Fadi Chamoun

Fadi Chamoun asked Janet Drysdale for clarification on whether the mix impact in 2026 is expected to be flat, worse, or slightly better than last year. He then inquired about CN's differentiated opportunities to grow volume and business over the next one to three years, seeking specific segments or markets where CN can outperform the broader economy.

Answer

Janet Drysdale, Chief Commercial Officer, explained that the mix impact for 2026 is currently projected to be 'about the same level' as 2025 versus 2024, noting that mix has both enterprise-level and within-segment aspects. She highlighted CN's differentiated opportunities stemming from its 'northern nature' and exposure to Canada's natural resource base, specifically calling out the BC North region (Montney Shale for NGL exports and frac sand), Canadian grain (improved yields, canola crushers, trade resolutions with China), potash (looking to 2027), and critical minerals.

Fadi Chamoun asked Janet Drysdale for clarification on whether the mix in 2026 is expected to be flat, worse, or slightly better than last year. He also inquired about CN's differentiated opportunities to grow volume over the next one to three years.

Answer

Janet Drysdale, Chief Commercial Officer, indicated that the mix impact for 2026 is expected to be similar to 2025, noting both enterprise-level and within-segment mix shifts. She highlighted CN's differentiated opportunities stemming from its northern franchise and exposure to Canada's natural resource base, specifically calling out the BC North region (Montney Shale, NGLs, frac sand), Canadian grain (canola), and longer-term exposure to potash and critical minerals.

Fadi Chamoun asked if CN is acting as an observer in potential merger scenarios, ready to defend its access, and questioned if there is an opportunity to tighten the elevated CapEx budget given flat volumes.

Answer

CEO Tracy Robinson affirmed that CN will "rigorously defend our competitive access" in any scenario. Regarding CapEx, she noted a $50 million reduction from the budget and highlighted a focus on productivity and investing in growth projects, primarily in the Western corridor, only when there is line of sight to returns, often secured by commercial contracts.

Fadi Chamoun inquired about the outlook for U.S. international intermodal volumes through Western ports, considering tariffs and blank sailings, and asked about potential new supply chain solutions CN could offer.

Answer

Remi Lalonde, Chief Commercial Officer, acknowledged a slower-than-expected recovery in U.S. volumes in Q1 but noted a strong pickup in April, driven by the Gemini Alliance at Prince Rupert. He mentioned that while an "air pocket" from blank sailings is expected in Q2, the second half should see growth. Lalonde also highlighted new services, like a short-sea route from Mexico to Gulfport, as examples of adapting to trade shifts.

Fadi Chamoun asked about the pricing assumptions embedded in the 2025 guidance and to what extent they incorporate the higher frequency of disruptions from events like fires and extreme weather.

Answer

President and CEO Tracy Robinson stated that while the operational plan accounts for potential natural disruptions, pricing is market-based. Chief Commercial Officer Remi Lalonde reiterated the goal of achieving same-store pricing above rail cost inflation, which CFO Ghislain Houle estimated to be around 3%.

Fadi Chamoun of BMO Capital Markets questioned the visibility and conviction behind the Q4 volume guidance, which implies a significant sequential ramp-up despite a soft quarter-to-date start.

Answer

Chief Commercial Officer Remi Lalonde acknowledged the required ramp-up but expressed confidence in meeting the low end of the guided range. He cited strong grain movements, a good U.S. grain crop, and recovering domestic intermodal as key tailwinds, while noting headwinds from the macro environment and a difficult year-over-year comparison for potash.

Fadi Chamoun, Equity Research Analyst at BMO Capital Markets, asked for clarification on how CPKC expects to bridge mid-single-digit RTM growth to revenue, considering potential mix issues and the impact of tariffs on profitable business. He also questioned Mark Redd on the network's capacity to handle projected business with current headcount levels.

Answer

John Brooks, EVP and Chief Marketing Officer, anticipated mix headwinds in Q1/Q2 due to strong bulk business and tariff impacts on high-margin traffic, but expected stabilization later in the year, projecting a couple of points of upside on revenue if RTMs and revenue aligned. Nadeem Velani, EVP and Chief Financial Officer, added that Q1 would see headwinds from lapping the carbon tax and Canadian dollar appreciation. Mark Redd, EVP and Chief Operating Officer, stated that headcount would be flat to slightly up, ensuring strong operating leverage and network capacity, with ongoing focus on train size and labor agreements.

Fadi Chamoun sought clarification on how CPKC bridges volume to revenue, particularly regarding mix issues and the implications of mid-single-digit RTM growth for revenue in 2026. He also asked about the network's capacity to handle the projected business with current headcount levels.

Answer

EVP and CMO John Brooks noted that Q1 and Q2 might see mix headwinds due to strong bulk business and tariff impacts on profitable segments, but anticipates potential revenue upside later in the year. EVP and CFO Nadeem Velani added that the Q1 carbon tax lap and Canadian dollar appreciation would affect cents per RTM. EVP and COO Mark Redd stated that headcount would be flat to slightly up, with strong operating leverage expected from train size focus and labor agreements.

Fadi Chamoun asked about the potential UPNSC merger, specifically if it would trigger an 'end game' leading to only two major North American railroads, and if the rest of the industry could maintain the status quo if one merger occurs.

Answer

President and CEO Keith E. Creel stated that the proposed merger is not a 'layup' and faces a high hurdle with unprecedented rules and a public interest test. He emphasized the STB's thoroughness, drawing on CPKC's own merger experience, and stressed the need for significant conditions to protect competition and prevent anti-competitive behavior, especially given historical service failures and embargo concerns from the applicants.

Fadi Chamoun asked about the potential for further rail consolidation following a hypothetical UPNS merger, specifically if it would lead to an 'end game' of two major North American railroads or if the industry could maintain the status quo.

Answer

President and CEO Keith Creel emphasized that a UPNS merger is not a 'layup' and faces a high regulatory hurdle, requiring significant conditions to protect competition. He highlighted the STB's experience with past service failures and anti-competitive behaviors, asserting that the regulator would ensure any decision protects the U.S. rail network and public interest.

Fadi Chamoun of BMO Capital Markets inquired about the commercial opportunities for CPKC in a potential 'endgame' scenario of transcontinental networks and whether the current mid-single-digit volume growth is sustainable into 2026, even in a flat economy.

Answer

CEO Keith Creel affirmed that the company sees a clear path to sustaining its mid-single-digit volume growth. Regarding a consolidated industry, he explained that any mega-merger would require significant concessions to meet the 'enhanced competition' standard. Creel highlighted that CPKC's unique North-South network is perfectly positioned to benefit from such concessions, potentially gaining unfettered access to key markets like Houston, which would create new competitive opportunities.

Fadi Chamoun of BMO Capital Markets asked about the medium-term volume framework, questioning if the U.S.-Mexico opportunity is dampened by trade policy attacks on key markets like autos and steel.

Answer

President & CEO Keith Creel stated that the company's job is to create solutions and act as market makers, noting that any headwinds are being offset by new opportunities, such as over $100 million in new revenue from Alberta to Mexico. EVP & CMO John Brooks added that the team is focused on converting business, driving synergies, and maintaining pricing discipline, expressing confidence in outperforming synergy targets.

Fadi Chamoun asked for clarification on the drivers of the high and low ends of the guidance range and sought perspective on how potential changes in trade policies are affecting customer behavior.

Answer

President and CEO Keith Creel addressed trade policy concerns, stating that despite uncertainty, strategic customer investment is increasing, not decreasing, due to the deep integration of North American supply chains. He expressed confidence that the guidance range accounts for this risk and that a pragmatic approach to trade will likely result in performance at the higher end of the range. EVP and CMO John Brooks added that based on customer discussions, current growth initiatives are not expected to be impacted, as complex supply chains are difficult to alter quickly.

Fadi Chamoun asked about the potential impact of the Gemini shipping alliance on CPKC's network and for an update on the synergy revenue pipeline's expected run rate for 2025.

Answer

EVP and CMO John Brooks expressed excitement about the Gemini alliance, highlighting CPKC's strong existing relationships with both Hapag-Lloyd and Maersk. He sees their precision-based model as a philosophical match for CPKC's operations, creating opportunities at ports like Lazaro Cardenas and Saint John. Regarding synergies, Brooks confirmed the company is on track for an $800 million exit run rate in 2024 and sees no reason why that pace of growth shouldn't continue into 2025, fueled by initiatives like MMX, MNBR, and the Americold project.

Fadi Chamoun asked about CAE's capital efficiency focus, the new thresholds for capital approval, and the potential for the business to return to double-digit Return on Invested Capital (ROIC) in the medium to longer term.

Answer

Matthew Bromberg, President and CEO of CAE, explained that the company is evaluating prior investments and reflecting current market conditions for new investments, aiming for a more disciplined approach. He acknowledged that double-digit ROIC was achieved not long ago and stated that maximizing return on current and future investments is a top focus, with more details to be shared with next year's financial outlook. Nick Leontidis, COO, also offered a brief thank you.

Fadi Chamoun with BMO Capital Markets inquired about CAE's updated capital efficiency focus, specifically how the threshold for approving capital has changed and the potential for the business to achieve double-digit Return on Invested Capital (ROIC) over the medium to longer term, given past performance.

Answer

Matthew Bromberg, President and CEO of CAE, stated that the company is evaluating all prior investments and reflecting current market conditions for new investments to ensure a more disciplined approach. He noted that achieving double-digit ROIC is a top focus for the leadership team, and more precise details will be shared with next year's financial outlook. Nick Leontidis, COO, also offered a brief greeting.

Fadi Chamoun from BMO Capital Markets inquired about the new leadership's focus on operational excellence, asking for high-level thoughts on where the primary opportunities exist for improving margins and free cash flow conversion.

Answer

Chairman Calin Rovinescu explained that significant past investments now offer potential for leverage through cost optimization, a skill he noted is in incoming CEO Matthew Bromberg's wheelhouse. Matthew Bromberg added that while he is still in the assessment phase, his career has focused on driving efficiency in complex global organizations, and he sees clear opportunities to do so at CAE over the next 90 days.

Fadi Chamoun inquired about CAE's flight operations business, asking about its competitive readiness, its performance relative to expectations, and whether it has the necessary scale and synergies with the core training business.

Answer

President and CEO Marc Parent confirmed CAE is winning a disproportionate share of new business and is currently at capacity for implementations, which are paced by the airlines' ability to adopt the new systems. He noted orders have a SaaS-like profile with revenue recognized over multiple years. COO Nick Leontidis added that the ~$700 million in orders will convert to revenue as solutions are implemented. Interim CFO Constantino Malatesta affirmed the business has the scale and capabilities it needs without requiring further M&A.

Fadi Chamoun of BMO Capital Markets requested perspective on the recent Board of Directors changes and their strategic implications. He also asked about the organic growth outlook in the Civil segment, particularly the relationship between OEM aircraft delivery recovery and training demand in the U.S.

Answer

CEO Marc Parent described the board changes as part of a planned renewal and succession process, highlighting the appointment of Calin Rovinescu as new Chair to lead the transition. On Civil growth, he explained the current U.S. softness is a temporary issue tied to OEM delivery delays, which has deferred pilot hiring. He expressed confidence that training demand will rebound quickly once aircraft deliveries normalize, noting strength in business aviation is a partial offset.

Fadi Chamoun of BMO Capital Markets questioned the visibility into the significant second-half EBIT growth required to meet Civil guidance, asking if the recovery in commercial aviation training would be swift or protracted, and sought insights from the new COO on efficiency improvements.

Answer

President and CEO Marc Parent affirmed confidence in the second-half forecast, citing stronger business aviation performance, higher simulator deliveries, cost optimization benefits, and a projected recovery in initial pilot training, which is already reflected in bookings. COO Nick Leontidis added that streamlining operations has removed management layers and is creating synergies, such as leveraging investments across both Civil and Defense on shared programs.

Fadi Chamoun sought guidance on XPO's pricing expectations for Q4 and the sustainability of its premium pricing strategy into 2026.

Answer

Mario Harik (CEO, XPO) affirmed expectations for continued outperformance in pricing based on company-specific levers like assessorial revenue and small-to-medium sized businesses. Kyle Wismans (CFO, XPO) added that year-over-year yield growth, excluding fuel, in Q4 is anticipated to be in a similar range to Q3.

Fadi Chamoun sought guidance on XPO's Q4 pricing expectations and the sustainability of its premium pricing, specifically if the 100-150 basis point premium continues into 2026.

Answer

CEO Mario Harik reiterated expectations for continued above-market yield growth into 2026, driven by company-specific levers like assessorials and small-to-medium sized businesses, which add incremental points of yield regardless of market fluctuations. CFO Kyle Wismans added that Q4 yield, excluding fuel, is expected to show similar year-over-year growth to Q3.

Fadi Chamoun of BMO Capital Markets asked a big-picture question about the sustainability of XPO's strong revenue per shipment performance and pricing leverage if the muted freight market continues for another year.

Answer

CEO Mario Harik affirmed confidence in the long-term sustainability of XPO's yield initiatives, noting a significant runway remains to close the pricing gap with best-in-class peers. He detailed the multi-year strategy, which includes improving service to command better pricing, expanding high-margin premium services (accessorials), and growing the local customer channel. Harik emphasized that these initiatives have years of runway left, allowing for continued outperformance even in a prolonged soft market.

Fadi Chamoun from BMO Capital Markets sought clarification on the volume decline assumption tied to the 100 basis point OR improvement scenario and asked for perspective on whether the LTL industry's volume decline is from demand weakness or share loss to other modes like truckload.

Answer

Chief Strategy Officer Ali Faghri clarified that the 100 basis point OR improvement scenario corresponds to a full-year tonnage decline in the mid-single-digit range. Executive Mario Harik attributed the industry's 15-16% volume decline from pre-COVID levels primarily to underlying industrial demand weakness, not a structural share shift to truckload, citing the significant cost differential between the modes.

Fadi Chamoun from BMO Capital Markets sought clarification on the volume decline assumption tied to the 100 basis point OR improvement scenario and asked for perspective on whether the LTL industry's volume decline is due to demand weakness or share loss to truckload.

Answer

Chief Strategy Officer Ali Faghri clarified that the 100 basis point OR improvement scenario corresponds to a full-year tonnage decline in the mid-single-digit range. CEO Mario Harik added that the industry's volume decline of 15-16% from pre-COVID levels is primarily due to underlying weakness in industrial demand, not a structural share loss to truckload, citing the significant cost differential between the modes.

Fadi Chamoun of BMO Capital Markets requested an outlook for 2025, questioning if the company can continue to improve results without a significant macroeconomic recovery.

Answer

Executive Mario Harik expressed confidence in delivering strong results in 2025, even in a soft macro environment. He pointed to several key drivers: momentum in premium services, continued growth in the local customer base (which added over 8,000 new accounts year-to-date), and ongoing cost benefits from line haul in-sourcing and new, more efficient service centers.

Fadi Chamoun of BMO Capital Markets asked for help reconciling the shift to heavier, yet seemingly not margin-accretive, freight with the strong 6.1% contractual renewal rate, noting that realized pricing appeared negative.

Answer

President and CEO Fritz Holzgrefe explained that heavier freight can have more difficult handling characteristics, adding costs. He emphasized that the more significant issue was that all growth came from immature, less profitable new markets, while higher-margin legacy facilities saw volume declines. Executive Matthew Batteh added that freight from new markets often requires more handling. Fritz Holzgrefe also clarified that the realization on contractual renewals is not one-for-one, as customers have choices in the current environment.

Fadi Chamoun of BMO Capital Markets asked if Saia could maintain its recent outperformance in shipment growth into Q4, potentially reaching high single-digits. He followed up by questioning why operating ratio seasonality wouldn't improve more significantly if start-up costs were moderating.

Answer

CEO Fritz Holzgrefe noted that Q4 shipment comps are noisy due to a GRI, a peer's issue last year, and recent hurricanes, but affirmed that Saia is gaining market share. Executive Matthew Batteh clarified that while the largest openings are past, there are still new terminals opening in Q4, which will continue to impact the operating ratio, alongside normal seasonal slowness.

Fadi Chamoun of BMO Capital Markets asked about the drivers of the strong core pricing, questioning how much was from lagging inflation versus improved service, and its sustainability.

Answer

CFO Jennifer Hamann explained that the strong pricing is consistent with the company's Investor Day strategy to achieve accretive pricing, which includes repricing long-term contracts. EVP of Marketing and Sales Kenny Rocker added that the strong service product provided by the operations team is a key enabler for the commercial team to price for the value delivered.