Canadian Pacific Railway Limited (NYSE:CP) Q1 2025 Earnings Call Transcript

Canadian Pacific Railway Limited (NYSE:CP) Q1 2025 Earnings Call Transcript April 30, 2025

Canadian Pacific Railway Limited reports earnings inline with expectations. Reported EPS is $0.74 EPS, expectations were $0.74.

Operator: Please stand by, we are about to begin. Good afternoon, everyone. My name is Bo, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to CPKC’s First 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 speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to introduce Chris de Bruyn, Vice President, Capital Markets, to begin the conference call. Please go ahead, sir.

Chris de Bruyn: Thank you, Bo. 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 2, in the press release and in the MD&A filed 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; Nadeem Velani. 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’d appreciate if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Keith Creel: Hey. Thanks, Chris. It’s certainly great to be with you, here with everyone today. First order of business, I’d be remiss not to pay tribute and express my appreciation to this 20,000 strong team of railroaders, we have spread across three nations that I get privileged to serve with on a daily basis that actually produce these results, results that certainly demonstrate industry best performance. First quarter, the team delivered revenue of $3.8 billion, which is up 8%. Revenue growth was driven by volume growth of 4%, an operating ratio of 62.5 which is 150 basis improvements an industry-best earnings growth of 14%, producing $1.06 of earnings. Finally, most importantly, a record performance from a safety perspective driving tremendous improvement on both train accidents as well as personal injuries.

It was undoubtedly off to a strong start in 2025, and we’re experiencing a strong start to the second quarter as well. That being said, there’s certainly an undeniable macro environment and uncertainty exists, trade policy uncertainty and currency uncertainty. As such, based on what we do know today, we do feel it’s prudent and responsible to adjust our guidance at this time. That said, I firmly believe as the leader it’s our responsibility to drive positive results for those things that we can control. We’re not paid to make excuses, crisis creates opportunities, and that’s how we’re approaching this uncertainty around tariffs and trade policies. Our base business remains strong. It’s reflected in the results in the quarter, and our volumes year-to-date, driven by strength our grain portfolio, coal, potash, intermodal, including a record quarter in our Midwest, Mexico Express as well as a new partnership with Gemini.

The uncertainty that’s created by these shifting trade policies, on a positive side is also accelerating opportunities that we always eventually felt would develop when we combine these two companies. This unparalleled three-nation network is uniquely built for times like this. We stepped into this trade storm that we’re facing to become market makers. We’re seeing opportunities with new trade flows between Canada and Mexico. We’ve got increased refined fuels, LPGs, plastics, grains that our customers in Canada are sending south as they look to diversify their end markets. Our network connects to those new end markets that land bridge to Mexico uniquely. The ability to move more appliances coming north, furniture, food products, finished vehicles and auto parts of Mexico to Canada as well.

Q&A Session

CPKC uniquely serves as a land bridge between Canada and Mexico we’re working closely with our customers and creating these industry unique positive outcomes. But it’s not just at the customer level that we’re driving these results. Our teams are working closely with the government in Canada at the federal provincial level as well as the government of Mexico regarding policies that could further incentivize growing Canada to Mexico trade volumes. We’re hearing from both governments and genuine desire to see the Canada-Mexico trade relationship maturing deepen, and we’re playing a major role in supporting that agenda. Now let’s talk more on the U.S. front with the FRA, another very encouraging area of opportunity, positive developments and opportunities that we’ve been actively working on from a regulatory perspective.

I’m extremely encouraged by the early discussions with Secretary Duffy and the U.S. Department of Transportation team, especially those in place at the FRA on their willingness to implement process changes and utilization of technology to deliver safer and more reliable outcomes. It makes too much sense not to do these things. Mark will get into the details, they’re fact-based, data-driven results and opportunities that the regulator wants to embrace for best outcomes from a safety perspective as well as from a service perspective. This is all, again, refreshing change in my mind, common sense, best sense value-creating change. In line with other value creation opportunities that we realized in the quarter, the PCRC, the Panama Canal Railway, as you’ve seen earlier in the month, after careful evaluation, we made the decision to divest our 50% stake in the railroad.

The sale of this non-core asset to a key strategic partner, a major customer of the PCRC allows us to focus on our core business and generates additional capital that we deploy to create value for our shareholders elsewhere in our three-nation network. When shareholder returns, another area of strength last month, having delivered on our commitment to repay debt and reduce our leverage fall on the merger. We announced a new 4% share buyback program. And just yesterday, we announced a 20% increase in our quarterly dividend. I’m very pleased for this company to be in a position of strength again to begin returning cash to shareholders, particularly amidst the volatile market. So, in closing, let me say this. The short-term uncertainties undoubtedly from the macro to trade policies.

That said, the network is performing extremely well and volumes continue to be strong. We’ve continued the momentum we carried for 2024 to the first four months of 2025, just as we told you we would do. We have the opportunity, the network and the team to drive a differentiated outcome, and that’s exactly what we will do. So with that said, I’m going to turn it over to Mark to speak a bit the operation. John provides some color on the markets and maybe on the numbers, and then we’ll open it up for questions. Over to you, Mark.

Mark Redd: Yes. Thank you, Keith, and good afternoon. The operating team did deliver another strong performance for the quarter, demonstrating why they are the best in the business. They’re focused on slightly delivering our precision scheduled service model is delivering exceptional results even during some of the challenging winter operating dishes throughout most of February. Dealing with three consecutive weeks of extreme cold is no easy feat, and I’m particularly proud of how quickly our network bounced back to produce a record March. We have carried this momentum also into second quarter. So think about the results. We continue to drive strong year-over-year operating improvements. Our train weight and length 5% and 4%, our locomotive productivity improved 3%, fuel efficiency was flat despite the challenging winter.

We delivered on strong demand. And in March, we delivered the strongest daily GTMs in our combined company history. We met demand safely, efficiently in part by leveraging our prior investments in locomotive interoperability, allowing us to send power from the Southern portion of the network to the Western portion of Canada where we saw a significant surge in GTMs. A resilient network is well-positioned to maintain this momentum, quickly adapt to changes in the operating environment as needed. If I look at safety. The FRA personal injuries were 0.98, which is 14% better year-over-year improvement. Our FRA train accident at a record 0.38, that’s 58% improvement year-over-year and noted a record performance as a combined company. And although we’re never stop striving to do better, I’m extremely proud of the team for their commitment to our home safe culture.

If I look at the labor update, just turn to the labor, I’m pleased on the progress we have made in this space. Recently, we announced four-year agreements ratified by both Unifor, Mwrd, and USW [ph] in Canada, representing our mechanical engineering and clerical forces. We’re also working closely with the unions in the U.S. to expand our hourly agreements. These hourly agreements will support some of the redefined crew districts that we are in the process of implementing. As we evaluate traffic flows across this new network, combining crew districts in certain areas will allow us to run extended runs, further improve cycle times and deliver more resilient service to our customers. As Keith noted and very proud we are working closely with the FRA on a number of initiatives that will enhance safety and generate operational improvements, including removing redundant air tests at the U.S. Mexican border also securing the final waiver approval to optimize where we change better orders, better wheels on our network, driving yard efficiencies and also reducing dwell at key locations like Kansas City and Laredo.

Exploring our cold wheel technology that when implemented in Canada or when we did implement in Canada, we’ve identified 30% more defects than the standard tests and the ability to better utilize our broken rail detection in the dark territories since we began this in 2021, we’ve detected 150 instances of broken rail preventing numerous derailments. I’m extremely encouraged by the FRA on their willingness to explore the process and technology improvements, which will lead to improved safety outcomes and enhanced service. As I look at the balance of 2025, our capital plan is built to support safe, efficient and stable growth through pinpointed investments. We have capital investments coming online this year, including merger settings and CPC that we spoke about, along with targeted investments in Mexico and Kansas City area to improve fluidity through those key corridors.

We’re also beginning to take on delivery of the new Tier 4 locomotors in coming weeks that will support growth and improve reliability and fuel efficiency for our fleet. We will continue to make targeted safety investments across the network, including hotbox detectors and broken rail detectors, which are improving safety and generating material expense savings. So in closing, we have a lot of momentum operationally. This network is built to drive growth with the team to execute it. The operating team and commercial team are closely aligned and work with each other on our customers to adapt quickly changes in demand and traffic flows. And with that, I’ll pass it over to John.

John Brooks: All right. Thank you, Mark, and good afternoon, everyone. I’m extremely pleased with the record volumes and revenue continued strong pricing and unique value for our customers that we delivered this quarter. This performance is unique particularly impressive if you think about the weather impact from February, along with the macro and tariff policy uncertainty. Q2 is off to a strong start, as Keith said, and our network is performing quite well. And although, we continue to face this uncertainty, the team is laser focused on what we can control, and I’m confident in our ability to deliver disciplined growth to this network. Now looking at our Q1 results. This quarter, we delivered freight revenue growth of 9% on a 4% increase in RTMs. Since our RTM was up 5% with strong pricing and FX, partially offset by fuel and mix.

Now taking a closer look at our first quarter performance, I’ll speak on FX adjusted results, starting with our bulk business. Grain revenues were up 4% on 3% volume growth, a record Q1 performance. Canadian green volumes were up 12%, driven by increased green to Vancouver and Mexico, if export demand remains steady, and we drive unique growth from our synergies. Now looking forward, our comps remained favorable through the first half of the year. The VR CPI was recently reported at 3.1%, and our outlook for further synergies remain strong. Moving to U.S. grain. Volumes were down 5% over prior year as we saw reduced volumes of U.S. grain exports. However, our U.S. grain franchise remains well positioned with available grain stocks and as we look ahead, we expect steady volumes across multiple outlets, including to the PNW, Canada, Eastern U.S. and down to Mexico.

We also had a record Q1 in potash with revenues up 10% and 8% volume growth. With positive demand fundamentals and Canpotex fully committed at strong levels for the first half of the year, we continue to expect another strong year of potash growth in 2025. In the finish out bulk, we closed the quarter with coal revenue up 21% on 10% volume growth. Strength was driven by higher Canadian met coal as we moved more volumes to Vancouver and Thunder Bay, driven by inventory drawdowns resulting from the prior labor strikes and weather impacts. Now moving to our Merchandise business segment. Energy, Chemicals and Plastics revenue grew 3% on flat volumes. Our base ECP franchise continues to deliver volume growth across multiple commodities from synergies, self-help, market share gains, and they were offset this quarter, though by lower crude volumes.

We had strong growth from refined fuel shipments and plastics from both the U.S. Gulf Coast and Canada, in the Mexico. We also posted an all-time record LPG performance in the quarter as our network is efficiently connecting Canadian production with destinations in the U.S. and Mexico. Looking ahead, we have a very positive outlook for this business segment with opportunities across multiple commodities, improving crude fundamentals and new opportunities for trade directly between Mexico and Canada. Forest Products revenues were up 2% on 4% volume growth. We continue to drive synergies and extended length of haul in this space, despite uncertain markets in a softer base demand. Volumes this quarter did benefit from higher wood pulp and paperboard driven by synergies and a new contract that we secured last fall.

Metals, minerals and consumer products revenue was down 1% on flat volumes. A softer demand environment, coupled with supply chain shifts impacted the volumes in the quarter. These declines were partially offset by higher volumes of frac sand and aggregates. Looking forward, we see lower cross-border steel demand resulting from the tariffs. However, we expect to see partial offsets from growth on two new aggregate transload terminals along with the development of direct sale moves that our network can facilitate between Canada and Mexico. Moving on to the automotive area. Revenues were up 18% and 24% volume growth. We posted another record quarter as this continues to be an area of unique growth for CPKC driven by our advantaged footprint, service and production plants and auto compounds across North America, along with our closed loop service solution.

While evolving trade policy has resulted in choppy volumes our long-term outlook remains strong, and we’re staying close with our customers to drive growth in this business segment. On the intermodal side, revenue and volumes were up 4%. Starting with Domestic Intermodal, we delivered solid performance this quarter with volumes up 8%. We are seeing steady volumes with our Canadian retail customers and strong momentum on our MMX180/181 service as customers continue to take advantage of the fastest, most efficient cross-border rail solution between the U.S., Mexico, and Canada. Our volumes on this service were up 42% in Q1 and March was the highest volume month on record. Now looking ahead, we have good line of sight to domestic intermodal growth as our business with Schneider National continues to outperform Americold’s cold storage warehouse located co-located in Kansas City starts ramping up midyear.

On the International Intermodal front, the volumes were flat in the quarter. We saw higher volumes through the Port of St. John and Lazaro primarily with Hapag-Lloyd as Gemini vessels started to ramp up in March. However, some of that growth was offset by lower volumes through Vancouver and Montreal. Looking forward, we continue to see a lot of opportunity in this space as the Gemini Alliance increasingly utilizes CPKC serve ports, which you are now seeing in our volumes quarter-to-date. While the transpacific market is experiencing volatility as a result of tariffs, our diverse port access across North America and reliable service proposition positions us well as trade policy evolves. To close, while the macro and trade policy remains uncertain, we continue to be confident in the unique growth opportunity this franchise has coupled with strong fundamentals in our bulk business and disciplined pricing.

I’m extremely encouraged by this network’s resiliency and this team’s ability to develop and convert new markets, I remain confident in our volume outlook for the year. So with that, I’ll now pass it over to Nadeem.

Nadeem Velani: Great. Thanks, John, and good afternoon. Turning to our first quarter results on Slide 12. CPKC’s reported operating ratio was 65.3%, and the core adjusted operating ratio came in at 62.5%, a 150 basis point improvement over prior year. Diluted earnings per share was $0.97, and core adjusted diluted earnings per share was $1.06, up 14% 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 $682 million or $677 million adjusted for acquisition costs. The year-over-year decline was driven by lower stock-based compensation and efficiency gains from improved train weights and lower crew costs, partially offset by inflation volume-driven increases from higher GTMs. As we look to the rest of the year, we expect our average headcount to be roughly flat, driving labor productivity gains against mid-single-digit volume growth.

Fuel expense was $481 million, up 3% year-over-year. The increase was driven by 3% higher GTMs, partially offset by lower price and continued improved efficiency. The change in fuel prices was a $22 million or 20 basis point headwind to the quarter. Materials expense was $123 million, adjusted for acquisition costs, 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 GSNO for net savings in the quarter. We also saw higher maintenance expense this quarter driven by unfavorable weather conditions. Equipment rents were $99 million, up 14% year-over-year. The increase was driven by higher volume as we continue to extend length of haul, particularly for our automotive business, along with reduced efficiency from weather impacts in the quarter.

Depreciation and amortization expense was up 4%, resulting from a higher asset base. Purchased services and other expense was $173 million adjusted for acquisition costs and purchase accounting, down 1% year-over-year. The year-over-year decline was driven by savings from the long-term parts agreement, which I mentioned earlier, along with lower casualty expense. These savings were partially offset by the impact of lapping a $34 million onetime non-competition waiver received last year. Despite the impact of weather this quarter, we continue to drive efficiency and cost synergy gains. These gains, along with lower inflation are driving sustainable improvements to our cost structure. Moving below the line on Slide 14. Other expense was $7 million in Q1, driven by FX impacts in the quarter.

Other components of net periodic benefit recovery was $107 million, reflecting primarily the lower discount rate compared to 2024. Net interest expense was $216 million or $211 million, excluding the impact of purchase accounting. The year-over-year increase was driven by higher short-term debt balances and new long-term debt issued in the quarter along with FX impacts. Income tax expense was $292 million or $322 million adjusted for significant items and purchase accounting. For 2025, we continue to expect CPKC’s core adjusted effective tax rate to be approximately 24.5%. Now turning to Slide 15 and cash flow. Q1 cash provided by operating activities increased 14% to approximately $1.2 billion. We continued our strong level of investment in the in the network with CapEx spend of $711 million quarter.

Cash flow remains strong as we delivered $456 million in adjusted free cash for the quarter. Quarter also marked an important milestone as we resumed shareholder returns for the — in late February, aligned with our principles of disciplined and opportunistic shareholder returns, we announced a new 4% share repurchase program. This was an acceleration from our original plan in order to take advantage of volatility in the market. In the first month of the program, we repurchased 3.5 million shares or approximately 9%. In line with our strategy of a balanced approach to shareholder returns, as Keith mentioned, yesterday, we announced a 20% increase to our quarterly dividend. This dividend will continue to be an important avenue to return cash to shareholders, and we intend to gradually increase it overtime towards a payout ratio of 20% to 30%.

Now looking at our guidance update, in January, we gave a wider guidance range, acknowledging macro uncertainty, and we committed to updating that outlook as we learn more. Four months into the year, we’re tracking right on plan with volumes up mid-single digits. The updated guidance reflects our current view of the impact from trade policies on certain areas of our business as well as the impact from a stronger Canadian dollar, which at current levels would present a 2% — a 2-point headwind to the guidance we issued in January. Taking a step back and review of the quarter, Mark and his team have the network running extremely well. John and his team are driving industry-leading growth and we are still tracking the mid-single-digit volume growth for the year.

We continue to deliver discipline on price and cost control, we have resumed returning cash to shareholders. While much remains uncertain, the team continues to deliver strong results, and we’re very well positioned for another year of double-digit earnings growth. With that, Keith, I’ll turn it over back to you.

Keith Creel: Okay. Thanks, gentlemen. Operator, let’s open it up for questions.

Operator: Certainly, Mr. Creel. Thank you very much. [Operator Instructions] We go first this afternoon to Scott Group of Wolfe Research.

Scott Group: Hey thanks. Afternoon. So John, I wanted to start with you. There’s seemingly this big sort of import cliff coming into the U.S. I’m wondering, are we seeing — are we expecting to see the same thing into Canadian ports and Mexican ports and just how you think about the impact of that? And maybe this is silly, but do you think there’s, opportunities for Canadian ports to be gaining share from U.S. ports, maybe as a workaround with tariffs? And then just like broaden out to the broader like tariff thing, just what you — like what percent of your book of business you think is ultimately tariff exposed here? I know there’s a bunch, but broadly on tariff exposed here.

John Brooks: Yes. All right, Scott. Let me see, if I can work through that a little bit. On the International front, I would say we’re very different than, I think, what the U.S. roads may or guess, may not face here in terms of that cliff. I would say we really haven’t seen a whole lot of pull ahead on that front at all as it relates to International. Our volumes are, I think, uniquely positioned strong right now, and I think you can definitely see it in the numbers right now, simply on the basis of the partners that we’ve selected, the growth with Gemini and they’re off to a really good start. And I would tell you those volumes both at Port of St. John and at Centrum in Vancouver have been somewhat stronger than we expected.

And again, as you know, the majority of our freight overtime has somewhat transitioned maybe a little bit more away from cross-border U.S. trade to a higher profile of Canadian dust and freight. And I think we’re benefiting from that that right now. And maybe to point, a very small percent of our book, I’m going to say less than 1% is international freight that would be, let’s call it, from China destined into the U.S. through our Canadian port. So I would characterize that as a little risk. And honestly, we continue to see strong growth at Lazaro. I think consistently I said it last year, it was the fastest growing port in North America and frankly, the world in many cases. And Lazaro continues to show good growth not only with our domestic service within in Mexico.

But then also, we’ve seen a steady growth in some of our cross-border business, and that continues today. That largely has not been impacted by any tariffs. So I feel really good about what the future holds on our international business right now. Broadly speaking on the tariffs. Certainly, the automotive area is an area that — it presents some risk and choppiness that we’ve been watching. The steel tariffs are an area that we’re keenly focused on in working with our customers on alternative. As I look ahead, as we get to new crop in the in the harvest U.S., we’ll certainly be watching how our soybean movements progress export to China and in what alternative markets we can develop for that business. And really, those are the areas that we’re focused on.

I think the good news is that, as Keith alluded to, really, the balance of our book has been quite strong so far year-to-date. Hope I got most of them.

Scott Group: Very helpful. You got it, thank you.

John Brooks: Thanks, Scott.

Operator: We go next now to Walter Spracklin with RBC Capital Markets. Please go ahead.

Walter Spracklin: Yes. Thanks so much, operator. Good afternoon. So my question is really on your volume cadence. And John, you mentioned that your second quarter seems to be starting out even stronger than your first and accelerating, I mean, last week was almost 20%. And you didn’t change your RTM guide as part of the EPS guide. And I just wanted to dive in a little bit more as to what really is leading you to an EPS growth reduction while holding your RTMs — which your RTMs are still at mid-single-digit and if anything, accelerating from here. So just curious the logic there in terms of how you map out your guidance by each of those inputs.

Nadeem Velani: Walter, let me just take that. Just in terms of where the Canadian dollar has really appreciated since the beginning of the year, our initial guidance had Canadian dollar exchange rate around CAD1.42, CAD1.43 level. Look today, we’re closer to CAD1.37, CAD1.38. So that in and of itself has an EPS impact of about 2 percentage points. So, if you look at the low end of guidance, we went from 12% down to 10%. And that’s really the big driver of that, really around the currency. So we still anticipate that mid-single-digit RTM growth, as I mentioned. So that’s the big driver.

Walter Spracklin: Appreciate that color. Thanks, Nadeem.

Nadeem Velani: Thanks, Walter.

Operator: Thank you. Your next question comes from Chris Wetherbee of Wells Fargo. Please go ahead.

Chris Wetherbee: Yes. Thanks. Good afternoon. Maybe just to follow up on that. So I guess the low end kind of moves with FX. Should we assume that the high end kind of ticks down a little bit more maybe on the lower end of mid-single-digit RTMs and then, I guess, maybe if I broaden out the question a little bit for 2025, how do you think about the OR in that context, maybe you want to answer on 2Q or give some thoughts around the full year, whatever is helpful.

Nadeem Velani: Yes. I think, Chris, I think that’s fair in terms of when we factor in some of the tariff impact and policy changes that could have an impact on the top end of volume. So maybe it’s maybe it’s not six, closer to five and that type of level. As far as the OR, you should see sequential improvement from the 62.5. Of course, Q1 has typically much higher OR than the rest of year. And I expect that to continue to improve over the course of the year. Traditionally, we’ve seen 200 to 250 basis points of improvement in OR and I don’t see why not, especially in this kind of volume environment where we’re seeing such a strong start to the quarter. And we’ve got some pretty easy comps into May for the year. I fully expect us to be able to deliver a sub-60 OR for the year.

And I don’t see why we can’t do that. You’ve got fuel prices as fuel surcharge coming off that’s supportive to the OR kind of neutral from operating income, it’s still helpful with the OR. At the end of the day, we’re running extremely well of this network. Mark and team have it humming and so from an efficiency point of view, I think operationally, we’re going to see some benefits there. We don’t anticipate the labor disruptions that impacted our ports and international volumes last year that impacted our network when we still had some of those stop and starts last August. So I think the impact that we had on casualty a year ago was become a big tailwind to the OR. So I’m quite bullish about our ability to get back sub-60 and leverage this great volume that we’ve got to start the year.

Chris Wetherbee: That’s great. Thank you very much. Appreciate it.

Nadeem Velani: Thanks, Chris.

Operator: We’ll go next now to Brian Ossenbeck of JPMorgan. Please go ahead.

Brian Ossenbeck: Afternoon. Thanks for taking my questions. John, maybe for you, I think you mentioned that the cross-border really hadn’t seen too much of an impact. So I just wanted to see if you could impact that a little bit more, obviously, the 180/181 seems to be a big driver there, but I would have thought with maybe some network issues with your peer in the east that might have been slowed down, especially with the auto headlines as well. So thought there will be appreciated. And then, just Nadeem if you can talk about how we should expect pace of the buyback to ramp up from here off to a pretty strong start in the first quarter. Thank you.

John Brooks: Yes, Ryan. So maybe a couple of things there, so certainly, as some of these tariff noise rolled on and off specific to, let’s say, auto at the beginning of April, there’s no doubt we saw some choppiness in some of those cross-border flows coming out of Mexico onto our network. Now I can tell you that has progressively smoothed out through the month and as of the last couple of days, I think all of our production facilities are up and running and shipping automobiles. So I feel good on that. The domestic product that you’re talking about the MMX, those volumes have just continued to be growing and strong Schneider. I’m excited to say that we’ve just launched this week over 200 new shipments specific to auto parts in conjunction with Schneider’s.

On our network, it’s a brand-new business that we’re bringing on, and it’s really our first foray into a major way of moving that business. So I’m quite pleased with that. And frankly, we’re still kind of just in the early innings of growth with CSX as we work on that product to the Southeast. Other areas we’ve probably seen a little bit of cross-border impact specific to some of our steel business that moves out of Mexico into the U.S. But that being said, we’ve also seen some new opportunities materialize in which we’re actually shipping some steel products out of Mexico up into Canada and some other markets. So, there certainly is some impact there. But the team is not resting as Keith said, it’s an all-out blitz literally to do everything you can to make our own luck as all this uncertainty sort of unfolds on the tariff front.

Nadeem Velani: Hi, Brian, just on the buyback. So you’ll see the filings. I mean we’ve been quite aggressive. I think as of yesterday, we bought back 20% of the program, the 4 million — 4% share buyback for the year. So 20% of that program is complete. You should expect us to finish it by the end of the year, completing about 10% of the capacity per month. We’ve been quite aggressive given the pullback given the compression in multiples. And the fact that we’re trading at a discount compared to where we should be trading. And so we’re going to be aggressive up to the point that we see the stock price is getting closer to our intrinsic value. So you should expect this program to be complete by the end of the year.

Brian Ossenbeck: Okay. Helpful. Thank you.

Nadeem Velani: Thanks, Brian.

Operator: Your next question will come from Fadi Chamoun of BMO Capital Markets. Please go ahead.

Fadi Chamoun: Thank you. I want to circle back on the volume framework. Maybe a little bit more medium term, when this network was put together the biggest kind of addressable market opportunity, felt like being U.S., Mexico driven in various end markets. And a lot of these end markets feel like they’re under attack a little bit with these trade policy, whether it’s autos or steel and other things like do you — I mean, from your comment doesn’t feel like your outlook is dampened by any of these things. I just wanted to get some additional framework from you, where do you see the opportunity potentially in these end markets kind of do come under attack and ultimately end up being more punitive from a growth perspective?

Keith Creel: Fadi, I’ll let John provide a little color, but I’ll just say at a high level, listen, if these end markets are impacted, that’s our job then to shift and create solutions. And when I talk about market makers, and I talk about land bridge, if we lose a little bit because of the impact of tariffs on autos, or tariffs on steel, number one, we don’t think it’s going to be material. This thing started to settle out. It’s doing exactly what we thought it would do and the automotive manufacturers are online, just making those shifts overnight are impossible to do. There’s still a demand in the U.S. for vehicles and these OEMs are producing them. That said, this crisis that’s been created with uncertainty in Canada and Mexico and lessening their dependence upon U.S. markets, it’s created opportunities.

Making these numbers that offset some of those headwinds. Just over the last month, John could give you more color and names, if necessary, but there’s over $100 million of new revenue that this crisis has created that originates in Alberta that goes to Mexico. So you start thinking about the puts and the takes and this — again, this network is uniquely enabled to be able to do that. So if we lose here, we’re going to gain there, and it’s our job to go out and convert those opportunities, and that’s exactly the expectation that John and his team have. And that’s exactly what they’re doing.

John Brooks: Fadi, I think you know from our team, we’re focused on what we can control. And frankly, not that we’re not keenly watching the tariffs to evolve in understanding those impacts, but we hear laser-focused on the task at hand. And the Keith point that’s sales blitzes. That’s getting our — we just finished a 60-day sales blip where we met with over 500 customers. We believe we’ve developed $100 million of new wins simply in that effort that will onboard mostly in the merchandise and ECP spaces. To Keith’s point, we’ve seen good momentum. Largely, I would say, again, in the energy space, but really across all commodities to figure out how we enhance this land bridge and connect Mexico in Canada. But it doesn’t stop there.

It’s dusting off the conversion files that we talked about back at IR Day. And there’s still $100 million that I’ve targeted to my team there that is three to two and four to two routes that we can convert and provide a better product for our customer. So when — I guess, you put all that together, combined with the resiliency of our bulk franchise, which, again, I think, if you look back to recession and pandemic time, that both franchises have stood up against a lot of uncertainty. And we feel really good about the demand in coal, potash, in both U.S. and Canadian grain. I fully expect we’re going to outperform on our synergies this year. Just bring you back I think we can grow by $300 million in run rate on synergies in 2025. And I have no reason to believe we can’t do that and potentially even outperform that.

And I can assure you, we’re going to continue to be in. And we have been super disciplined on our pricing. The pricing model has held in really strong. I’m super proud of the team. And we’re going to keep the foot, we’re going to keep it in throttle a, on the pricing front as we look forward.

Keith Creel: Fadi, I’m going to give you a case in point. This is a fellow Canadian. I’m going to give you a Canadian success story that this crisis has created. So just last week, I was in Toronto, and I was having a conversation with a CEO, fellow CEO of a very large Canadian retailer about opportunities, about diversifying markets, about imports, about exports, that might not involve the United States if that’s not the desired market or the warrant a market to go to. And the question about how many things are on Canadian shales that Canadian consumers purchase that yesterday originated in the United States, but where do they truly originate from? Where are they produced? And if you really get into the detail and you’re motivated to create solutions for the customer, you lead them to information that, quite frankly, you see that a lot of these products, in this case, are produced in Mexico, then their truck in the United States to be packaged and labeled and warehoused and then trucked out of the United States to go across the border to the Canadian shale.

Was that good for the environment? I’d say no. Is that good for cost control and for optimizing a supply chain? I’d say that’s not best in class. But when you’re a railroad that can uniquely connect the origin and the destination, and the middleman is redundant are not necessary and inefficient. And in some cases, they don’t want you to be there, that creates opportunities. So, those discussions are being had, they are being had with people that have interested in motivated minds and for us to be able to help create some of those wins, it’s just all accretive our ability that this unique combination is created again, creating a solution that, quite frankly, before was never possible, and even today, only this railroad can create that kind of solution.

That’s the power of this network.

Fadi Chamoun: That’s great. I appreciate the detailed answer. Thanks.

Operator: Thank you. Your next question will come from Ravi Shanker of Morgan Stanley. Please go ahead.

Ravi Shanker: Great. Thanks. Good afternoon everyone. Just a follow-up on the point of controlling the controllables here. what is the plan if there is a prolonged cliff in incoming port volumes? Is there a pandemic playbook you can dust off on costs? Anything you can do with labor flexibility or is it just a wait-and-see approach?

Keith Creel: No, it’s never going to be a wait and see. We’re always paying attention to that, Ravi. And I can tell you, I’ve been doing this for three decades now, and I’ve been the PSR leader in this industry for two decades, and I’ve been through several recessions, up cycles, down cycles, we have metrics in our company. We see slippage when it’s occurring and we take action on a daily and on a weekly basis. So if we see we have visibility to this alleged cliff. We see the ships coming. We know two or three weeks ahead of time, we’re not going to wait two or three weeks to take action. We’re going to start lining up responsible action. We can adjust crew starts. We can adjust fleet sizes, we can adjust yard expenses. We have all kinds of levers that we quite frankly have pretty good muscle memory in swing history of pulling and swinging in this railroad those kind of times, we’re going to be the ship in the storm.

There’s no doubt about it. I don’t think that’s going to happen. We’re not planning for a recession, but we’re always prepared for one.

Mark Redd: And Keith, I would add, I mean, we’re two years in this CPKC and we’re experienced enough now the southern region where we can react quite quickly move power around crew starts, whatever it is we need to do. Again, I think you said it best, we control what we what we can control, and that’s what we will do. It’s not enhanced.

Ravi Shanker: Understood. Thank you

Operator: We’ll go next now to Tom Wadewitz of UBS. Please go ahead.

Tom Wadewitz: Yes, good afternoon. So Keith and John, you’ve had some pretty interesting commentary on kind of pivoting to the Canada, Mexico opportunity. And you mentioned the $100 million opportunity out of Alberta to Mexico. Is there more perspective you can offer like if you said — I’m not sure the right framework, but just trying to think about the size of that relative to if you said Mexico, Canada relative to the size of your Mexico U.S. business? I’m assuming it’s a lot smaller, but maybe like what the starting point is? And I guess, other examples of where you potentially could see growth outside of ECP or just to frame it a little bit more because it seems something new and pretty interesting, but a little hard to get your arms around how to frame it or give it context. Thank you.

John Brooks: Tom, it’s a good question. And honestly, as part of this sales blitz we’ve deployed, it’s really been trying to understand that and peg it ourselves. I can tell you between LPD plastics, fuels. And frankly, those have been the biggest three so far. The ECP space has led the way, and I tell you it was down in Mexico last week, meeting with a number of customers. And certainly, some of the steel business down there has been impacted by cross-border in that. But getting into a discussion with the CEO of major steel company and really picking his brain around having sold into the Canadian market and what products would be conducive. And frankly, maybe not dissimilar to what we stepped into when we took over on the auto front, kind of that crisis and creating something good out of that with our closed loop.

We’re kind of in the early innings of that in this process. And I don’t — to your point, it probably isn’t anywhere to the order of magnitude in terms of like Mexico into the U.S. or Canada into the U.S. But there’s certainly an opportunity there. And I’ll just give you another — just example to help frame it up. Like grain that moves out of the U.S. today in the Mexico does not have to be fumigated but it can move, I’m going to say, generally, seamlessly into the market. Grain out of Canada is an area where regulation has required this grain to be fumigated and also requires some different documentation in policy to move into Canada or into Mexico. And it’s not that it’s — we’re not doing it today, we are. But as Keith talked about, these are the things we’re working with the governments on both sides of the border to say, how do we foster this in this case, grain trade in a more seamless way that we can certainly enable through our 8,500-foot grain product out of Canada and Mexico.

So a lot to said there, but and I’ll be able to probably hopefully quantify it a lot better as we move down this path. But I would say the most important point is we’re not resting on our laurels here. We’re attacking this opportunity just like we did the autos year and a half ago, and we’re already starting to see some early results.

Tom Wadewitz: So it sounds like it could broaden out from ECP and maybe steel and grain and could be broader than that, but you just need some kind of time to see how that develops. Is that fair?

Keith Creel: We’ve got to sweat it out. Tom, to John’s point talking about grains speaking to that specifically, we had a move two weeks ago that — it was a test move, a new move for us. We got oats that originated in Saskatchewan that went all the way deep into Mexico. It’s a 3,000-mile unit train move. That’s a pretty exciting thing to think about when you think about the power of that. But again, that fumigation is an impediment. It’s additional costs, it’s additional time. It affects the assets, it affects the rate we have to charge, it affects the customer service. So why does it need to be there? We got the mines and the motivation now and the attention to the Mexican government. We’ve got a great spirit of partnership with the Mexican government. We educate. We communicate. We eliminate those unnecessary bearers and we incent trade — more trade to move between the nations of Canada and Mexico.

Operator: Thank you. Your next question comes from Kevin Chiang of CIBC. Please go ahead.

Kevin Chiang: Hi. Good afternoon. Thanks for taking my questions. Maybe just on the auto front. It does feel like, at least with the U.S. administration, reshoring U.S. auto production is soundly key to their industrial policy. And I think over the past few weeks, we continue to hear more D3 OEMs and foreign OEMs talk about increasing U.S. production. I’d be interested in knowing what discussions you’re having with these customers as they look to reshape their supply chain? And I guess how CPKC can assist with that?

John Brooks: Well, maybe a couple of points on that, Kevin. I guess, first of all, as I said at the beginning, we’re in a pretty good position on our auto franchise right now. We’ve got all our production facilities up, running and shipping. And I can tell you, for the most part, inventories are fairly low across at least our network and across Canada. So that’s been actually pretty supportive of volumes. And I do believe the consumer as a whole, maybe has been a little more aggressive in looking to buy automobile maybe earlier in this year than maybe they had planned. And that’s burning some demand. I can tell you, I met with a leading automotive shipper here a couple of weeks ago, and they got 60,000 unfilled orders in Canada alone.

Those are sales made where they’re waiting on vehicle to get into the marketplace. And that’s certainly the area which we do best, and we fell. The other piece that I would point to is we got 6,000 available acres across this network in three countries that we can develop. And I think you’ve heard the story in our land value quite a bit over the years on how we’ve created unique opportunities for our shippers and our customers and co-location across our franchise. And certainly, that is something that we’ve been aggressive to get into the marketplace. And frankly, we just published the nine site-ready locations that we’ve gone out and we’re actively marketing those locations with well, not only the OEMs and automotive companies, but all sorts of supportive industry that may be looking to do more or build more in the space.

So we’ll see what that brings. But as it stands right now, I fully expect in our automotive franchise to continue to produce at the record rate we’ve been able to do really last year and through the first quarter.

Kevin Chiang: That’s great color. Thank you very much.

Operator: We’ll go next now to Stephanie Moore with Jefferies. Please go ahead.

Stephanie Moore: Hi, good afternoon. Thank you. One is a quick follow-up question and just your commentary in terms of OR performance for the full year and in the second quarter. Did I hear you correctly with kind of idea that you expect OR to improve as the year progresses? Are you meaning kind of sequentially off of this first quarter level?

Nadeem Velani: Yes, absolutely.

Stephanie Moore: Okay. Got it. Thank you. And then second, more of a big picture question here. As you’ve had, whether it was your sales blitz are just continuing to have conversations with customers, have you particularly those customers in Mexico or with businesses in and out of Mexico, have you seen any kind of increase in activity of maybe production move to Mexico or plans to move to Mexico, just given the disruptions or potential disruption in trade lanes from other parts of the world and maybe viewing Mexico as a viable alternative from a manufacturing standpoint? Thanks.

John Brooks: Well, you know what the industrial device development pipeline on our network in Mexico was really strong. A number of projects underway, underdeveloped development under construction, I wouldn’t characterize, Stephanie, that maybe we’re seeing a glut of new. We’ve certainly seen some pause. But I would say the majority are continuing to push forward which is something we’ve watched really close given some of this uncertainty if those projects would be shelved or changed or sort of the boardrooms we’re thinking differently around those investments. And we really haven’t seen that at all on a grand scale. So I continue to believe that our Mexican territory is ripe for development. And we’re going to continue to certainly push that narrative.

Stephanie Moore: Thank you. I appreciate it.

John Brooks: Yes.

Operator: Thank you. We’ll go next now to Jonathan Chappell of Evercore ISI. Please go ahead.

Jonathan Chappell: Thank you, good afternoon. John, I feel like, if we didn’t have the crisis to talk about, there might be a little bit more focus on Gemini. I know you’re super excited about it late last year and you’ve mentioned a couple of times this morning — this afternoon. Is there any way to put numbers around what the Gemini potential is, given your positioning with the two partners there, whether it’s in units or revenue? And has that changed at all, over what’s called the 12 to 24-month period. Just given some of the uncertainty that’s emerged since that partnership started?

John Brooks: Jon, my enthusiasm around it is not waning one bit. Actually, the — it started off, I would say, even faster than anticipated DP World is doing a tremendous job with Gemini at Centerm. We are attempt to quantify it a little bit for you but we’re moving quickly towards two trains a day. That’s the pressure wanting to put on Mark and the team in Vancouver to get to two trains a day, launched at Centerm. And the majority of that tied to Gemini. They’ve done a great job at Port of St. John. Maersk has moved their service. Now as part of the Gemini out of Halifax down to that port so we’re super pleased with that. Maybe the one area that we’ll watch is Lázaro. We have a lot of opportunity between Maersk and Hapag focused on cross border into the U.S. I would say the momentum hasn’t slowed on that.

Certainly, a portion of that was tied to imports through Mexico from China. So we’re watching that and how that may change or not. But honestly, I don’t really feel that that’s going to be a needle mover in the end of the day. But needless to say, no, I continue to be super excited about what Gemini bring to this network.

Jonathan Chappell: Thanks John.

Operator: And your next question will come from Ken Hoexter of Bank America. Please go ahead.

Ken Hoexter: Hi. Good afternoon. John or I guess, Nadeem, just you’ve had a couple of questions in the OR, but I just want to understand that the normal post 1Q to 2Q, you get about 260 basis points. I think just want to understand your comment there, can you outpace normal performance given the weather you had? Or were you saying the weather wasn’t too difficult that is just going to be a normal path? And then my question, John, on pricing, you haven’t really gotten a lot of pricing. You mentioned pricing real quick. But revenue priority really accelerated, I guess, focused on coal, grain, potash, ECP. Any thoughts you want to talk about seeing some of the accelerating strength in some of those commodities?

Nadeem Velani: Ken, I think that 200 to 250 basis points, a realistic expectation. Obviously, there’s areas where we can’t control like stock-based comp. And if that becomes a tailwind, it could be bigger than that. I’m optimistic it won’t, but that’s I think the 200, 250 is fair.

Ken Hoexter: Thanks.

John Brooks: And Ken, a few comments on pricing. I continue to tell you that the team does the best in the industry and pricing to the value of our servicing capacity. And I think that’s what we’ve continued to see. Our renewals are on the very top end, 4% to 5% plus. I’m quite pleased with that. I can tell you in this quarter, we’ve repriced two existing legacy KCS contracts that were out there. There wasn’t much left to reprice, and we got through those this quarter in a positive way. So I feel good about that. There’s — I think we guided in IR day back then, pricing at 3% to 4%. My expectation is to exceed that. And as I said earlier, PRCPI came in today at 3.1% for our 2025, 2026 crop year. So we’re pleased with where that landed. So again, we’ll keep it on throttling, as it relates to pricing.

Ken Hoexter: Thanks, John.

Operator: Your next question will come from Steve Hansen of Raymond James. Please go ahead.

Steve Hansen: Thanks for squeezing me in. Keith, I was pretty taken by your upbeat commentary about the FRA discussions pertaining to technology deployment and I guess some potential benefits to safety and service. Is there a way to frame the timeframe around that deployment and think it could ultimately mean to the efficiency and safety?

Keith Creel: Very short-term, the changes that Mark spoke to on bad orders with our green fleet. There’s an optimal design that we’ve implemented since spending and investing some money in IFG, which is our terminal there in Kansas City that allows specifically the legacy KCS great network to benefit from and takes cars that would have been shuffled up to Kanoki Yard to be bad order repaired and then shuffle back down to being trained. So we’re going to get some relief with a waiver that allows us to take them out and train and Laredo as well as at IFG, which optimize that supply chain, and that’s imminent.

Mark Redd: Yes, yes, that’s within the days. I’ve already spoke about it this morning.

Keith Creel: And in part two on the redundant air break test Mark spoke of, we expect that in the near term as well.

Mark Redd: Yes. So we’ve had FRA on property for the past two weeks in Laredo, seeing very good signs doing a good job on our staff down there showing them what we do, how we do it. And we believe within the coming months, it’s a really good dialogue back and forth. I know I spent some time in Washington just like you did. And good dialogue with FRA, good dialogue with kind of what they see with data, how we can use that data to embedder a lot of different things that were taking away over the past years.

Steve Hansen: That’s great to hear. Appreciate the color.

Mark Redd: You bet.

Operator: And we’ll go next now to Brandon Oglenski of Barclays. Please go ahead.

Brandon Oglenski: Hey. Good afternoon everyone. Thanks for taking my question. Mark, I guess, following up on that, I know you spoke to the FRA as well in your prepared remarks, but I think you mentioned something along lines of getting your labor agreements in place is helping the network actually run better? Or maybe I misheard you on that, but I guess what’s the plan this year just looking at it from an operational perspective, combating inflation and getting the efficiency up even further?

Mark Redd: Yes. So a couple of things, first, I would say, every year, we had GM meetings where we look at taking cost out. We do that first regardless of what increase that we have as far as the cost of living for unions. We look at that first $50, $60 of Howard, upward of $70 million that would take out just cost alone. And then for the stability that we have spoken about is the three unions that we’ve already signed up this year at 3% that would be a four-year deal. We’re on the cusp of finishing up TCRC in the RCTCs which is the dispatchers that will be coming up in the coming weeks. We’ll go to coming out of mediation on that and should have that finished up in arbitration here soon. Now when we turn to the U.S. side, we are still looking at our hourly agreements.

We can have hourly agreements across a couple of the southern region, meaning the former Minto KCS, some the LMA territory just takes you back some of the operating agreements they’ve had in place, so looking at doing some of those hourly agreements down there. So some of that you can change some of the crew base around. You can also run longer in some areas, which we have implemented toward the New Orleans route. So certainly, every opportunity we can take now we’re taking. And then once we get new agreements in place, we can build upon that. And I would even say, just from the Mexico perspective, we can continue to work with the unions in Mexico to do more. I know its steady staging. We work with them every month and every year do those agreements, but it’s certainly making progress for sure.

Brandon Oglenski: Thank you, Mark.

Mark Redd: You bet.

Operator: And your next question will come from Ari Rosa of Citigroup. Please go ahead.

Ari Rosa: Great. Thanks. Good afternoon. Just going back to the regulatory discussion, maybe you could talk about what are some of the other areas that you’re pursuing? And just how impactful you think they could be in terms of the cost savings opportunity or the efficiency opportunity that’s gained from that? Thank you.

Mark Redd: Yes. So the cold wheel technology is something we’ve had in place for years Canada and partly what that does for you is it increases the cycles of turns on trains mean the equipment of grain hoppers, if it’s coal, whatever the cycle maybe, includes locomotives, about what we could control, that’s what we could control. So when I do the inspections of that, I can certainly pinpoint mechanical work whenever I do have to stop the train to do the inspection. I can understand what I can do it once, not just several times on inspection. So working with FRA, if we can get that in place with the U.S. operations, we can certainly do that toward the PNW. We can certainly do that down toward Mexico. And again, it’s a one-stop shop with inspections.

There’s lots of money to be had in that, I don’t want to quantify it until we can see exactly what we can do with that yet. But again, there’s many more opportunities from a safety perspective from hot box detectors that we talked about, just inspections of the portals that we have where we can do more work and inspect cars and see more defects than we do today from the human eye. And certainly, from a technology perspective that is much better. Not saying it will get away from human I will always that work but I guarantee you we’ll have a safer railroad because of it.

Operator: Thank you. We’ll go next now to Benoit Poirier of Desjardin Securities.

Benoit Poirier: Yes. Thank you very much and thanks for taking my question. John, with respect to the China vessel surcharge, I was wondering if you have seen any customer react to this potential? Any new calls into your ports as customers try to diversify away from U.S. ports and talking about port movement with respect to Saint. John, given the increased momentum with the Southeast Asia improvement at the Red Sea channel? And have you seen any increased dialogue to ramp up at faster pays the operation in Saint. John in — or through the Eastern ports? Thank you.

John Brooks: Yes. Benoit, we’ve got pretty good momentum out it, Saint. John. Again, I feel really good with the ramp-up of Gemini there, but our existing business with the other steam ship lines has been growing also. And frankly, we just turned on a number of additional gensets in that marketplace that’s going to provide export opportunities, frankly, of products that maybe traditionally were coming out of the U.S. frozen product coming out of the U.S. that now we’re working with Canadian producers of similar products for export, and a lot of that’s going to be pointed at Saint. John for us. So overall, feel ongoing positivity around the whole Saint. John opportunity and on the backs of the growth we already have at that location.

Mark Redd: Get good upside on capacity as well. I mean there’s plenty of room out there since they’ve moved out some industry.

John Brooks: What was the other part, Benoit?

Benoit Poirier: With respect to the China vessel surcharge, whether you’d see more increased dialogue for people wanting to go to Canada instead?

John Brooks: You know what, I would say pretty minimal at this point. I think overall, there’s a fair amount of relief on sort of the changes that were implemented versus what that could have been initially when it was talked about. So I think the steamship lines will adjust their fleets appropriately ultimately for the U.S. ports. I’m not sure that is going to impact us a whole lot one way or the other, whether you think about Mexico in Canada. We are looking at a few opportunities down in the Texas area with some existing business and what alternatives if in fact, some of these applications may apply to that business. But again, these aren’t huge opportunities. But certainly, it’s a wait and see, and we’ll understand it more as it progresses as we get closer and closer to October.

Benoit Poirier: Many thanks.

John Brooks: Okay. Thank you.

Operator: Thank you. And we have reached our allotted time for Q&A. I would now like to turn the call back over to Mr. Keith Creel.

Keith Creel: Thank you. Listen, thanks for your time this afternoon. I hope you walk away with a bit of color. Certainly, in spite of the winter, in spite of the many uncertainties that we’re all facing. We produced a very strong first quarter. We’re set up well to produce a strong year in 2025. This unique three nation network is built for times like this. We’re going to create solutions, not excuses that will lead to industry unique growth outcomes and value for our shareholders, not just in 2025, but beyond. Thank you. And we look forward to sharing our second quarter results.

Operator: Thank you. Ladies and gentlemen, that will conclude today’s CPKC’s First Quarter 2025 Conference Call. Again, thanks so much for joining us. Everyone, we wish you all a great remainder of your day. Good bye.