Steven Hansen

Steven Hansen sought further clarification on the contour of CN's 2026 guidance, specifically asking if the 'belly of the year' (Q2/Q3) might be stronger than the back half. He cited factors like petchem, coal, and metals/minerals being weak in Q2/Q3 last year due to one-time issues, a record grain carry-over benefiting those quarters, and Q4 having record grain movers.

Answer

Tracy Robinson, CEO, agreed with the suggested contour, noting that the comparison to last year's volumes (including refinery shutdowns in Q2/Q3) and the timing of cost reduction efforts (many early in the year) support a stronger middle part of 2026.

Steven Hansen asked for further clarification on the contour of CN's guidance, specifically if the middle of the year (Q2/Q3) might be stronger than the back half, considering that petroleum and chemicals, coal, and metals/minerals were impacted by one-time issues in Q2/Q3 2025, and a record grain carryover should benefit those same quarters.

Answer

Tracy Robinson, President and CEO, agreed with the assessment, noting that the timing of last year's volume patterns, such as refinery shutdowns in Q2/Q3, and the timing of cost reduction efforts, support the expectation of a stronger middle part of the year.

Steve Hansen asked about the recent change in the Chief Commercial Officer position, noting a perceived lack of continuity in the C-suite and questioning if the company is getting closer to having the right team.

Answer

CEO Tracy Robinson declined to comment on the specific personnel change but asserted that it is her responsibility to ensure the right team is in place to execute the company's strategy. She affirmed her confidence in the current team, stating, "We've got the right team and we're moving forward."

Steven Hansen asked for more specific details on the expected magnitude of blank sailings in the second quarter and any potential visibility into the third quarter.

Answer

Remi Lalonde, Chief Commercial Officer, responded that while there is uncertainty and he lacks perfect data, the impact of blank sailings on the ports CN serves, like Prince Rupert, is expected to be less significant than at other western terminals. He anticipates the resulting "air pocket" in volume will be brief, lasting one to two months at most.

Steven Hansen requested an update on the labor situation, specifically regarding the previously mentioned East-West workforce imbalance, current hiring status, and how much rebalancing remains.

Answer

Chief Field Operations Officer Derek Taylor reported 800 employees are currently furloughed, mostly in the East. Chief Network Operations Officer Pat Whitehead added that targeted hiring continues in the West to meet growth, where they have a smaller pool of furloughed employees to recall from, ensuring they are positioned for volume increases.

Steven Hansen of Raymond James asked for more details on the early seasonal slowdown in frac sand volumes and whether this weakness is expected to continue into the new year.

Answer

Chief Network Operations Officer Patrick Whitehead explained that the slowdown follows four exceptionally strong quarters, suggesting a pull-forward of activity. He expressed optimism for next year, citing customer investments in new terminals which create opportunities for CN to haul both sand and NGLs.

Steve Hansen, Managing Director and Equity Analyst at Raymond James, asked about the dynamics of the large grain harvest, specifically why Q4 movement was lower than expected despite the record size, and whether the normal shipment pattern would extend into Q3 2026 given the significant carryover.

Answer

John Brooks, EVP and Chief Marketing Officer, acknowledged that Q4 grain movement was impacted by wet weather in Vancouver and farmers storing grain. He anticipates a very "ratable" shipment profile for grain throughout 2026, potentially extending into Q3, and noted bullishness for a possible repeat harvest next year, with farmers having built significant storage capacity.

Steve Hansen inquired about the grain harvest, expressing surprise at lower Q4 movement despite a large harvest, and asked whether the normal pattern of bulk movement in Q1/Q2 would evolve or extend into Q3 due to the significant carryover.

Answer

EVP and CMO John Brooks acknowledged the surprise, attributing it partly to wet weather in Vancouver. He suggested a potential shift towards a more ratable shipment profile throughout the year, with strong demand expected through August, and noted farmer storage of the record crop. He also mentioned early bullishness for a potential repeat harvest.

Steve Hansen asked about the grain opportunity, specifically customer sentiment regarding upside and timing, and whether farmers are likely to move grain in Q4 or defer into the first half of next year.

Answer

EVP and CMO John Brooks noted that grain companies are currently 'pulling' grain into elevators, rather than the typical harvest 'push.' He expressed satisfaction with CPKC's cycles and sets in Canada, and highlighted the ability to backfill any northern softness with strong opportunities from the southern franchise, expecting to run hard through year-end.

Steve Hansen asked about the grain opportunity, seeking insight into customer sentiment regarding upside potential and timing of movements, particularly whether farmers would defer sales into the next year.

Answer

EVP and CMO John Brooks noted that grain companies are currently 'pulling' grain into elevators rather than the typical harvest 'push.' He expressed satisfaction with current cycles and sets in Canada, and the ability to offset any northern softness with strong opportunities in the southern franchise. Brooks expects a strong finish to the year for the grain franchise through teamwork across Canadian and U.S. operations.

Steve Hansen of Raymond James asked for an opinion on the probability of the UP-NS deal getting approved and inquired about the performance of the Gemini partnership relative to initial expectations.

Answer

CEO Keith Creel stated the deal's probability depends on meaningful concessions to address the holistic impacts of a potential industry endgame. On the Gemini partnership, EVP & CMO John Brooks said the company is 'extremely pleased,' noting volumes ramped up faster than expected in Vancouver. EVP & COO Mark Redd added that the service allows building trains straight from the port to eastern destinations, creating a quality service plan.

Steven Hansen of Raymond James asked for a timeframe on the deployment of new technologies and process changes discussed with the FRA, and what the ultimate efficiency and safety benefits could be.

Answer

President & CEO Keith Creel and EVP & COO Mark Redd explained that some changes, like waivers for bad order car repairs and redundant air brake tests, are imminent and expected within days or the coming months. These changes will optimize the supply chain and improve fluidity in key corridors like Laredo and Kansas City.

Steven Hansen asked about the potential for 2024's various network disruptions, such as port and labor strikes, to be repeated and the general outlook for labor stability in 2025.

Answer

President and CEO Keith Creel characterized the 2024 disruptions as episodic and expressed high confidence in a more stable 2025. He highlighted recently negotiated multi-year agreements with key unions (Unifor, BMWE) as evidence of a move toward reliability. He anticipates a positive resolution with the TCRC, leading to four years of labor stability, which he described as creating a 'clean platform' for growth and a more fluid, reliable network for customers.

Steven Hansen asked for an update on the progress made in establishing the new North-South grain corridor relative to initial expectations.

Answer

EVP and CMO John Brooks responded that the company is 'ahead of pace' on grain synergies from the legacy CP network to the legacy KCS network, but believes they are just 'scratching the surface' of the full potential. President and CEO Keith Creel added that the value of CPKC's reliable, single-line gateway is a powerful competitive advantage, especially when alternative routes are congested and more complex, making the CPKC value proposition even more compelling for customers.

Steven Hansen inquired about the strategic tuck-in acquisition in Western Australia, asking for clarification on what RB Global gains beyond white space, the specific appeal of that market, and the broader M&A pipeline in other or similar jurisdictions. Hansen also followed up on market share gains in the auto sector, asking about the opportunity for future growth, any ongoing contract work, and visibility on further domestic market share expansion.

Answer

CEO Jim Kessler expressed excitement about the global pipeline, noting the Western Australia acquisition opens up a new geography for RB Global, which previously focused on Eastern Australia, and brings a culturally aligned team. Regarding market share, Jim Kessler emphasized focusing on controllable performance, highlighting high SLA compliance (99%+) as a key driver for industry recognition and optimism for future competition. He declined to comment on unfinalized deals.

Steven Hansen inquired about RB Global's recent acquisition of Smith Broughton Auctioneers in Western Australia, seeking clarification on the strategic benefits beyond geographic expansion, the specific appeal of the Western Australian market, and the broader M&A pipeline for similar opportunities. Hansen also asked about the sustainability of market share gains in the automotive sector, seeking insights into ongoing contract discussions or visible opportunities for further domestic market share growth. Additionally, Hansen followed up on the new operating model, asking for details on the rollout pace, milestones for achieving the $25 million run rate savings by Q2 2026, and potential for upside. Finally, he asked if specialty/narrower auctions and specific asset verticals remain M&A targets alongside larger geographic plays.

Answer

CEO Jim Kessler expressed enthusiasm for the M&A pipeline, highlighting the Smith Broughton acquisition as a key move to service all of Australia by expanding into the western region and integrating a culturally aligned sales team. On automotive market share, Kessler emphasized RB Global's focus on operational performance, citing high service-level agreement (SLA) compliance as a driver of industry recognition and future optimism, without detailing specific deals. Regarding the operating model, Kessler clarified it's primarily for clarity, focus, and efficiency, not just cost-cutting, reducing management layers, with Eric Guerin confirming clear line of sight to the $25 million savings. For M&A, Kessler confirmed interest in both geographic expansion and acquiring vertical expertise that can be scaled across the network.

Steve Hansen asked about the M&A pipeline post-J.M. Wood, the impact of UK insurance carrier mergers, the historical range for catastrophe (CAT) event GTV, and progress on the enterprise customer strategy.

Answer

CEO Jim Kessler described the M&A focus as core business tuck-ins and international expansion. He views the UK merger as a market share opportunity. On CAT events, he noted the outcome is too variable to guide, ranging from zero to last year's high. For enterprise strategy, he highlighted providing a 'blended net recovery' through channels like Boom and Bucket as a key differentiator.

Steven Hansen of Raymond James followed up on the progress of the sales force expansion initiative and its impact on market share, and asked if recent strong catastrophe (CAT) event performance has overcome past criticisms, aiding in new business wins.

Answer

CEO Jim Kessler confirmed the sales force expansion has a strong ROI and the current focus is on accelerating the onboarding process for new hires. On CAT performance, Kessler stated he is very proud of the team's recent results, which are proactively shared with the industry for transparency, and believes there should be no doubt about the company's ability to perform during these events.

Steven Hansen from Raymond James asked about RB Global's ability to leverage its service level performance to win back additional market share and questioned the specific drivers of the recent win, such as operational metrics versus price performance.

Answer

CEO Jim Kessler stated that while he cannot control competitors' decisions, RB Global will ensure the industry is aware of its outperformance, which he believes will lead to new business opportunities. He clarified the win was based on the total value proposition, including tow costs, cycle time, and ASP, which all contribute to the net return for partners.

Steve Hansen asked about the optimal outcome for Nutrien's phosphate strategic review, specifically whether the company aims to retain strategic value through long-term offtake agreements, similar to past divestitures, or if the primary goal is a straightforward sale for cash, considering integration benefits.

Answer

Ken Seitz, President and CEO, stated that all options are on the table, including reconfigured operations, partnerships, or a sale, and that contractual arrangements are possible. He emphasized that the primary objective is to maximize free cash flow. He noted that the timing is opportune for the review given the current phosphate market dynamics and the focus on U.S. domestic security of supply for critical minerals.

Steve Hansen asked about the optimal outcome for the phosphate strategic review, specifically whether Nutrien aims to retain strategic value through long-term offtake agreements or is primarily seeking a direct sale.

Answer

Ken Seitz, President and CEO, stated that all options are on the table, including reconfigured operations, partnerships, and a sale, potentially with contractual arrangements. He emphasized that the company will be solving for free cash flow. He noted that the timing is right for the review given the importance of phosphate and focus on domestic security of supply in the U.S., with more details expected in 2026.

Steve Hansen from Raymond James asked a broad question about portfolio optimization, inquiring whether management sees further opportunities to streamline the business or divest non-core assets.

Answer

President & CEO Ken Seitz stated that the company is 'probably never done' evaluating its portfolio to optimize free cash flow per share. He pointed to recent actions, such as the ProFertil process and the divestiture of its stake in Sinafer, as evidence of this ongoing rigorous review. While not detailing future plans, he confirmed they are actively looking for opportunities to upgrade the portfolio.

Steven Hansen asked if Nutrien would establish a new cost synergy target given the early achievement of the current one, and inquired about other assets being reviewed as non-core for potential divestiture.

Answer

President and CEO Kenneth Seitz expressed confidence in exceeding the $200 million cost savings target but stated it was too early to announce a new specific number. Regarding non-core assets, he confirmed the review is ongoing, mentioning the process for Profertil, the completed divestiture of Sinofert shares for $223 million, and a continued evaluation of Latin American retail assets, indicating more updates will follow on additional divestiture opportunities.

Steven Hansen asked for more detail on the encouraging improvements in Nutrien's Brazilian retail business, seeking specifics on actions taken and macro variables influencing the recovery.

Answer

CEO Kenneth Seitz confirmed that the company is seeing 'green shoots' in Brazil due to its strategic actions. He detailed several initiatives, including headcount reduction, idling five blenders, closing unproductive retail and experience centers, and increasing focus on proprietary products. Seitz acknowledged that high interest rates remain a challenge for the broader Brazilian agricultural market, but Nutrien's internal improvements are beginning to yield positive results.

Asked about the margin profile and competitive environment for new Construction equipment, and the impact of rightsizing the rental fleet on utilization and rates.

Answer

Margins for new heavy construction equipment have stabilized, but compact equipment margins remain challenged due to market oversupply. On the rental side, fleet rightsizing has improved utilization, but it's still below the target of the high 60s. Rental rates are reported as stable.

Steve Hansen of Raymond James questioned the margin profile for new Construction equipment, asking if the competitive environment was stabilizing. He also asked about the benefits of rightsizing the rental fleet, specifically regarding utilization and rental rates.

Answer

CFO Tony Colucci confirmed that margins are stabilizing, particularly for heavy equipment, though compact equipment remains challenged by market oversupply. He stated he does not expect margins to pull back further. Regarding the rental fleet, Tony Colucci noted that while utilization has improved due to the smaller fleet size, it remains below their target in the low 60% range. He described rental rates as stable.

Steven Hansen focused on the construction market, asking about the pricing backdrop for new and used equipment for the remainder of the year and into 2025. He also questioned if competitor incentive programs have changed and how the company feels about current inventory levels and its ability to generate cash flow to pay down debt.

Answer

Chief Financial Officer Tony Colucci stated that he believes equipment pricing has bottomed out and that it will take about six more months to work through excess market supply. He noted that future sales improvement will be driven more by post-election clarity and interest rate trends than by pricing. Colucci expressed satisfaction with Q3 inventory management, which helped pay down $40 million in debt, and expects to generate more cash from the rental fleet in Q4.

Steve Hansen asked about the near-term integration priorities for the OCI assets and the company's view on China potentially rationalizing older methanol facilities.

Answer

President, CEO & Director Rich Sumner detailed integration priorities including systems integration and capturing $30 million in hard synergies within 18 months, with potential operational upside to follow. He noted that any rationalization of downstream olefin capacity in China would be a positive for methanol affordability and pricing.

Steven Hansen asked about risk mitigation strategies for the OCI transaction, particularly concerning unhedged gas supply and marketing agreements. He also sought clarity on the G3 plant's recovery, asking if there would be planned fluctuations to test its new run rate, and inquired about tariff risks for methanol imported from Trinidad.

Answer

Executive Rich Sumner explained that a large integration team is managing the OCI transition to ensure a seamless day-one operation. For G3, he clarified the issue was with start-up conditions, not steady-state operation, and the plant is now expected to run at high rates without further testing. Regarding Trinidad, he confirmed a minor 10% tariff exists on limited flows into the U.S. East Coast.

Steven Hansen asked about the company's integration preparations for the OCI transaction, sought clarification on the large Q4 inventory build, and inquired about the implications of a recent court decision concerning the Natgasoline plant.

Answer

President and CEO Rich Sumner stated that extensive integration planning is underway for a safe and reliable Day 1 transition post-OCI closing. He clarified the Q4 inventory build was a structural shift to a more normal 80% produced/20% purchased mix. He also confirmed the court decision affirms that all joint venture partner rights at Natgasoline, including marketing, are transferable to a purchaser.

Steven Hansen from Raymond James inquired about the company's target cash balance, the factors enabling more secure gas procurement in Chile, and the feasibility of relocating a plant from New Zealand.

Answer

President and CEO Rich Sumner stated the comfortable cash balance remains $250-$300 million. He noted increased confidence in securing gas from Argentina for Chile, especially outside the winter period. He dismissed the idea of relocating a New Zealand plant, citing unfavorable economics and the need for a clearer long-term gas outlook.