Fadi Chamoun: John, I’m not sure if you’re willing to take a stab at – like this CAD 350 million, what would that number you hope to have looked like kind of years from now, given the pipeline of all these opportunities that you seem to have your eyes on it? And just to follow up on some of the cost commentary, Nadeem, you had a 10% decline in your ex fuel yield cost kind of Q3 versus Q2 on slight volume, which is impressive, obviously. But were there any unique items in there? Or you’re calling headcount going down again, going into Q4, like is this a new level that we get to improve from? Or are there some unique items maybe in the third quarter that we should take into account?
John Brooks: No, this is a new base now. We’re going to expect some volume growth in Q4. So you’re going to have some volume ramp up. We did have an insurance recovery in purchased services. Now we also had higher casualties. So the net of two was a small benefit in purchase services and other. And that’s why I mentioned that we’ll ramp that up a little bit from 506 closer to 530. But certainly, we expect labor costs come down as the headcount comes down, and we don’t backfill – attrition does its job on that front.
Nadeem Velani: Fadi, I’ll just say that I continue to see us exceeding in our revenue synergy area, and I would say, you know what – and our Investor Day, we guided to sort of what our multi-year plan expectations would be annually. We’re right on pace for that or even again some upside as I look to that.
Operator: Our next question comes from Steve Hansen, Raymond James.
Steve Hansen: John, question for you. Perhaps the disruptions and constraints facing potash have been significant thus far, as you’ve described. You’ve now got some constraints in the eastern direction, with the seaway as well. Do you want to maybe just give us a sense for how the potash volume look looks through the next quarter or two as we sort of get through some of these constraints?
John Brooks: Canpotex has a pretty good sales book on for Q4. It’s just their ability to execute without the Portland terminal, which is a significant workhorse for them and a good route for us. It’s been horribly challenging. So I’m optimistic that we’re going to sequentially improve. The numbers are so low, we better sequentially improve as we move through Q4 in potash. And we’ll get that terminal back up at the end of the year. And as I said, I’m hoping we gain some momentum in November and December and really hit the ground running as you look to 2024. I know Canpotex has ambitious plans to sort of gain back the market share that they’ve lost over 2023, into 2024 as a result of a number of these challenges they’ve faced.
Operator: Our next question comes from Tom Wadewitz, UBS.
Tom Wadewitz: I know you’ve had a couple of questions on 2024. I want to kind of circle back to that a little bit. I think the broader theme for transports has been somewhat weaker freight markets, lowering of expectations for 2024, just to reflect that kind of lower momentum. I think you have a lot of puts and takes, right? Like, clearly the conversation on potash, you would think that’s easy comps in 2024, but I know you’ve got Canadian grain down a little bit. So maybe just at a high level as you go into 2024, do you view that as kind of a low base or easy comps, so you can have kind of stronger growth than normal? And that maybe gets you up towards where the Street is with 20% earnings growth? Or do you think that it’s like, hey, let’s be a little careful because there is enough weakness that’s kind of macro weakness in the markets that we ought to be a little bit careful on expectations?
Keith Creel: Tom, I’ll make a couple of comments and then if, Nadeem, you want to make a comment or two. But, look, I got bit in 2023. I thought I was – had easy comps for potash coming into 2023. And, well, frankly, the numbers are – I saw 10% growth in potash and we’re at a 10% decline in potash. So, it’s fool me once, but we’re going to be a little more cautious on that front. Again, in that area, I expect to be set up well. You know what, we’re going to move a lot of Canadian grain, US grain over the next couple of quarters here and we’ll watch what materializes, Tom, as we move into Q2 and beyond with this crop. That’s certainly more challenged in the southern part of Canada. And maybe my last comment is, overall, I feel hopefully good about the synergies and that ramp up as we look to next year.
I do believe this pricing environment continues to be favorable as I look to next year. It’s all about the macro in the base and how the intermodal business and some of these very heavy consumer driven areas rebound or not. And we’re just going to be very prudent about how we how we look at those volumes into 2024.
Nadeem Velani: Not to get into too much detail, it is still October here, about 2024. But I think just fundamentally, you should think about it in the usual way of how we’ve been successful in the past, which is some volume growth, pricing, we’ve been hurt by inflation. That’s been, call it, a significant impact, I think, in transportation in general in 2023. But I think the ability to price above inflation comes back in 2024, which will be positive and accretive. I think currency could be supportive as well. And so, you factor that into and you can get to that kind of mid to high single digit revenue number. I think the more important thing is the operating leverage. As this network starts humming as we start to continue to invest in the capacity sidings that Keith mentioned and Mark mentioned, you get the benefits of running a better network as a whole.
You get the benefits of some of the synergies both on the top line and on the operating costs. I think it formulates a pretty decent EPS growth number. So, I’m not backing off. We’re not backing off what we think we can achieve. Sure, there’s going to be some challenges on the macro side that we’re fully aware of, and we’ll get into that in January and have a better view of that. But as we stand here now, I don’t think we’re changing this kind of the earnings model of how we’ve been successful in the past both at CP and at KCS.
Operator: Our next question comes from Jon Chappell, Evercore ISI.
Jonathan Chappell: John, about six months in, where do you think you stand on the unique pricing true up opportunities that you had across the entire portfolio? Is that something that’s easier to do once you’ve integrated for a full year when you have more of a demand tail on your back? Or was that something where you can enact pretty quickly and we should start to see the benefit of that as soon as the fourth quarter?
John Brooks: I would say, John, we’ve attacked that pretty aggressively. I feel good. In terms of where we’re are, we’re still discovering things and I don’t know maybe we’re in the mid innings of that story as a whole. I can tell you I think you’ll start to see some of those benefits as you come – probably Q1 of next year, but we still have a number of areas of opportunity that we’re going to work over the next – certainly this quarter and into Q1. And I do believe that that’s given us – that does give us a little bit of tailwind as you think about some of our pricing in terms of RTM as you look to 2024.
Operator: Our next question comes from Cherilyn Radbourne, TD Cowen.
