Walter Spracklin • RBC Capital Markets

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CEO Keith Creel responded that CPKC's primary obligation is to maximize shareholder and stakeholder value. He stated that the company will be an active observer and participant as events unfold. He emphasized that the CPKC team and network represent 'industry unique value and strength,' suggesting that in any potential consolidation scenario (except one obvious combination), CPKC would be a compelling and valuable entity, and it is the management's job to ensure that value is realized.

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EVP & CFO Nadeem Velani clarified that the primary driver for the lower EPS guidance was currency headwinds from a stronger Canadian dollar, which accounted for a two-percentage-point impact. He reaffirmed the company's expectation for mid-single-digit RTM growth for the year.

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President and CEO Keith Creel clarified that the Norfolk Southern option pertains to a small 'island' intermodal terminal within CPKC's much larger Wylie facility. He stated that an exercise of the option would not be material, as CPKC would be compensated and the true value lies in the integrated auto compound that CPKC controls. EVP and CMO John Brooks added that automotive growth is driven by superior service, and since U.S. vehicle demand necessitates imports, CPKC is positioned to provide solutions regardless of the specific trade environment.

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EVP and CMO John Brooks attributed near-term strength to the bulk franchise, citing strong Canadian and U.S. grain crops, record potash demand, and a coal catch-up. He noted that while some merchandise areas face macro headwinds, unique synergy opportunities and extended length of haul are allowing CPKC to outpace the industry. While not revising long-term targets, Brooks expressed confidence that the future is bright for 2025 and beyond, given the current momentum.

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Alain Bedard, President, CEO & Chairman, expressed optimism that a new U.S. administration budget could revive the industrial sector in late 2025 or early 2026. Regarding M&A, he stated that for 2025, the focus is on share repurchases as the best use of capital. He suggested a larger transaction could be considered in 2026, after fully digesting the Daseke acquisition.

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Executive Alain Bedard confirmed that uncertainty, particularly around tariffs, is causing industrial and agricultural customers to delay orders, impacting flatbed volumes. However, he noted that rate per mile has improved since March. On M&A, Bedard stated that activity will be minimal in 2025, with the company prioritizing share repurchases ($56 million in Q1) and maintaining leverage below 2.5x. A potential deal was abandoned due to the uncertain environment.

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Executive Alain Bedard confirmed TFI will not delist from the Canadian stock exchange. He explained the re-domicile is a corporate structure change to a U.S. corp to better align with its business and shareholder base. On M&A, Bedard agreed with the 'buy in bad news' philosophy but noted it's a balance between being bold and managing the company's leverage. He suggested a significant deal could happen in 2025 but wants to get through a difficult Q1 first.

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CEO Alain Bedard stated it was too early for a formal 2025 guide but believes an EPS around $8.00 is attainable in a normal freight environment, citing contributions from recent acquisitions like Daseke. He emphasized a focus on aggressive debt reduction, which will lower interest costs. For 2025 capital allocation, Bedard anticipates the usual $200-$300 million for tuck-in acquisitions, while share buybacks will be opportunistic and dependent on the stock price.

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CEO Jim Vena stated that Union Pacific looks at all ways to grow and that competing with Canadian railroads is part of his job. EVP of Marketing & Sales Kenny Rocker added that the company is 'on offense' to capture this business, highlighting new service products from Tacoma into Chicago and a new ramp in the Twin Cities as examples of how they are penetrating those markets.

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EVP of Marketing and Sales Kenny Rocker identified significant leverage opportunities in grain products (driven by renewable diesel), petrochemicals, and a potential recovery in automotive and domestic intermodal. EVP of Operations Eric Gehringer added that the network has proven its ability to flexibly support such growth, citing recent successes in handling grain shifts and intermodal surges.

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Executive Vincenzo Vena asserted that Union Pacific has maintained an industry-leading OR for several quarters and expects to continue doing so. He explained that while inflationary pressures are a challenge, the company's strategy, focused on pricing, productivity, and EPS growth, remains on track with the long-term goals outlined at the recent Investor Day.

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EVP & CFO Sean Pelkey stated it was too early for a specific 2026 forecast but agreed the setup is strong. He explained that simply removing 2025's one-time costs and headwinds provides a low-to-mid single-digit operating income growth base. Combined with the industrial development pipeline and easier comps, he expects 2026 growth to be in the 'double digits.'

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EVP and CCO Kevin Boone clarified that his comment referred to CSX's strong strategic positioning with its existing portfolio of growth-oriented partners, rather than a specific new contract. He highlighted a focus on capturing opportunities from shifting global trade flows, particularly those that could benefit East Coast ports.

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EVP and CFO Sean Pelkey reaffirmed the company's commitment to its long-term guidance. He pointed out that the significant network disruption costs in 2025 will completely reverse into a net benefit in 2026. He also clarified that the 3-year guidance assumes a return to 2024's average commodity price levels by 2027, which is a key variable in hitting the targets.

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CCO Kevin Boone responded that CSX competes with a strong, improving service product and a consistent leadership message. He emphasized that CSX has an effective cost base to compete on both service and cost. However, he stated the primary focus is on growing the overall market by converting freight that is not currently on rail, which also helps in retaining existing business.

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CEO Tracy Robinson stated that optimism for the company's specific growth initiatives remains fully intact. She explained that the initiatives are based on fundamental network advantages in intermodal, energy, and agriculture. Robinson attributed the current slowdown to the uncertain tariff environment, describing it as a "timing issue" and affirming that the underlying growth fundamentals have not changed.

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Remi Lalonde, Chief Commercial Officer, explained that Gemini's focus on a higher service promise aligns perfectly with Prince Rupert's value proposition of reliability and lack of congestion. He confirmed that the alliance has successfully pulled volume into Rupert for both U.S. and Canadian destinations, exceeding CN's initial expectations.

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CFO Ghislain Houle stated that CN will continue to prudently manage its balance sheet to the 2.5x adjusted debt-to-EBITDA leverage target and did not provide a specific budget for the buyback, emphasizing its flexibility. He confirmed the use of the balance sheet is a topic of ongoing internal debate.

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Chief Network Operations Officer Patrick Whitehead responded that the immediate challenge is recovering the U.S. destination mix through its Western gateways, which shifted heavily toward Canadian destinations post-disruption. He noted that while recovery will take time, congestion at U.S. ports underscores the value proposition of Canadian gateways like Prince Rupert.

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COO John Orr explained that no single metric tells the whole story, emphasizing a balanced approach across a 'network asset and customer health index' of multiple metrics. He pointed to the zero-based plan's success in tightening standards and compressing the speed differential between the fastest and slowest trains. He stressed that the focus is on the combination of metrics and the actions being taken to improve them, rather than one specific number.

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COO John Orr advised against focusing on a single metric, emphasizing a balanced view of network, asset, and customer health indices. He explained the focus is on overall system performance driven by the new zero-based plan, which improves service standards and moves the entire network more productively.

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COO John Orr stated that they are aggressively pursuing all cost opportunities and nothing structural is holding them back. He emphasized a disciplined approach that will not compromise customer service for short-term gains. CEO Mark George characterized the strategy as a 'cerebral' PSR 2.0 approach that allows for simultaneous improvement and volume growth without service degradation.

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Ed Elkins, CMO, confirmed that near-shoring is a key trend and that Norfolk Southern is in active discussions with both Grupo Mexico and CPKC. He highlighted the Meridian Speedway as a prime opportunity and hinted at other exciting developments. John Orr, COO, added that Mexico is a growing part of supply chain conversations and that opportunities exist for both rail and short-sea routes.

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