Thanks, everybody, for joining us. Appreciate it. We're getting back on the transportation track. We are very excited to be joined by Canadian Pacific. This morning, we have John Brooks, EVP, Chief Marketing Officer from the company, as well as Mark Redd, EVP, Chief Operating Officer. Ashley's also there in the front row. Thanks very much for coming, guys. Really appreciate you joining us at the conference today. Absolutely.

Appreciate it, Chris. Great.

Well, I think probably the best way to kick off, which is what we've been doing, is maybe just a little bit of a current market update, if you will. So maybe we'll start, John, with you on what you're seeing from a market's perspective on volume, and then we can turn it over to Mark to talk a little bit about what's happening from an operations perspective.

All right. Well, again, certainly honored, Mark and I, to be here representing all the CPKC employees out there across three countries. It's crazy, Chris, to think about it, that we just passed our three-year anniversary here back in April of this combination of, you know, legacy CP traversing, of course, across Canada and into the U.S. and, of course, the KCS down from Kansas City and into Mexico. And it has been a unique journey, but it's a unique journey because it's a unique property and franchise. And, you know, I sit here today super pleased with what the three years have produced. We continue to lead the industry in earnings growth. We continue to lead the industry in volume growth. And honestly, as I looked at 2026 and how things are shaping up, Q1 was sort of how we expected. There was certainly some pull ahead and some challenges from last year. But nonetheless, we stacked a record Q1 in terms of volumes moved onto Mark and his team to move. Now, as I sit here in Q2, I would tell you the volume trend continues to be positive in sort of week over week. we continue to see a little bit of an uptick. So I'm pleased where we sit today. I'm, you know, as optimistic as ever around our full-year guidance of mid-single-digit volume growth and hitting double-digit EPS growth. And I don't think anything has changed on that front. I can tell you, Chris, and I think you know this, we continue to be very disciplined in the marketplace in terms of pricing I feel good about where we sit on that front and and frankly as you know maybe some of this trucking capacity continues to tighten and some of those trends you know continue on the right direction as we look forward I think there's further opportunity there and maybe I'll turn it over to mark because he's running a pretty good railroad right now yeah he's selling the business right so he's propping himself up here he's looking good so thanks for having us really I would say you know it's good to be a CPKC the railroad running well we've got if I look at some of just the metrics

off the top of my head dwell car miles per car day double digit I mean we're 10 11 percent better than last year if I look at some of the you know some of the day-end noise that we did have last year comparables to this year the the KCS former KCS Southern property doing quite well as well so yeah so you know we're delivering what we said we would do the synergies we're propping up the synergies that John talked about we also looked at the just the integration piece of it with our employees with our culture certainly dynamic we have three countries to work through with our employees and certainly from a cultural standpoint we're implementing PSR CP KC living well so again it's good to be here. Absolutely.

Well, listen, that's a great way to kick off. And maybe, John, we'll dig in a little bit more on the volume side. I think, you know, quarter to date up a little bit north of 3% on RTMs. I guess, you know, when we look at the individual commodities, grain continues to be, you know, quite robust. Let's start there. So how do you think about the grain dynamic? I guess there's been a view that you guys are kind of running all out. I guess, is there a point when that crop from last year runs out and we go into a little bit of a pause? How do we think about sort of first half, back half of 26 from a grain perspective?

Chris, I have to tell you, like, so, yeah, quarter to date, we're just right at about 4%, and our Canadian coal is, it's probably about a 3% headwind that we're covering on that, too. So, you know, I look at last year we grew RTM's Q2 by 7%, the prior year 6%, ex-coal we'd be 7% again this year. we're stacking growth upon growth at CPKC. Certainly grain's a huge part of it. And honestly, I've said it in the past, I'll say it again, at CPKC we got the best, most resilient bulk franchise in the industry and it's paying dividends. The grain is running well. As you know, we had a record crop across Canada. We actually had a record crop specifically on the corn side in the U.S. and that's where we continue to see the strength. How long it lasts it's the thing that sort of keeps me up every night kind of kind of wondering but I'll tell you the certainly the outlook to close out the next three weeks in early July continues our orders look very strong. Yeah we just kind of got through two weeks of the final seeding across the property which sometimes the farmers pull back a little bit on their deliveries and it's been pretty wet up in canada here recently so that's put some road restrictions on so we've seen a little softer volumes but i can tell you orders for next week came in as about as strong as this time of the year i've seen um so look i i expect to continue probably right in the new crop to see a pretty steady or above average grain shipments certainly within Canada and honestly the U.S. customers are pretty bullish on sort of the outlook the next few months and on the U.S. side of our property too. So you know between between grain you think about our other pieces of business in the bulk franchise our potash business continues export potash continues to be particularly strong and if we can see some incremental improvement in our Canadian coal business, which we fully expect as we look to the back half of the year. I don't know, that kind of presents itself a little bit of stabilizing effect or even a little bit of upside.

Yeah, I would, you know, one thing I would add, I'd be remiss not to say it's following our PSR principles as well. So if I think about with seeding, if I think about EVR, some of the issues they may be having, I mean, we're pulling train sets, we're pulling cars out as we need. We're storing locomotives even for that short time period just to save costs, save overhead that we can in the operating side. Again, we talked about a ramp-up next week where we've got grain hoppers spotted at elevators ready to load ahead of our competitor in some of the areas and certainly ready to push off this coming up week as we see orders restore themselves.

Auto has also accelerated nicely here in the second quarter.

Can you talk a little bit about sort of what you're seeing there obviously the the franchise is somewhat unique in the way that you triangulate that business using i think some of the opportunity in the network that you have in texas there so can you talk a little bit about what you're seeing on the auto side yeah you know um this is an area that chris if you recall as we look to you know bringing this these two properties together we really thought it was a kind of late part of the journey honestly i thought it would have been about right now we would have seen that really materialize but it's an opportunity that we took advantage of and really were able to pull forward the opportunity. And when I say that, it is creating this closed-loop network to where we're really taking our auto compounds, our production facilities in southern Ontario, the U.S. and Mexico, and how we sort of link all that together. To honestly just give the OEM a better service product than they've ever had in the past. and we've had a lot of success. So you're right, there's uncertainty relative to trade and some of the tariffs and how production shifts may take place over the coming years. Right now, the demand is strong. So again, I expect a pretty good run out here the next few weeks to close out the quarter and the automotive space. I can tell you I see an opportunity. There's still a lot of vehicles being produced in Mexico that are being short-seed into the U.S. or even into Canada that just because of contract timing haven't come available to us yet. So I do see a pretty good auto opportunity even out here the next 18 months in terms of new incremental volumes. And we'll see what the second half brings. You know, typically we get into that July time period and you see retooling and plant maintenance. We're even talking to some of the automakers about the idea of producing through that period, which could present even some upside as we move into summer.

And then I guess as you think about the full year, so the mid-single-digit RTM target, you're running, you know, a bit below that now, but obviously volume is accelerating. So can you just talk us through how you think about what the progress would be that you need, I guess, 3Q, 4Q, some of the key points that you're looking for? Obviously, you mentioned, you know, you could see some different commodities do different things as they move over the course of the next two quarters.

Yeah, I would tell you the cadence is exactly sort of how we played it out for the year. We knew, again, Q1 was going to have some pull-ahead challenges despite sort of us moving record volumes. I think we had about 2% RTMs. We expect Q2 to fall in that 3.5% to 4.5% range RTMs, roughly, Chris. And that kind of sets us up for what I would consider to say, let's call it a half point to a full basis point, kind of sequential RTM growth as you think about Q3, Q4. I think that's how the year plays out. Nothing that I see out there right now gives me pause relative to this. I continue to see our bulk franchise performing quite well. You know, Intermodal is definitely hung in there for us, and I'll give you kind of two thoughts on that. One is our international business, although we're facing tough comps, is right hanging in there. Better than actually I thought, and I can tell you sort of the view here the next few months, is we've got pretty strong deliveries planned in cargo on the water, and actually that's with Lazaro not performing really great so far the first half of the year, but we see a pretty good pickup on our Lazaro freight coming into end of June, July. So I'm actually pretty bullish on international, more so than maybe I was early. And, you know, frankly, the Canadian consumer and the U.S. consumer on the domestic side, despite all the noise, continue to be pretty resilient. So those volumes are pretty decent. Our transload import volumes that get transloaded for the likes of a Canadian tire and Dollarama and others in Canada continue to be pretty strong. And with the introduction of our new SMX product that I'm super bullish on, that is a great growth platform for this network. So I think we're going to be stacking double-digit week-over-week volume gains as you think about that product as we move through kind of the second half of the year.

And, Mark, I wanted to kind of get your take on how you prepare the network to kind of manage it, Because it does sound like things are going to get a little bit busier as we move forward through the rest of the year from a volume standpoint, at least on a year of year growth basis. So I guess how is the network kind of prepared to handle it? And then maybe we can weave in some of that 2Q OR commentary. I do think there's an expectation of some improvement in spite of what we've seen with the price of fuel. So how do you think about the network and how it can handle that volume?

Yeah, I think, you know, the past couple of years we've put capital in our railroad. We've spent some money in Mexico to separate our switch and leads that we've talked about in the past to where we can run trains, mainline trains, and switch customers. We've, you know, we've twinned the Laredo Bridge. It opens up capacity for us. We've certainly put money into the old Meridian Bigby that we bought. We've got that railroad up to 49 miles an hour. So we've placed capacity into the network. We have the people to cover it. We have good agreements that cover anything that John can throw at us. We brought on locomotives. We're probably about 166 of 170 delivery from Wabtec. But I tell you what I'm proud of and really super pumped about is progress coming back into the business. We'll have August where they'll start delivering 30 locomotives, Tier 4 locomotives to us this year, and that will migrate into 35 for the following year. So we'll be 200-plus locomotives on hand, replacing some of the older fleet, but also getting better utilization and fuel efficiency out of the ones that we do have. But certainly super excited on where we are. You see it in the numbers. We've got growth that we can add and overlay into that. We've got growth on our trains of SMX, and the MMX certainly can grow in that space as well. So, yeah, we've done a lot to get here, and we've backed off capital just a bit, just only because of the money that we've put in over the past couple of years. So we're super excited. it.

And then as you guys think about sort of the, you know, 2Q, I think there's an expectation of OR improvement. I'm guessing nothing's necessarily changed as far as that's concerned. And then I think full year, you know, sub 60, I think is the way you guys are thinking about it. Any anything to think about from an OR standpoint, 2Q or full year?

No, I think we feel good about it, Chris. But look, fuel continues will be a challenge. Stock based comp, a good thing. uh we'll we'll we're watching that um we've got to keep them on the rails have a little bit of a casualty wobble here um but all all that to say sort of the thesis in terms of uh bringing on more volume operating in a disciplined way and having that output be that sequential improvement that we've talked about nothing's changed and and honestly um as we look forward to a full year in terms of our volume guidance, our double-digit EPS, and the ability to improve that operating ratio, as we spoke about, all is in line.

Yeah, I think double-digit EPS in the second quarter was also mentioned on the last call. I'm guessing that still sounds reasonably good. Yeah, that's right. Let's talk a little bit about pricing. So I think there's been a lot of discussion around the transportation market broadly. Certainly at this conference, we've been talking a lot over the last day or so on the trucking market in the U.S. specifically. I guess maybe a couple of parts to this question. First off, how are you thinking about sort of pricing in the various end markets that you guys are very focused on? And then maybe we can think a bigger picture about the transmission of truck pricing in the U.S. to how it impacts your franchise and when.

Yeah. Well, look, I'll start by saying I believe we have been the most disciplined price leader in the industry, and we're not going to back off, we're not going to waver, we're not going to blank. My team is, frankly, part of their compensation is tied to their ability to earn price for the value of the service and capacity we provide. That's a finite product that mark provides and and we want to get that that value out of it um so you know the pricing that i've sort of guided to the last couple quarters as i look at q2 and um it's it sort of continues to play out i'm just going to say that three to three and a half to four and a half percent range can continues to sort of play out and and honestly as i look out over the next 18 months as I look at a lift Chris as I look at what you described and on the trucking piece to me there's it feels like a little bit of a tailwind and if some of these markets continue you know trade stabilizes and we get some of this geopolitical things hopefully past us and and USMCA kind of begins to sort of whatever that new and looks like begins to crystallize I think all those things are supportive for that pricing piece of our business you know specific to the trucks in in how that materializes it kind of moves in it doesn't move as fast as you might think what what happens first and I think what we've definitely realized is the spear or pie of opportunity specific to that gets has grown like as much as I would say our MMX product which is our trained service from central Mexico to Chicago when we introduced it three years ago the timing couldn't been worse I think it was a tough market to introduce it in the SMX arguably couldn't be better it's and and I think I think what we're seeing is the band or scope of customers now interested in that product right out of the chute has been much bigger. The pricing piece, I think there's a little bit of a lag to how that plays out, but I was telling a group earlier today, you know, it's not just that sort of natural intermodal piece truck to a 53-foot dry van. we're getting a lot of interest from shippers that are trucking today that are interested in boxcar or you know other types of movements or a combination of boxcar in intermodal that they can sort of diversify and try to find some savings to what they're facing in the truck markets today but but I do believe that pricing piece relative to that kind of just continues

to play out as we look forward yeah that makes sense and then Margaret I wanted to touch a little bit on on some labor dynamics and how the network is operating in the context of those I guess as you think about heads and anything from a 2q operating perspective around labor yeah so I think just from head count will be will be balanced I mean I don't think we may be incrementally up just a bit just based upon you know when business comes on board one thing maybe you didn't mention was the IABW that we're they have a strike right now with the signal department they handle the signals in Canada about 300 employees for us we're covering the business we'll cover it through Q2 if we need to certainly be back at the table whenever they're willing and able and want to it's unfortunate that it happened but you know you gotta you've got to take a stand on where your beliefs are and you got to do what's right in the U.S. side we've been dealing with an hourly agreement certainly the men and women in some of those areas didn't want an hourly agreement which is fine we have a and I think said it last time we have an older short line agreement that'll be in place it gives you really good flexibilities I know it well I used to work under that hour with that short line agreement and we do know it well so again that unlocks some some opportunities for us to move crews around move crew districts around run run double districts instead of single districts. So we'll see some savings out of that as well. But from a labor standpoint, we've always said from the start, you know, we've got to build that relationship. We've got to keep that relationship. That relationship is always important to us. Again, we're going to agree to disagree on some things, but certainly when we leave the table, we'll understand what's important to both of us.

And with those 300 folks, there's not necessarily any meaningful disruption in the way the network's operating on a day-to-day basis here.

Yeah, not at all. We're all love. You know, the good thing about it from the company side is we learn that job a little bit and get a little more intimate with what they do day in a life is their opportunity for headcount to come out. We'll be certainly looking at that as well.

Okay, that's helpful. John, I want to come back. You mentioned USMCA. That's obviously a topic of conversation. I think a lot of folks are thinking about, particularly as it pertains to your network, considering you kind of run the gamut there. So can you talk a little bit about anything that you guys have heard, how maybe you think the process kind of plays out? Obviously, we won't know what the outcome will be, but how does the process play out? We're kind of getting near to the timing here, right?

Well, Chris, I think I would start and say that, you know, the thesis are fundamental of North American trade being good for all three countries. We're not wavering one bit. But I think the foundation of our network traversing all three countries seamlessly and being able to trade and move goods, we continue to strongly believe that, you know, that's the future regardless of what USMCA looks like or who is in Ottawa, who's in Mexico City or who's in Washington, D.C. You know, in terms of the process, you know, we're trying to keep our hands on the pulse of it. Obviously, we read in the headlines and all that, too. I think our feedback so far that we've received is things continue to progress well and discussions are ongoing and robust between U.S. and Mexico. And I think we feel pretty good about directionally how that's going. Timing remains maybe a little uncertain on that. You know, honestly, there's been certainly recent discussions that took place between Canada and the U.S., a little less certain in terms of exactly where those stand and what's next on that front. You know, I think our belief is, again, whether these are now just bilateral agreements between countries or it is all together, I don't know if it really matters to us. If at the end of the day, these look a little different, they're bilateral, but it still gets us to the end in terms of a stronger North American. That's where we're, North America, that's where we're focused. I would tell you, Chris, that, you know, with all this noise, there are green shoots and good opportunities that have emerged. And one piece that was sort of never in our thesis when we put these companies together other, was the idea of linking trade at a higher degree between Mexico and Canada. And that has definitely been something that we've embraced, the two countries have embraced. And frankly, the volumes we've seen grow to a $400 million plus revenue stream from almost a zero revenue stream just three years ago. And we're continuing to see a lot of new opportunities still exist between, you know, whether it be steel or forest products or grain products or, you know, avocados and bananas out of Mexico into Canada or, you know, consumer goods flowing the other direction. So that's sort of been a – I wouldn't say it's a one-to-one tradeoff or that, but certainly it's been an area that we've been able to work on and will continue to work on. It will be kind of this new revenue stream as part of this combined network. Okay.

And how do you think about the shipper positioning going into these discussions? Do you feel like anything is being held back? Is anything being pulled forward? Or do they want to get in or kind of hold off until we get a little bit more clarity on what we're going to know what the rules of the road are going to be?

Yeah, I would tell you I don't think we've seen any sort of dramatic volume shifts right now like we did sort of pre-liberation day where definitely we saw an onslaught of movements. I'm pretty confident we haven't seen that today. To be honest with you, we're in this cycle right now, it feels like, in some of these areas that are pretty heavily tariffed between the countries where you get a pretty big buy by those producers or those folks needing those goods, and then they're depleting the inventory as long as they can go without buying again, and then it's sort of this spike. Like, that's kind of what we're seeing in those areas. And, you know, optimally, we'd like to see that smooth itself out with some sort of trade agreement.

And then I guess, you know, Mark, you were talking a little bit about the Mexican part of the network, I guess. As we're sitting here a few years, I think you've noted the three-year anniversary of the transaction. As we're sitting here, I guess, where does the Mexican network stand relative to U.S. and Canada? Are there more opportunities there, I guess, as you think sort of bigger picture operating ratio and how improvements in Mexico fit into that sort of earnings growth algorithm. You know, what else can we expect down there? What needs to happen?

Well, I mean, I would say from a labor side, good news is we've kind of settled our labor agreements this year with just cost of living, and next year we'll do some service rules, work rules with each other. And they're year to year, right? Yeah, they're year to year. You do work rules every other year, so you get that opportunity. But, yes, you're right. so it but again we've had such a good relationship I would say it's never perfect but would say that you have a good relationship with the the Union and but and the other part of it is just kind of where we are there's incremental things that we want incremental things that they can see that they want to swap different things with so there's there will continue to be opportunity in Mexico just from a labor standpoint which allows us to do more which allows us to pay a bit more and probably take a few more heads out of that system as we continue to build upon some of the track structure down there as we continue to put the culture of what cpkc is our consequence leadership culture we certainly gain more ground in that area remember we focused on KCS first it's based upon STB we've been migrating down to Mexico which is how we do business what we do PSR model all of that type of stuff so we've been working hard in that space this year alone so we've seen a lot of incremental even from day one year over year just in Mexico alone but again you'll see probably two-fold in the United States on the KCS side okay that's helpful and Chris I'll tell you I'm bullish I'm I'm bullish on Mexico I have to get this in a couple weeks ago I just spent a week down there probably met with 30 plus customers a lot of them new prospects never moved on the rail

before, to sell that property in the spirit and vigor of how we sell the US property and Canadian property has never been done. And I'm completely convinced we are in inning one-two of a growth story with Mexico. I think this network in the past was just a benefactor it just benefited from all the all the all the trade and things going on in mexico and just sort of what it produced we received versus an approach where we're going to go get it and we're going to convert and we're going to teach and we're going to educate and and convert truck to rail um i'm i'm bullish on the growth platform for mexico let Let me add a comment, because rest in peace.

Pat Otzemeier always said whenever he felt down, he would want to go down to Mexico for a reason. And he'd say, you know, just the people down there, they just gravitated to how they can do more of the pride in the workforce day in and day out. As John went down with his marketing team, as we go down with the operating folks, and we talk about how we do certain things, it's just a pride and how they want to do business down there, it overwhelms you. So certainly they want to do more. Certainly they can do more.

And I think it's not lost on us that the last few years from a macro perspective haven't been necessarily all that conducive to kind of reaching some of the bigger picture earnings growth goals that I think you guys originally laid out post-merger. So I think as you guys are talking about these opportunities, are these the kinds of things that we can think about as we look out to 27, 28, that we can be part of the catalyst of driving that accelerating earnings power that we kind of thought we could get originally? originally, but I think that the economy had other thoughts, other plans.

100 percent, Chris. I mean, I remember that investor day like yesterday, and truly the only piece of the equation that isn't exactly sort of how we thought it would play out was sort of that organic growth, that baseline macro piece, and it just hasn't produced like I think it previously had. Now, that being said, I think we've overproduced relative to the synergies and creating the value, and that's been the differentiator. That's what makes this franchise unique to all our competitors out there. I do believe the story, when you think and look forward, with a fairly supportive sort of macro environment coming back at some point here, layering in sort of Mexico and sort of the early innings of where we are, layering in sort of an industrial development story, that I think, truth be told, just the uncertainty the last, I'm going to say past 24 hours, four months, there's a lot of money still sitting on investment money that whether it be in Mexico for the whole nearshoring story or even in the United States. I think certainly we've seen some of that come to roost here recently, but I think that there's still a lot of opportunity for this network in those two spaces that do play in that 27 forward story.

And I waited until there's four minutes left here, but I got to ask you an obligatory merger question. So I guess, you know, As you're thinking about customer discussions, how you feel like the network is positioned, obviously there's probably going to be some time before we have to necessarily address a potential combined UPNS. But how are you guys thinking about the playing field going forward?

Well, I'm going to say, first of all, I'll let Mark, this thing's going to go nine rounds and maybe ten rounds. I think it's going to be a slugfish. I think you got an STB that you've seen now repeatedly at least twice or three times Say that they are gonna hold this to the 2001 merger standards and those that bar is high So it they're they're taking that responsibility obviously very seriously which they should because Whatever transpires and obviously we've been very candid. We do not believe this is necessary. We believe there is balance competitively in in the industry and this is going to bring an unneeded giant to the playing field potentially but also unnecessary risks to really North America in terms of you know if there was a failure that that went with it all that all that to be said I think we believe at CP Casey our network by design is most resilient and if you then were to carry it forward and say let's say it did go forward and and then if there was another round of consolidation

that took place we believe between our franchise our management team we're we're a good suitor so if if if that were to be part of this story then we think we're in a great position there too yeah anything from a network perspective that we should be thinking about competitively with you and a potentially combined UPNS well I would let me talk a little bit about John land on that first but what I would say is kind of counter to that if I think about SMX and I think about the work we've done with CSX they have been a prince I mean they have met us at the door services on and we put schedules together we've done a lot of good things two railroads two class one railroads say they can't work together. We've come together and we've been to do a lot of work together for Atlanta, for New Jersey, for Florida. At some point we'll talk about Charlotte on this SMX and Southbound as well where we have North Mexico and we have the Dallas market that we work together on and we put a good service product together and again it's two class ones working together. Mike Corey and his team has done an exceptional job working with us on blocking, locomotives, everything we need to do to be successful and it's about show me and we're going to show you what that service can do and we've been showing you what it can do and I think that's what I would add to the mergers talk there is there is a way to do this even without a merger yeah and just anything from a competitive standpoint within the network do we is there any areas that you guys feel like you're really well positioned relative to a combined company well again I think the fundamentals of our seamless cross border you know look like they would have the ability to move out of Mexico into the northeast on a two-line carrier just that would be different than the

three that have to do it today so it would match up to our two-line hall does that give me concern no I I do believe fundamentally the routes and in in products that we've put in place are designed to be leaders in in the marketplace now look again I think part of the story Chris is you got maybe one company that arguably control 40, 50 percent of all the freight out there. That brings with it a huge amount of risk. It does bring with that some concern on leverage and customer discussions and stuff like that. But those are the things that I think the STB have now been very clear that they are really going to scrutinize and look closely at.

And whatever happens, I mean, our voice will be heard. If we have to do with the STB publicly, whatever it is, if there is a merger, there's issues that come along with that our voice will be heard so that makes sense well I think we are out of time so thank you very very much for joining thank you appreciate it all right thank you guys yep