopoly system, based on what conditions, which will define the concessions, which will allow me to find or tune how much we might benefit with this network as it relates to those combinations.

Thanks for the thoughts. Appreciate it.

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

Hey, good afternoon. Just wanted to ask a little bit more. Keith, you covered the public interest aspect of all this, but, you know, they also have to prove that the only way to get these benefits is through a merger. So I just wanted to see if you can elaborate on some of the partnerships and JVs that you're talking about here. Obviously, it's hard to compete with single lines, so maybe that's the answer. And then clearly, as you mentioned, long history and long memories of service problems and integration challenges. I mean, yourself had one here in the southern U.S. Do you think that's a read-through to what could happen with maybe more complicated mergers and integrations? and how do you think they would be able to address that credibly and say, you know, we won't have a system-wide issue here if we go down this route? Thank you.

Yeah, I would say, let me start there. The gravity of the challenges we had integrating that were isolated to the most southern part of our network pales in comparison to the complexity and gravity of getting this wrong. So, again, not to be taken lightly, not that I would suggest they would, but it can be overwhelming and the complexity of it with the best of intentions. I know how much effort we put at it. I know how much money we spent. I know how much time we took but knowing and integrating a system seamlessly that you replace on your own network is uniquely different than taking that same system and applying it to somebody else's network with a different system. The complexity is thousands fold, not to be underestimated. So if you get that wrong, and that's the challenge of this, and that's what these reviews and all these assessments have to take into effect, a network that big, if it gets sick, it's not isolated to a particular geographic region in the nation. The entire nation is going to get sick. That's the magnitude of this. So then back to if you think about what you could do in exhausting alliances before you entertain a merger or the risks that are associated with these type of mergers. I would say it's our responsibility to make sure that we've exhausted all of those opportunities, and I can't answer for UP or NS, have they? I can tell you that we haven't. I can tell you that our network that's been created is just beginning to get busy doing those things. Now, a year from now, two years from now, three years from now, we'll be further along, yes. But I would suggest I know that UP and NS understand the benefits of some of those alliances. They're benefited from it now over the Meridian Speedway. You've got UP running big trains that are coming out of western U.S. that go straight to the southeast markets over RLLC, which is in partnership with NS. So they know the benefits now. I would ask and challenge if you've done that in other parts of the network, if you're so aligned together, have you exhausted that? And only they can answer that question. I heard some rhetoric or discussion yesterday, which I agree with, over the benefits of step-on, step-off interchange trains. We call those direct hit trains in our industry. Much better than going into Chicago, for instance, or for a perfect example in illustration, going to one of the belt railroads or one of our terminals and switching cars out and all that associated delay. I believe in it so much that we do it today with NS in Chicago. It's a step on, step off, both ways. We don't go under the belt. They don't go under the belt. We switch in our terminals. They switch in their terminals. When we get to Chicago, it's a handoff. Power runs through, cruise change. It's as if you're merged together. So, again, I would ask, if you believe in that, have you exhausted all those avenues? Have you looked at, in this case, the potential proposed network, which is NSNUP, and looked at these gateways that, as they propose, will eventually be connected? Why not do it now? What are you waiting on? If the gains are there and the benefits are there for your customers, don't we have a responsibility to go mine those opportunities? And that's true and applies the responsibility to the entire industry. So to me, that is a great question to ask, and only the applicants can answer the question. Have they exhausted all those opportunities? I know we have it. I can only speak for us.

Thanks very much, Keith, for that perspective. Appreciate it.

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

Thanks very much. Can we just do kind of a hypothetical where, let's say, the Transcon mergers do go ahead? In that scenario, Keith, what are the options? Are you suggesting that commercial options are the main and only course of action for you? or would you consider as well going to a round two of consolidation and looking to involve yourself, CP, with one of the Transcon railroads from a consolidation standpoint?

You know, I think the simplest way to answer that is our responsibility at CPKC is to make sure we remain in the best position to create shareholder value and all stakeholder value. That's what our obligation is. So as that plays out, as this unfolds, we certainly will be active participants, but we're going to be active observers as well. This team and this network represents industry-unique value and industry-unique strength. So in all these multiple scenarios, you can whiteboard them all, and I'm sure we're going to eventually get to a point where we think and evaluate, consider all. But I could make a case that in any mix that you propose but one, there's one that we never would be able to, for obvious reasons, partner with. In that kind of way, this industry and this team, this network, within this industry, this team and this network, represent compelling value. And it's our job to make sure it's real.

That's excellent. Thank you, Keith.

Thank you.

Thank you. And our next question comes from Scott Group with Wolf Research. Please go ahead.

Hey, thanks. So, Keith, when you talk about enhanced competition and concessions, if you just think about your wish list of what you'd want to get, like what's the opportunity for CP? Is this tens of millions of dollars, hundreds of millions of dollars? I don't know if there's a way to quantify it, but any thought on it? And then maybe just back to just, like, the quarter and earnings, Nadeem. Any thoughts on how to just think about the OR progression in Q3 in the back half of the year?

Sure, let me just answer that, Scott. I mean, we'll continue to see sequential improvements in Q3, and I think we've had Q4 be typically our strongest quarter of the year, And so you'll see kind of a step function improvement in Q4 versus Q3. And, you know, we've mentioned this year a couple times that we see the sub-60 OR for the year. So I think we're not backing off of that. There's no need to. We still have visibility with the strong volumes and the recovery of the network. And I think we can achieve that for the year as well. That's with that.

And it's got a, you know, hypothetically, and again, this is hypothetically, I can't really give you a good answer until I see what the concessions would be. Now, I've got a list. I've got some ideas. But, you know, depending on how successful we are in achieving those outcomes, we'll determine what that number is going to be. And listen, I'm not naive, and I'm not going to misrepresent the need to compete. We're going to have to compete, no doubt about it. But, again, the reach of this network allows us to create unique outcomes. And what we might lose in one location, perhaps, because there might be some single-line service created that we can't replicate, either ourselves and or through a seamless partnership with a motivated partner, then, again, we'll have to compete, but I guarantee we'll offset it in other areas. You know, I heard something yesterday about, you know, the desire to go after Canadian ports and attack traffic that's – convert traffic, maybe attack's a bad word, convert traffic that's destined for U.S. Well, I can tell you, and I'll let John provide a bit of color, that's not a lot for us. That's not a place that we have a lot of exposure. So, again, the puts and takes, that's not a big one on my take list.

Scott, I hope they're not banking their business case on that volume. It's, you know, barely 1% of our revenues, and honestly, we feel pretty good about the structural advantage that Vancouver has been able to provide over the years. You can historically look at these volumes, and certainly they move back and forth. You get a labor disruption down in L.A. Long Beach, and it all flows north. You get the same one we had last year in Vancouver, and you saw some of the volumes slide back south. And I think the other point is you've got to realize the majority of that traffic we haul does not – they don't need a merger to compete against it. It's Chicago. It's Minneapolis is the bottom line. NS can haul that direct out of the East Coast ports into Chicago, and UP can obviously hit both of those markets today. That traffic's available. So we feel pretty comfortable with the service product out of Vancouver that we produce, out of St. John's that we've produced. And at the end of the day, as Keith said, we'll compete. If we need to compete, we're going to compete today. We'll compete tomorrow for that traffic.

I can't resist asking, though. 75% odds of getting the deal approved. You must have a pretty meaningful concession list in mind to pass a public interest test. So maybe we take that one offline, but I'm interested in your answer to that one.

Happy to catch up anytime.

Thanks, Scott.

Thank you. And next question comes from Brandon Oleski with Barclays. Please go ahead.

Hey, good afternoon, guys. Thanks for taking my question. If I recall, a pretty epic flow. But, John, maybe you can speak to the specifics of tariffs on your business and the growth outlook, just looking into the back half of the year. You know, how is that impacting the auto business maybe specifically, but more broadly, should we be thinking about other impacts that may? Thank you.

Brandon, you're kind of breaking up a little bit. I think I got the most of this. You know, looking at the back half of the year, you know, undeniable trade uncertainty and macro issues, you know, we're keeping it pretty basic. We're focused on the self-help initiatives and synergies, And frankly, that's what's driven our differentiated growth these last couple years. The good news is that pipeline remains strong, and we see a good building of that through the second half of the year. Second piece is our bulk franchise. We had a really strong outlet the second half of the year on our bulk franchise. As I think I mentioned, we got really good grain crops framing up across our U.S. network and also across Canada. We've got record potash demand relationship with Campitex, and that business has never been stronger. It's performing quite well. And we've got a really strong coal outlet the second half of the year. You couple that with strong pricing and disciplined pricing, we'll continue to deliver, and I feel good about where we're set up. You know, July is, you know, roughly 3% RTMs. We're around that 5% number. and we got some favorable comps as, you know, we left some of the issues we had the second half of the year last year. You know, on the tariff front, I would boil it down to three areas where, you know, we've seen impact and we'll, you know, depending on what happens, we'll probably continue to see some impact here. Essentially our steel business, our cross-border steel business is, for all practical purposes, shut down at this point at a 50% tariff level. You know, we've had to work hard to sort of back hit Phil and find other opportunities with those customers, and we'll continue to do that. You know, the automotive space, yes, it's been choppy some stops and starts. The good news is we also have created a service product that I would say is industry best and leading, And albeit we've seen choppiness, we continue to see growth with these customers and the desire to convert more and more to our single-line haul product and to use our compounds. So we've been able to insulate ourselves in that space by, you know, ongoing growth with those customers. And then the last piece is the international space where certainly we've seen pretty significant ebbs and flows. and that's probably going to continue. We're going to watch close the back half of the year on sort of what that area looks like. You know, as Keith said in his opening remarks, the good news in that space is, you know, our partnership with Mariscan Hapag through Gemini is as strong as it's ever been with those partners. They're producing the volumes. And as much as Vancouver has been a success, we're seeing you know, good growth with them at Port of St. John, that's going to continue. And, you know, honestly, we saw a dip in some of our Lazaro traffic here the last couple months, but I can tell you the bookings here the next couple months look much stronger. So we're excited to keep pushing that product, you know, as much as we can up into the U.S. market. So, again, you were kind of breaking up, but I hope that captured most of it. Yeah, you got it, John. Sorry, I'm on

that train actually right now. So thank you. All right. Good place to be. Get you on your

travel. And your next question comes from Ari Rosa with Citigroup. Please go ahead.

Hi, good afternoon. Keith, you mentioned you'd had some conversations already, just kind of preliminary conversations. I was hoping you could share some of that. Obviously, you know, nothing that's confidential or anything of that sort. But, you know, How are customers responding to the proposal? To the extent you've spoken with any regulators, how are they thinking about that? Just any caller on those kind of preliminary reads would be helpful.

With all due respect, the conversations have been direct with other railroad CEOs and two-way conversations. Only one of us is here. I'm not going to represent the conversation. I can just say that they're encouraging and positive. When it comes to customers, John, you want to comment?

Yeah. Yeah, so honestly, the phone's been pretty active on that front already. I'd say as much as trying to understand, given that what we've lived through these last few years are leading up to this transaction, trying to get a read, you know, RE on our feeling around the likelihood of this and can it be done, I don't know. It feels like it's a little bit of a mixed bag. You know, there is certainly the risk of operational performance and integration that I think is looming over everyone. And frankly, nobody knows that better than us coming out of some of the challenges we faced the last couple of months in the southern part of our network. And as Keith said, it's just a far grander scale and a much whole other level of risk that I think these customers are going to be concerned about are going to want to really understand what that looks like in a tremendous amount of detail going into that. So look, we'll continue to canvas and make sure the customers are fully educated in terms of not only what we went through and what they should expect UP and NS need to deliver and produced to them uh you know through the process they're going to go through with the sdb great

thank you for that and your next question comes from steve hansen with raymond james please go

ahead yeah thanks for the time guys keith only because you referenced the probability earlier would you hazard to put the probability on a deal getting done better or greater than 50 better or lower than 50. and then just secondarily i think just outside of the merger topic i just wanted to ask about the Gemini process and ramp up in particular, I think in many cases that's far out exceeded our expectations thus far. Just curious how you think it's tracking relative to your earlier expectations. I can say February, March when we started to see the volumes coming on. Has it exceeded those expectations thus far? And John, you've already referenced some opportunities still for growth ahead, but how do you sort of envision that over the next two to

three years? Thanks. Yeah, I'll let John answer the question on Gemini. I want to make sure I got the question right, Stephen, on the merger. You're asking what my view is on the odds of it getting approved? I mean, that answer depends on the concessions that are proposed and the concessions that are willing to be accepted. So it's hard to put odds at it. I'll just say this. They're going to be meaningful. They'll have to be meaningful to address the holistic impacts of a potential end-game scenario. There's no way to deny that. So it's not, again, just an isolation and UPNS, it has to consider the potential endgame. The rules require it. All the parties understand it. So more to come on that. We'll just have to see how this thing plays out. And rest assured, you know, I'm kind of thinking about in history and memory the comment early, a minute ago, about the integration risk. You know, if I can remember, and I'm still working, and I'm, I mean, this is my 33rd, 34th year in the industry, But as a young operating officer, I lived through the SV-UP combination, the two associated industry meltdowns with that. I lived through the Conrail carve-up. I can remember the complexities and the challenges that are created with those combinations. And I would just suggest if I'm still working, I'm a bit more seasoned than I used to be, but I've still got a lot of run left in me. There's like scenarios and situations in these large companies where they were, too, and they were people that were in entry-level jobs just like I was, and they lived through the realities, undeniable realities of these complex combinations, and they're going to be asking those questions, too. Up today, they're in positions, perhaps, like we are, with more increased responsibility to their organizations. So the answers are truly going to matter to them.

and steve you know regarding gemini i'd say we're extremely pleased with how it uh has started up so far um we've recently you know met and continue to meet with both partners that are very pleased with the service performance that that we've been able to tag on to their vessel and ship performance um i would say the volumes have ramped up faster uh in vancouver than uh i think they expected and We expect it, but it's been a good thing. And I would say we're still in the middle innings of the journey with them. So I'm quite pleased with that. And really, you know, as you think about growth over the next 18, 24 months, we haven't really scratched the surface to the level I think all the parties want to, if you think about Lazaro. So I think there's still opportunity there that has maybe been weighed down by some of the tariff and trade talk. So we're still excited about that. And we've got a lot of capacity online now at St. John's. So I think there's still some upside with the partners at that port.

And, John, just to add, Steve, this is Mark, The, you know, the dream we had is coming off the South Shore with just building service straight out of the facility, being able to go and penetrate into the eastern market straight from Vancouver. With Jim and I, we've been able to do that. We've been able to build trains straight off of that port and go straight to destination. To overlay that with the new locomotives that we're adding to the 100 series fleet in Canada, certainly upside and really just creates that quality service plan we need to give them, and we are.

And our next question comes from Stephanie Moore with Jeffries. Please go ahead.

Hi, good afternoon. Thanks for the question. You know, Keith, really appreciate the insight and time you're spending kind of walking through the puts and takes of the proposed merger here and providing your insight from your own experience. You know, I guess one follow-up to a point you were making earlier in terms of, you know, gateway options. But, you know, if I recall, you know, I think the official ruling from, you know, your own deal here from the STB, it talked about protecting, you know, competition and not necessarily competitors. So I wanted to, one, do you think that the board would likely take a similar stance in this deal or has something changed? And then second, maybe talking about, you know, the ability to, you know, ensure existing gateways are still preserved and, you know, if that wouldn't be the case based on the merger proposed. or potentially both, trans-con mergers.

You know, again, I can't speak for the STB. I could imagine a world where some of those solutions are part of the considerations, but you mentioned a key word. Under our consideration and under the rules that we were approved, the STB was governed by a standard that said you had to protect competition. That's not the case anymore. Don't exist anymore. There will never be another merger that just has to protect competition. They have to enhance competition. So when I hear that there's only 20 customers that go from two to one and we have an answer, then the next question I have is what does the answer do? Does it preserve or does it enhance? Because if it just preserves, it doesn't meet the public interest test. It must enhance. That's a unique and undeniable material difference that these merger rules represent. They're untested, and rest assured the SDB will want to get this one right because by their own admission and by the industry, including UP's own admission, this very well could trigger total industry consolidation that leads to an endgame scenario where you have two duopolies across this nation. It has to get right. It has to be done right to serve the public interest.

Thank you. Thank you. Thank you. And our next question comes from Daniel Embryo with Stevens. Please go ahead.

Yeah, thanks for squeezing me in, guys. John, I want to follow up on actually the pricing back on the CPKC side. I think you talked about three headwinds in the quarter on fuel prices, the carbon tax, and then mix. Any way to quantify those cents for RTM headwinds as we parse through 2Q and which of those will continue in the back half? And if we heard you right, it sounds like core pricing is staying above that 3% to 4% range. I guess when should we think about that beginning to flow through the model more to the bottom line and maybe not being masked by some of these other headwinds?

It flowed through first quarter pretty well. Yeah, Daniel, just to give you a perspective, Fuel and the carbon tax essentially 100% wiped out pricing, and mix is how it broke down. You know, frankly, just you saw the intermodal growth, the international intermodal growth. We saw it combined with really strong bulk growth, and, you know, those average cents for RTM in those business units is slightly below, you know, the corporate average. So hence the mix challenge. You know, looking forward, I think fuel we expect to improve. So we'd see, I think, a better outcome there. We're going to continue to have the carbon tax headwind. And, you know, as I look to the second half year volumes, I think mix improves some, but it's probably still going to be a headwind because we are expecting a pretty big bulk back half of the year, too, with the grain, the potash, and the coal.

Thank you. And your next question comes from Ken Hickster with Bank of America. Please go ahead.

Hey, great. Good evening, Keith and team. So I'm sorry, just to clarify, Keith, are you saying that CPCN is now off the table? It was only a couple of years ago. CP tried to make the case for each of the eastern rails. It sounds like you're saying you're inclined that this is only a duopoly-structured process and you're going to now lead the fight for concessions and detailing the risk to the regulators versus you jumping in the round and dancing with who's left. Is that kind of what you're saying, the only realistic option on the table? And then I guess, Nadeem, just to clarify one thing you mentioned on the OR, right? You said the – I just want to understand, given the impact to 2QOR from the network issues, You mentioned kind of going into the 50s. I just want to understand, should we see an outsized historical shift from 2Q to 3Q just given the network issues from 2Q?

No, I mean, the OR wasn't greatly impacted in Q2 by the network issue, by the systems integration. There was a 3% to 4% EPS, but it didn't affect the OR significantly, Ken. So I would say that year over year you'll see probably the best OR improvement in Q3 relative to the other quarters. So I'm giving you a lot of quarterly OR color there, Ken. But I just say continued improvement and then continued improvement in Q4 and sub-60 for the year.

Now, I guess, Ken, the best way to answer your question is we're going to consider all scenarios except for one, and you figured out between the lines what that one is. At the end of the day, it's our job to make sure we create and leverage this team and network to create the most value for our stakeholders and whatever definition allows us to meet that standard, we've got to produce your responsibility to consider it, and that's exactly what we'll do. We won't be confined by traditional, so maybe you expect the unexpected, who knows? I don't know. I don't know what the facts are going to be. I just know that as they're revealed, we're going to understand them, and we're going to meet our fiduciary responsibility. Thanks, Ken.

Thanks, Ken. Our next question comes from Ravi Shankar with Morgan Stanley. Please go ahead.

Great, thanks, everyone. If I can squeeze in a non-M&A question here, apologies if I missed this, but I think you mentioned MMX volumes were up 40% year-over-year and 20% sequentially. I don't think anything in transport is up 40% year over year. So can you just give us a little more color there? Kind of was this tariff related? Kind of is that any pull forward into 2Q? And kind of where do you see that going next couple of quarters?

Really strong sales effort, Ravi. It's truck-like. It's fastest in the industry. It's seamless. Middle Mexico to Chicago and up into Canada. And frankly, between our partnership with Schneider and others, we've just seen really strong and continue to see strong growth. I think I mentioned in my prepared remarks, we've got a really sizable piece of automotive parts business that's ramping up. And now with the AmeriCold facility, you're going to start to see our reefer business ramp up on that product too. So I expect this trajectory to grow, and hopefully pretty soon here, we're putting pressure on Mark for a second train start.

Okay, thanks, Ravi.

Thank you. We have reached our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Crill. Please go ahead.

Okay, thank you. Well, listen, let me close where I started. Thank you for your time today. A lot of robust discussion, certainly more to come. In the meantime, the most important thing we're focused on with this team is executing our plan this year to meet and exceed our objectives. We've laid out guidance. We fully intend to see a path to achieve that as it relates to the year and as it relates to our multi-year plan. That's what we'll do, as well as stay abreast of all these current developments as they progress within the industry. Thanks very much. We look forward to sharing our results next quarter.

Thank you, and this concludes today's conference call. You may now disconnect.