Canadian Pacific Kansas City Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
January 30, 2024

There are 7 speakers on the call.

Operator

Good afternoon. My name is James and I will be your conference operator today. At this time, I'd like to welcome everyone to CPKC's 4th Quarter and Full Year 2023 Conference Call. Besides accompanying today's call are available at investor. Dotcpkcr.com.

Operator

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I'd now like to introduce Chris De Bruin, Vice President, Capital Markets to begin the conference.

Speaker 1

Thank you, James. 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 and in the earnings press release filed with Canadian and U.

Speaker 1

S. Regulators. This presentation also contains non GAAP measures outlined on Slide 3. Please note, in addition to our regular quarterly financials, there's supplemental Q4 and full year combined revenue and operating performance data available at investor. Ctkcr.com, which some of today's discussion will focus on.

Speaker 1

With me here today is Keith Creel, President and Chief Executive Officer Nadine Belani, our Executive Vice President and Chief Financial Officer John Brooke, 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 and A. In the interest of time, we'd appreciate if you could limit your questions to 1. It It's now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Speaker 1

Thanks, Chris, and thanks to everyone for joining us today. Give us a chance as a team to share our 4th quarter results as well as our view for this exciting year ahead in 'twenty four that we have to create value for our shareholders, for our customers and our in our CPKC family. So with that comment, let me start by thinking that CPKC family, 20,000 3 nations strong family of railroaders industry best. Their body of work enabled the results that we get to talk about today and obviously the work that's ahead of as we create value for all of our stakeholders. And I can tell you as a leader, it's my honor to be able to be at the colleagues that are with me here today to represent their body So with that, Ted will speak to the results.

Speaker 1

For the quarter, this team delivered revenues of $3,800,000,000 which is up 4%, volume growth of 4%, an operating ratio that represents 220 basis points of improvement versus last year to 58.7 percent, core EPS of $1.18 also up 4% versus last year. And for the full year, revenues $13,900,000,000 up 5%, Volume growth of 1%, a very unique industry story and operating ratio of 62%, core EPS of 3.84%, up 2% versus last year. So standalone certainly unique and impressive results, even more so when you think about This is a railroad in the early stages of an integration, working against a challenging macro environment all at the same time. So here we are 10 months into our forever story at CPKC, and I'm telling you, I'm extremely proud of the progress this team has made across the organization, Be it operationally, sales and marketing, finance, IS, all areas of the business, this is a team that's committed in Creating value as we said we would, we're doing exactly what we said we would do. And I can tell you, a tremendous amount of work went into preparing for this merger for this combination and even more so has gone into executing it.

Speaker 1

As leaders, I believe this. We're not here to sustain performance. We're here to do it better. We're here to make an impact to improve the product. And that's exactly what this team We're here to make an impact to improve the product and that's exactly what this team has been doing for the last 10 months.

Speaker 1

We've launched new services, market solutions across the industry that this transaction has uniquely enabled, be it our 180, 181 service, our Mexico Midwest Express, Which is the gold standard in the industry in spite of what anybody else might say, try and imitate it. It's best in class fast, reliable, single line service across a very fluid and always open border. A closed loop service solution for the automotive industry It provides a differentiated level of service and reliability that the OEMs are embracing and recognize the value that, that creates in their reliable subaw chains. Connecting Origins, destinations at ACP MNC Forest Products, again with a unique single line service across the all 3 nations. We've made gains in operating efficiency, service, reduced assets, we've increased velocity.

Speaker 1

We've reduced well. We've eliminated handles. We've also made strong progress, I'm very pleased to say, on the labor side. On the U. S.

Speaker 1

Side, we've expanded our very unique hourly agreements, which I believe gives us unique competitive advantage, not only to serve our customers, but also to attract and retain the best railroading talent in the industry. And in Mexico, establishing trust and respect With our one union that's there working towards agreements that not only improves service but also benefit the employees. So it's truly a win win for Mexico, for our employees as well as our customers that utilize our service. Also through the year, while we're doing all that, we've continued progress in our hydrogen locomotive program. We've now got 2 low horsepower hydro locomotives that are servicing customers every day in Calgary.

Speaker 1

Come rain, Come Sean, come snow, we're rapidly producing the 0 emissions of Calgary customers in that market as well as We fabricated our 1st high horsepower locomotive, which we completed late last year, which completed its first test movement. We'll be putting that into service later this year In a coal loop with the tender car, cycling coal between the coal mines in British Columbia and the Tidewater in British Columbia in partnership with our largest customer tech coal accreting a green corridor. And above all that, while we're doing that, Most importantly, we've improved and continue to make vast improvements in our safety performance as a combined company, building we're going to continue to build upon that. Mother Nature has humbled us a bit in the 1st month. That said, it's a challenge.

Speaker 1

It's not an Hughes were well positioned to recover. We've regained our momentum that we started the year with, and we're in a great position to continue that through this quarter and into the balance of the year. So let me close by saying 23 was a very special year. We bought 2 great companies together, CP and KCS to create a very unique industry leading most relevant rail network in CPKC. We've connected a continent in a way that's never been done before and I would We'll never be done again.

Speaker 1

3 continents. Since the combination took effect in April, we've seen us steadily build momentum. And I can tell you we're just getting started. 2024 is shaping up to be an even exciting more year than 2023. So that said, let me hand it over to Mark.

Speaker 1

I want him to expand, speak to some operational points. John is going to bring some color in the markets and maybe we'll bring us home on the numbers and then we'll open up the questions. So over to you, Mark.

Operator

All right.

Speaker 1

So first of all,

Speaker 2

thank you, Keith. Good afternoon. I'd like to just first of all thank the operating team for their hard work in delivering safe reliable service across this great network. If I think about bringing 2 networks together, certainly this isn't easy and there's been still a long list of out there, but I'm pleased with the progress we're collectively making. Also, I'd like to thank this team's effort to combine CPKC network as we enter 2024 in a place of strength, as Keith noted.

Speaker 2

But while we've been dealt with some weather for the 1st part of the year, we're well positioned to rebound quickly and have Done so. As I look at safety, I would remind and I'd like to recognize the entire team for the tremendous safety results that we've had. I'm extremely proud to say again, 2023, we have the lowest effort to train frequency on Class 1 Railroads building on the CP's 17 consecutive years in the industry. This is an impressive milestone, highlights the team's dedication to excellence while ensuring the safety remains its top priority. It also showcased the strong commitment to safety that both KCS and CP brought together in this merger.

Speaker 2

As I look at the operating performance, year over year for the quarter, The L4A personal injuries landed at 1.10, which is a 15% improvement. The L4A train accident frequency was a 1.08, which is 23% improvement. If I look at locomotive productivity, improved 13%, our train speed at 6%, our fuel was 2% better And our average terminal well was down 11%, strong indicator of how well our network is performing. As I talk about this, I think about the backdrop of all time record highs of GTMs 5% year over year and 11% From a safety perspective, I think about 27 subdivisions in around 2,600 miles of dark territories now protected with CP KC's broken rail detection system. We plan on putting 8 more additional subdivisions in 2024.

Speaker 2

So looking at the acoustic bearings, we're looking at an additional 5 across the network. This just will expand on our detection capabilities. I look at our capital projects for the year. 2023, we in service 3 new sidings and constructed will construct 5 more in 2024. This is all part of the $275,000,000 merger commitment that we have.

Speaker 2

If I look at the Laredo bridge, we're 45 complete at this point. We remain on target to be done by end of year. We're also investing in capital in Mexico to increase capacity, fluidity across the North South Corridor between Laredo and San Luis Potosi. All these projects will support growth, further improvement in the network performance. As I look at 2024, we'll continue to build the momentum that we've generated in this past year in 2023.

Speaker 2

We continue to work strong with John's team to provide service and generate industry leading growth that this network can achieve. And with that, I'll turn it over to John. All right. Thank you, Mark, and good afternoon, everyone. So having now wrapped up our Q3 at the combined CPKC, as excited as ever I can tell you about the opportunities that sit in front of this company.

Speaker 2

It's a unique franchise. The year quarter ended on a strong note and we are well positioned to continue delivering differentiated growth in 2024. Now looking at our results. On a combined basis, we had record freight revenue up 4% on 4% RTM growth versus pro form a CPKC a year ago, in line with exactly what we spoke about during our Q3 call. Since per RTM was flat year over year with fuel and other freight offsetting a continued strong pricing environment.

Speaker 2

Now taking a closer look at our 4th quarter revenue performance, I'll speak to the FX adjusted results On a comparison versus CP Casey had the combination occurred in 2022. Starting with bulk, grain revenues were down 3 on a 7% decline in RTMs. Canadian grain volumes were down 15% year over year, driven by a weaker harvest for the 2023, 2024 crop year, particularly in our CPKC Draw territory. Additionally, we saw the Canadian farmer be more price sensitive and hold on to more of their crop, which added to the weakness in this volume on the quarter. While this was a headwind to closing out 2023, ultimately this grain will still move and it provides some modest side into 2024.

Speaker 2

Now that being said, we will still expect to see weakness year over year in Canadian grain to persist until we get to the new crop. U. S. Grains were up 3% as we benefited from a solid harvest, steady market demand and growth from synergies as we continue to connect new origination and destination pairs across our new network. Additionally, we continue to see investment and growth in our 8,500 foot model.

Speaker 2

By the end of 2024, 60% of our franchise in Canada will be 8,500 foot capable, including all 8 of the 8,500 foot elevators that Richardson International is developing across our network. We continue to roll out this model and work with customers down in the U. S. And ultimately down into Mexico to roll out this high efficiency operating model. Moving on to potash, Revenues were up 16% on 20% volume growth.

Speaker 2

The volume increase was driven by strong supply chain performance and higher volumes of Port Potash with Canpotex as we work together to find additional outlets for volume given the Portland terminal outage during the first 2 quarters 2 months of the quarter. In early December, the Portland terminal came back online and we're able to quickly return to a full run rate by the end of the year. We are positioned well for strong potash growth in 2024. And to finish out the bulk business, Coal revenue was up 32% on a 33% volume growth, driven by favorable compares following last year's outage at Teck's LP Mine. Now moving on to the merchandise franchise, ECP revenue grew 6% and 3% volume growth.

Speaker 2

Refined petroleum products and asphalt grew, driven by new market share and growth, also 6 to the Midwest. We will continue to benefit from the new business wins that started up in Q3 and Q4 of last year As some of this growth was muted by a facility outage and a slower ramp up. With solid demand fundamentals, ongoing ramp up of this business wins and continued synergy gains, we are setting up for a strong 2024 in ECP. In Forest Products, Revenues were up 2% on a 1% increase in volumes. Despite a softer demand in our base business in this area, We have seen nice synergy wins in this space as customers take advantage of our new single line haul network connecting new markets.

Speaker 2

The Metals Minerals and Consumer Products portfolio was up 3% on flat volumes. We continue to see strong growth in steel out of our production facilities across our network, supporting industrial and infrastructure growth across North America. This quarter, however, in this area was offset somewhat by weakness in frac sand to the Bakken and also the Permian Basin as we saw in earlier seasonal downturn and some growth in in basin sand. Automotive revenues continue to be strong, up 22% and 19% volume growth, another record quarter for our automotive franchise. Our automotive franchise is benefiting from new business, solid continued production from our OEMs and steady equipment supply driven by Proved operations and cycle times, particularly in Mexico.

Speaker 2

We are pleased with the new agreements we have developed that enable closed loop service solutions, Providing this industry service reliability it has never had in the past, including the use of our new auto compound in the Dallas metro area and linking customers traffic between U. S, Canada and Mexico via our single line haul service. For automotive, 2024 is positioned to be exciting year as we see a path through record volume on our franchise. On the intermodal side, Revenue was down 11% on flat volumes. Domestic Intermodal continues to be challenged but lower retail volumes, ample truck capacity and some general market softness.

Speaker 2

Now our MMX 18,181 that Keith spoke to, cross border service continues to perform very well. This is truck like service with a safe reliable border crossing between Mexico and the U. S. We saw growth in this service in the 4th quarter, particularly across our Northbound volumes. While the base demand in domestic intermodal is something myself and my team are watching closely, particularly across Canada, the opportunity For cross border intermodal, we'll continue to see steady synergy growth from over the road conversion and new customer solutions as we move throughout the year.

Speaker 2

As part of those new solutions, I'll remind you, we are very excited to break ground on the new Americold facility co located in our intermodal terminal in Kansas City. This partnership with Americold is another step in creating new rail options for shippers in a market that is dominated by trucks. Moving over to International Intermodal. After a challenging third quarter, this business has picked back up. We ended the quarter with volumes up 2%.

Speaker 2

Although we remain cautious on our outlook for 2024 in this space, we are certainly encouraged by the recent trends. We're also encouraged about the progress we are making at the port of Lazaro Cardenas. In 2023, the Terminal saw PEU growth of 30%, while CP casing volumes grew by 35 percent versus 2022. Our customers are enthusiastic as we continue to develop this service and them on this supply chain alternative. When you combine this with our 50% ownership in the Panama Canal Railroad, we are excited about the unique solutions CPKC can offer ocean carriers and their beneficial cargo owners.

Speaker 2

In closing, despite some early weather challenges in January, we are entering the year with strong momentum. While we have a known headwind from Canadian grain and the macro backdrop remains uncertain, we have strong line of sight to remain uniquely positioned to deliver long term growth. Our synergies in 2024, Combined with base self help initiatives and a disciplined pricing approach will continue to be an exciting story and differentiator for us in this industry. With that, I'll stop and I'll pass it over to Nadine.

Speaker 3

Great. Thanks, John, and good afternoon. So first, I'd like to thank the TCKC family of railroaders for working tirelessly throughout the year to bring our 2 companies together. 2023 was truly historic And I'm extremely proud of the hard work and dedication that the team has displayed. Looking at the quarter, CPKC's reported operating ratio was 61.8% and the core adjusted operating ratio led the industry for the 2nd quarter in a row coming in at 58.7%, which was a 220 basis point improvement versus Q4 2022.

Speaker 3

Earnings per share was $1.10 And core adjusted combined earnings per share was $1.18 up 4%, which was also industry best on the quarter. On a full year basis, TPKC's reported operating ratio was 65% and the core adjusted combined operating ratio in at 62%. Earnings per share was $4.21 and core adjusted combined earnings per share with $3.84 up 2% year over year. Now taking a closer look at our income reported operating expenses for Q4 and full year are provided on Slide 14. Combined operating for the Q4 are on Slide 15.

Speaker 3

Similar to what we shared last quarter, our combined operating expenses illustrate the estimated effects of the acquisition for the Q4 is that the acquisition closed on January 1, 2022, and I will only speak to FX adjusted 4th quarter operating results in these prepared remarks. We've included full year results in the appendix for reference. Starting with comp and benefits, its expense was $637,000,000 up 2% when compared to combined comp and benefits expense a year ago. This includes $7,000,000 of integration related expenses. The increase was driven primarily by wage inflation, increased incentive and higher volumes.

Speaker 3

Average headcount was down slightly sequentially in Q4. Looking at 2024, we expect headcount growth to be below volume growth on a year over year basis. Partially offsetting the increase was lower current service in the DB pension plan resulting from higher discount rates and lower stock based comp. Looking at 2024, we expect to have a $16,000,000 headwind resulting from lower discount rates, which is more than offset below the line. Fuel expense was down 8% year over year.

Speaker 3

The decline was primarily driven by a 10% decline in combined fuel price along with a 2% improvement in fuel efficiency that Mark mentioned, partially offset by a 5% increase in GTMs year. Materials expense was down 9%. The decline was largely driven by reduced locomotive maintenance material spend. This is partially offset by an increase from inflation and lower use of CPKC intermodal equipment by other roads. Depreciation and amortization expense was up 6% resulting from a higher asset base.

Speaker 3

Purchased services and other was relatively flat Year over year, a reduction in casualty expense and gains in efficiency were offset by volume related increases in inflation. Before moving below the line, I'll make a couple of comments on inflation. This past year, we were not able to reprice our entire book to offset the impact of inflation on our cost structure, which created a headwind to OR throughout 2023. As we move into 24, the impact of inflation on our expenses is moderating. Additionally, the pricing environment remains strong and we will reprice a portion of our contracts that did not renew during the period of higher cost inflation in 20222023.

Speaker 3

Putting these together, we should see some catch up and a tailwind to OR in 2024 from inflation dynamics. Moving below the line, other expense was up $12,000,000 in the 4th quarter. Other components of net periodic benefit recovery decreased $34,000,000 reflecting higher discount rates compared to 2022. We expect this line to increase by approximately $23,000,000 in 2024 from $327,000,000 in 2023, offsetting the headwind in common benefits from the current service Net interest expense was $206,000,000 or $200,000,000 on an adjusted basis. The decline was driven by a reduced net balance.

Speaker 3

On the quarter, income tax expense was 275,000,000 $314,000,000 on a core adjusted combined basis. Looking ahead to 2024, Expect CPKC's core adjusted combined effective tax rate to be approximately 25%. Turning to Slide 17, We continue to generate strong cash flow with cash provided by operating activities of $1,300,000,000 in Q4. Our first call on capital in line with our outlook to invest $2,700,000,000 in capital on a combined basis. Looking at 2024, we will remain disciplined in approach to capital allocation and we expect capital spend to be $2,750,000,000 for the year.

Speaker 3

This reinvestment in the business builds off of record capital investment as a combined company in 2023 and our network is well positioned from a capacity perspective to absorb the growth we have in front of us this year. We generated $785,000,000 in adjusted combined free cash flow on the quarter in just under 2,200,000,000 in 2023. Our adjusted combined leverage was 3.4 times to

Speaker 2

end the year on our path back

Speaker 3

to our target leverage of 2.5 times. We expect to reach a target late 2024 or early 2025, at which point we will evaluate shareholder returns with our Board. Looking ahead, despite a known headwind in grains, John mentioned, and a still somewhat uncertain macro, We expect to deliver double digit core adjusted combined earnings growth from the core business in 2024. We also anticipate generating strong free flow while making record investments in the network to sustain future growth and getting back to our target leverage. Putting all of this together, CPKC offers a truly differentiated investment profile and I am excited to continue delivering on commitments that we have made to our shareholders.

Speaker 3

Looking back, we ended 2023 with strong momentum, investment industry earnings results with the best yet to come. The network is performing well, synergies are ramping, and we are well positioned for a strong 2024. It's an Exciting time to be railroading at CPKC. With that, let me turn it back over to Keith.

Speaker 1

Thanks, gentlemen. Operator, let's open up the line for

Operator

will take our first question from Walter Spracklin with RBC Capital Markets.

Speaker 4

Thanks very much, operator. Good afternoon, everyone. So on the double digit earnings growth, I know, Nadim, when you that's consistent with what you provided at Investor Day there in July. And I'm just I know during later in the session in at that day, you kind of gave us an indication into a doubling of your earnings growth by the end of that multiyear period suggesting kind of a mid teen EPS growth in the early year and then perhaps ramping once you're able to kick in the buyback. Is that still the case that in the early year here in the year 1, the mid teen cadence is still holding and then ramping after that or Have conditions changed that would cause you to change that overall view?

Speaker 3

Well, since we gave our guidance in June, Walter, nothing has changed other than I'd point out that we had a grain crop that came in maybe a bit weaker starting in the grain crop starting in August. So that's going to hurt us near term A little bit probably Q2 of this year. Other than that, the model remains the same. We're going to support the business with the base organic growth. We're going to have the benefits of synergies, which we're ahead of schedule on.

Speaker 3

And then we're going to see continued margin improvement and then the benefit in outer years of share buybacks and shareholder return. So Nothing has changed on that thesis. We've guided to double digit for this year. We're obviously not going to get a benefit from buybacks in any fashion. We're not going to buy back stock until we get our target leverage back.

Speaker 3

So that's going to hurt us compared to other years of that 5 year outlook, but that's the only change. It's a that the macro environment is probably a little bit weaker still in terms of the immobile side that John mentioned. But other than that, we're right on track, right on our plan to that guidance Okay.

Speaker 4

I'll keep it to 1. Thanks very much.

Speaker 3

Thanks, Walter.

Operator

Our next question will come from Tom Wadewitz with UBS.

Speaker 2

Great. Thanks. Good afternoon. Wanted to see if you could give a little bit of perspective on what's Underneath the earnings guidance, just in terms of how are you thinking about RTM growth? Are you thinking like mid single digits, what kind of what ballpark should we be in?

Speaker 2

And then how do you think about the magnitude of improvement in operating ratio that would fit into a base case? Thank you.

Speaker 1

Tom, that's a great question. I'll tell you this, this is what we're expecting. Low single digit RTM growth, double digit EPS and margin improvement. Now tell me what the back half of the year looks like. Tell me what the macro is going to do.

Speaker 1

We've taken, I believe, an appropriate Conservative approach and at the back half surprises and some of those weaknesses that Beijing spoke of, be it domestic, Be it a normalized grain crop or maybe a little bit better, then there's some upside there. But we've taken a modest approach, a Responsible, reasonable, conservative approach, and we expect to hit these results. And again, if we get a couple of things that might turn our way, then we certainly have an opportunity to exceed them.

Speaker 2

Okay, great. Thank you.

Speaker 5

Our

Operator

next question will come from Fadi Chamoun with BMO.

Speaker 6

Yes, good evening. Thank you. At the June Analyst Day, you indicated you had $240,000,000 of kind of actual annualized revenue synergies and you suggested you had a pipeline line of sight to $950,000,000 I'm Just wondering like as we stand today, what does it look like and how do you feel about the pipeline for 2024 in terms of these revenue

Speaker 2

Hey, Patty, it's John. So as I said, I feel really good. I think we made great progress In the 1st 10 months, I can tell you we've got some contracts and some wins in 2023 that we haven't realized yet. They're just starting to ramp up, and I think we're going to see a progression with those. I still think we got a long tail On the 180, 181 product as we move through 2024 and hopefully we see some of the domestic Intermodal trends, macro trends maybe moving our favor a little bit.

Speaker 2

And honestly, that includes Lazaro also. It's been quite an educating process with the steamship lines and beneficial cargo owners around what that port potentially Could do. To be honest, I'd hope that'd be a quicker start up, but we are starting to gain some traction there. So I think We guided to 3 we mentioned $350,000,000 we saw as a we were very comfortable. We're on that pace, I would tell you right now that we've slightly exceeded that.

Speaker 2

We're ahead of that and well on the way to those numbers we talked about at Investor Day.

Speaker 6

Thank you.

Speaker 1

Thanks, Savi.

Operator

Our next question will come from Chris Wetherbee with Citi.

Speaker 2

Hey, thanks. Good afternoon.

Operator

Maybe a

Speaker 2

question on pricing. So you guys noted that there's a little bit of catch up going on in 'twenty four in terms of some of contract that you didn't get a shot at over the last couple of years and you have moderating inflation,

Speaker 6

that's a little bit different than

Speaker 3

what we've heard from some of

Speaker 2

the players in the particularly some of the U. S. Names. So maybe if you could just put a little bit of color around sort of the pricing environment that you're seeing. And is this sort of Upside opportunity in the U.

Speaker 2

S. Versus Canada, if there's any sort of difference there kind of what the contract renewals are coming in around? Yes. Chris, John, a couple of thoughts on that. One is I'll tell you Q3 and Q4 were quite strong, some of the best rail pricing that I've seen.

Speaker 2

And again, I think part of that was us through the year kind of catching up to some of those inflationary numbers. So going to get a tailwind on that. There's been a fair amount of repricing and as we've dug into the book of the new company And some of those contracts have rolled over. There's been opportunities where we felt that we needed to reprice some of that book. I'll remind you, we took control in April of last year.

Speaker 2

So a lot of the contracts leading up to that I'm KCF, standalone head had renewed on their own. So I can tell you my team is kind of getting a first Look at a number of those contracts that rolled over to start this year. And the results, I think most importantly, The results in those areas continue, I would say, on the trajectory of what we saw in Q4. So Again, my expectation will be the first half of this year remain strong on that front and we'll see what the back half comes when we get Great. Thanks very much.

Speaker 2

Yes.

Operator

Our next question will come from Steve Hansen with Raymond James.

Speaker 5

Yes, good afternoon guys. Thanks. Look, your network wide improvements in speed and dwell have been pretty striking over the past several months, notwithstanding last week or 2. I'm just hoping you could point to where these gains have been coming from more specifically on a geographic basis and what that might imply for some of the prior congestion issues you've acknowledged in Mexico? Then I guess ultimately what it means for bringing on the revenue synergies down there as well?

Speaker 5

Thanks.

Speaker 1

Steve, great question. Let me say this. I'm going to have 2 gentlemen that are driving and leaving a separate day, both Mark. Mark's part of the store, John's part of the store and their teams. That's the beauty of this.

Speaker 1

It's not singular. It's diversified. What Mark has done in Canada relative to driving well down train speed up, our 100 trains have never been better. The focus there and the intensity and the opportunity to drive not only train speed, but asset turns and locomotive Velocity and fuel efficiency, Mark and the team are doing a phenomenal job. And at the same time, part of the task force, we've taken a challenge, which comes with growth, we turned it into an opportunity.

Speaker 1

And John took this team and has turned it into an organization that's focused on process, focused PSR principles where we turn assets, where we get better for our customer, we whiteboard with GM, we whiteboard with Stellantis, we whiteboard with Bartlett, we Light bulb with our customers so that we can identify what's possible and then we work to strive to achieve the art of the possible. All about asset churn, speed and velocity. And as a result of that too, although I said I'm going to let these guys talk, I get a little scared away here. Part of what we learned that we're super excited about is with a little bit of strategic investment much like in the playbook PSR in the past, this isn't about cutting costs. It's about strategically and surgically investing money to create capacity and Resiliency to eliminate bottlenecks, turn assets more, it's about locomotive productivity, it's about train speed, it's It's about crew productivity, it's about fewer re crews, it's about turning assets, creating car capacity to doing that for our customers so that we can create more loads with less It's PSR 2.0, and John has done a masterful job of integrating and starting that evolution in Mexico since that task force was created.

Speaker 1

So again, a couple of highlights, John, a couple of highlights, Mark, you guys have done it. I'm the proud guy that gets Talk about it. I love it when I see it happen, but let me give these guys a chance to share a couple of highlights for you, Steve, as well as the rest of our investors to give you some The meat on the bone, so to speak, not just a bunch of rhetoric, but real life examples of the art of the possible.

Speaker 2

Yes. So if we think about Just 100 Series in Canada. I mean, we've shortened some of the trains up just a bit just to get more track speed across the network. And We've been able to produce locomotives by doing that. We've been able to give a product to John that he can sell to the marketplace.

Speaker 2

So that's some of the areas we focused on. Large focus on KCSR property where we've had boots on the ground at the switching that we spoke about this in the previous quarters. We spoke about some of the in train repairs that we're doing at Kansas City and really just ramping up Mechanical operations. Some of the things we haven't spoke too much about, it's not train speed, it's not this other stuff, but it's about working in diesel shops. We're going to take 2024, spend some time in the diesel shafts and do our own overhauls where we've had to do that in the past and give it 3rd parties.

Speaker 2

We'll do more of that in house. We'll also leverage the tile plant that we have in Shreveport, Louisiana, Leverage the wheel shop that we have in Winnipeg and use that cross border to build up to in house our wheels, Put the timber in the right of way where we need to and enhance our engineering gains as well. We'll reduce some of that headcount in engineering gains, but also this would be the 1st year that we can work toward system gains with KCSR And with that, I'll hand it over to John to talk a little bit about Mexico.

Speaker 1

Yes. Thanks, Mark, and thanks, Keith. I think I'll use the same phrase because we've got the same approach. We've taken a boots on the ground effort to help stabilize and improve Mexico operations in and the task force was a trinational task force of railroaders who went to the central part of Mexico around the automotive hub to really streamline the businesses there and unlock the potential of the fluidity in the south of Mexico and worked progressively northward and improved our well in San Luis Potosi, Monterey and our border terminal at Sanchez Yard. That all started to really pull together the velocity, the resource utilization, the improvements on locomotive use, locomotive productivity and even labor productivity.

Speaker 1

Since then, the task has worked to embed best practices that we shared or inherited from the CPKC merger. And now we're turning our attention to you improving cycle times on some of the bulk business or some of the more complex larger customers in the steel and metals sector. And we're using the time that we spent within the ground to really pinpoint Structural improvements, engineering out choke points and that's reflected in our 2024 capital allotment. As you said, Keith, very precise and targeted to continuing the fluidity, the opportunity to grow the business and to

Operator

Our next question will come from Scott Group with Wolfe Research.

Speaker 1

Hey, thanks. Afternoon. John, with everything going on at SUEZ and Panama, just curious your thoughts if Vancouver or Lazaro or if one is better position in the other 2 to benefit from that? And then just separately, Keith, I know we've got the labor negotiations going on up in Canada. Any update you can give us And how to think about that?

Speaker 1

Thank you. Yes, let me start with that one on labor. I'll give you a quick update and maybe still look at John's thunder and let him add some more color. So on the labor side, listen, I remain cautiously optimistic. I'm a realist with the table.

Speaker 1

We actually reengaged today. We're with the TCRC through the end of this week. I believe Ian is doing the same thing and I'm going to remain optimistic We can get to a negotiated settlement. That said, if not, as investors, you're going to have a heads up Effectively, the way the process works, if you reach an impasse, either party could file for conciliation. And from the time that It will be very public if it happens where we deserve notice or they deserve notice.

Speaker 1

It's a 96 day process before you would, at the earliest, experience a potential strike. So again, I'm going to give this thing optimism. I think it's in our best interest, it's in our Employees' best interest and our customers' best interest, obviously, and the nation's best interest to keep everybody working. And I hope that's what happens. But again, if not, you're going Quite a bit of heads up in time to be aware of what's going on.

Speaker 1

And relative to the Suez, the Panama, Lazaro, West Coast U. S, West Coast Canada, let me just say this and I'll hand it over to John. Lazaro is a whole lot closer to Panama than Prince Rupert is. Scott,

Speaker 2

Lazaro, Panama, another Tool in our toolbox. I'll tell you right now, like, I'm really surprised, volumes have recovered pretty strongly in Vancouver. And I don't think that has anything

Speaker 6

to do

Speaker 2

with That is a whole different issue and I don't see that really being a volume driver to our West Coast ports. But I do see our value proposition of multiple Westport outlets, the ability to get the Panama Canal, utilizing the railroad down there, being an opportunity for us. It just broadens the discussion with all these customers. And I fully expect you're going to see us continue to ramp up some volumes Through that terminal down in Lazaro. Honestly, the big thing I'm watching right now is the East Coast labor situation and that's the area that really could present itself some opportunities for us.

Speaker 1

Thank you, guys. Yes.

Operator

Our next question will come Benoit Poirier with Desjardins Capital Markets.

Speaker 6

Yes. Thank you very much. Good afternoon, everyone. With respect to the situation in Mexico with the decree now being enforced and given the fact that you've submitted your feasibility study to the Mexican government, What are the next step? And if you could talk a little bit about the benefits of the second bridge in Laredo and kind of the benefits and impact we should expect on volume, dwells and velocity, that would be great.

Speaker 6

Thanks very much.

Speaker 1

Benoit, great to hear from you. Let me at a high level, I'll start with the Laredo Bridge. Obviously, doubling our capacity, ability to essentially create a double track across the border point that allows trains to pass and not trains to stage and wait in queue. We've Driven a lot of improvement, John and team, prior to our acquisition and even in Trust. We took one of those where they used to have Being in queue 12 hours or 8 hours, cut them down to 4 hours, so there's been dramatic improvement.

Speaker 1

But 4 hours in queue versus no hours in queue, it's material. I don't know Actually what number has been on it yet, we'll see, but I can tell you it gives us again, it adds to the unique structural and strategic advantage that our network represents to our customers that Shifting to the passenger rail. I'm a bottom line upfront guy. Let me say this. I have zero expectation or belief that Mexico's ambitions and intent to integrate and initiate passenger rail Service in concert with freight rail service will impact our ability to hit our synergies or any of the targets of our multi year guidance.

Speaker 1

I think that's an important to start. Number 2, we speak with a bit of experience. And I'm saying this from a place of the utmost humility. We didn't always get this right at CP. We made a commitment shortly after I came to CP, I don't know, probably 2, 3 years into it.

Speaker 1

Quite frankly, I got tired of being in the tail by Amtrak complaining about their service. And I said, listen, we can do both. As long as you've got the right infrastructure, you have a schedule where a scheduled railroad, Those passenger trains don't just show up. Run them on time and get them out of the way and they don't become a problem as long as you have the infrastructure to be able to handle both. So that said, when I first became the CEO of this combined entity, I knew That Mexico, different nation, different expectations, completely autonomous, sovereign.

Speaker 1

Important part to me was to understand and learn what I didn't know about Mexico. So I made an initiative, an important initiative, to get in front of The President of Mexico, right out of the gate. Pat and team have built a phenomenal relationship with respect based on performance In years of history with the Mexican government regulatory environment, so I said, let's go to Mexico, let's meet with President of AMLO. In that initial meeting and I shared this, he told me his vision about creating prosperity in the country and he explained the need for passenger service in Mexico. And he also said to me that your concession requires it.

Speaker 1

Well, obviously, I've done a little bit of homework. I had a lot of time Preparing to get this merger, number 1, get it accomplished number 2, get it approved. I did a lot of reading. And of course, I read about this concession. And it said that that's part of the concession.

Speaker 1

If they say they want to run faster trains, you've got to figure it out. So with that said, when he told me that, I said, listen, President, I get it. I understand it. There's a way to do both and be successful. We need to define and understand what capacities We need to be able to succeed at both.

Speaker 1

So we automatically, and this is May of last year, said, you know what, I'm going to pay for the study. I'm going to get an industry expert that knows how to define what capacity is required for both. And I'll let you know what the results are and we can talk more at a later time. Well, we did that. We initiated an RFP.

Speaker 1

We selected HDR, which are experts in determining the rail capacity that's needed. We engaged in that and started that well before that decree came out in November of 2023. So we were not Surprised. Now the decree expanded the scope a bit. That said, it had a date, to your point, Benoit, we had to submit January 15, what our intentions were, and our intentions were to do exactly what we said we would do.

Speaker 1

We'll work with you, Mexican government, to identify the capacity needed so that we can protect our growth today as well as the future growth that's planned for the country of Mexico that brings prosperity So that was submitted January 15, and essentially that's what it says. We're going to include in the additional scope after we finish this initial study Those additional lines they'd like to look at. But I felt again it was important to make sure that not by the written word that was submitted by our interaction with the President to make sure that, that was represented in its best possible light. So no better way to do that than, again, Request to meeting with the President. So a week ago yesterday, myself, John Orr, Oscar, who is the President of our CPKC Damerico Property, we met with President AMLO at the Presidential Palace with President AMLO.

Speaker 1

We had the Minister or the Secretary Interior and Infrastructure, SCT. We had the Secretary of Economy. We had the Of the Interior. Of the Interior overall. So we had 3 Secretaries and the President, hour and a half meeting.

Speaker 1

It was our meeting to explain to the President what we intended, what we expected. So I gave him an update on the merger, and we spent an hour talking about What they needed, maybe in Mexico relative to passenger trains, what it would take to get it done. And I explained to the President that we had engaged into We gave him the time line. We expect results, which will define that infrastructure in May. I explained to him that it's important To Mexico to establish passenger service, it's also important to Mexico and our customers to make sure that we protect Freight service and we need to do both and do both well.

Speaker 1

He committed to me that he's aligned with exactly what my expectations are. They want to do well in passenger. They want to do well in continuing their economic growth and prosperity and the middle class Great paying jobs they're creating, the manufacturing is coming to Mexico. He does not want to jeopardize any of that. So these are 2 complementing initiatives That will get executed.

Speaker 1

And that said, one of the last points I'll make, and I said this to President Amol, I said not only can we create a great passenger service with the right infrastructure and right investment. We also protect that great freight service, you're not only going to get passengers out of cars on passenger trains, you're going to get trucks off the road on the freight trains. And I said that is a win win if I could ever put one together for the environment, for the people of Mexico, for the rail network, In general, that's serving all stakeholders' best interest. And that resonates. It resonated with the President then.

Speaker 1

He's committed. Going to go back. I'm going to meet with them again. We're going to go back and represent the results of the study before the administration changes likely in June. So again, to me, it's just more of what we planned for.

Speaker 1

We're not surprised. We're going to be able to do both well. We'll protect our customers' interest. We'll protect the nation's interest. And we'll get it done and we'll be proud of the results when it's over.

Speaker 6

That's a great answer, Keith. Thanks for the time. Thank you, Benoit.

Operator

Our next question will come from Jon Chappell with Evercore ISI.

Speaker 2

Thank you. Good afternoon. John, you mentioned doing a little bit better than the $350,000,000 of revenue synergies. I assume that's not completely linear. There's probably some areas where you're doing better than you originally thought and some where maybe there's been a few challenges.

Speaker 2

Can you speak to the latter part Where there may have been some challenges? And do you think you eventually get to the initial projections? Or is there something structural that may have kept you from hitting that point or is it more just kind of the macro headwinds that we keep hearing about? Let me just first say It's macro and timing, John. I feel good about the synergies in hitting them.

Speaker 2

Certainly, I think I mentioned earlier, I thought we would see a quicker ramp up on Lazaro. It has been an education process with the steam Chip lines, it's been an education process with Beneficial Cargo owners. And frankly, it's been a lot of work around making sure that we have a seamless border, a seamless product for those shippers. I can tell you that it's been a ton of work and I sit here today with a lot of confidence that the team will deliver, and you're going to see that begin to build itself in 2024. As much as I'm super proud of the service, the safe border on 180 and 181, the Overall environment on the macro trucking fraud prices and that have made that a little bit more of a challenge.

Speaker 2

Certainly, I think we initially anticipated that again in a really good position. Schneider National, our partner there, Has had a stronger start up than we ever could have anticipated. We're working in some specific areas to introduce some retail products on that train, got some of our partners in Canada, when you think about growth in reefers in that beginning to start up on that service. So that intermodal area has been just a little bit tricky, But I'm looking for big things in 2020, 2024. Just to go along with an area of surprise like the automotive sector that We've just seen a lot of success in creating, as Keith spoke about that closed loop system in that area.

Speaker 3

So I hope that's helpful, John.

Speaker 2

Yes, very. Thank you, Jen. Yes.

Operator

Our next question will come from Kannur Gupta with Scotiabank.

Speaker 6

Thanks, operator. Good evening, everyone. Just wanted to understand, if you see synergies you reported within the 2023 earnings, What would 2024 earnings look like?

Speaker 1

Say that again?

Speaker 6

So I'm thinking in terms of passing out the WTTPS growth for 2024, maybe more for Nadeem or John. If increased 2023 synergies you realize, how much 2024 earnings would grow without growing synergies?

Speaker 3

So you want to understand what our 'twenty four synergy incremental is versus 'twenty three? How much of that of our Double digit of

Speaker 6

earnings? Yes, maybe. It's a right to give you.

Speaker 3

Yes. We're not giving that granular guidance at this point. So we've given you an indication of where we see our synergies. We told you that We're at a 400 kind of run rate and we're going to ramp up over the course of the next 3 years. We initially guided to $1,000,000,000 over that 1st 3 years and that we're on pace.

Speaker 3

So I think you can kind of do the math yourself. So happy if you want to follow-up With Chris and Ashley after the call. Thanks,

Speaker 6

Habib. Thank

Speaker 1

you. Our

Operator

next question will come from Ken Hoexter with Bank of America.

Speaker 2

And thanks for the detailed answers so far. Maybe Nadeem, if I can follow-up on the cost side synergies there. There's been a lot Questions for John on the revenue side. Can you talk about how well you've executed to your target so far? Where you see that going?

Speaker 2

Where you can see some of those synergy goals on the cost side? And then thinking about headcount, how do we think about that going forward relative Your RTM, I think, Keith threw out there a low mid single digit RTM growth as part of the double digit earnings growth. How does headcount play in that? Thanks.

Speaker 3

Great, Ken. So, if you think about what we had guided to on our on the EBITDA synergies on the Expense side, we had talked about $180,000,000 in the 1st 3 years. So it's very much on target. The Headcount piece of that initially was a big part of it just given near term attrition, some of the as the team combined, Some people chose not to be a part of the team. And so you can imagine that at the more senior level, some of those costs were a little higher.

Speaker 3

So from a G and A type of headcount, we're fully on track, a little bit ahead of schedule. From an operating Synergies, we're going to see that increase in year 2. Certainly, That's going to ramp up. If you think about early on focus on the U. S.

Speaker 3

Part of the network, Think about where some of the challenges on the network were on the Mexico side. So we weren't getting a huge amount of operating synergies near term as kind of day 1. But have you seen the results this quarter? And we've talked about The huge improvements both across the network on the former KCSM and the KCSR, the synergies and the cost side is really starting to ramp up on that front and that's what's given us the ability to deliver the ORs that we have in the back half for the year and lead the industry. So I'm really bullish on where we see the operating synergies coming in.

Speaker 3

You think about some of the Some of the sourcing synergies, those take time as contracts come up and you can negotiate with your vendors. We're on track in the 1st year, actually Slightly ahead of pace. This year, we'll start seeing additional synergies on that front as additional contracts come to the table. So all in all, we're slightly ahead of schedule on the expense side. Again, it's Smaller piece of the total synergy pie, but we're slightly at a pace.

Speaker 3

And I think this year, we're going to see more of the value come in as we run this network as well as it can. So very excited about that.

Speaker 1

And thought on the headcount Versus the volumes going forward?

Speaker 3

Headcount, we're talking low single digit type of RTM assumption. I see a flattish type of

Operator

Our next question will come from Justin Long with Stephens.

Speaker 2

Thanks and good afternoon. And Nadeem, you mentioned the assumption for low single digit RTM growth this year, I'm assuming that includes a benefit from synergies. So is there a way to think about the organic volume growth that you're assuming for the business? And then, Nadim, it would also be helpful to get a little bit of color on Q1 OR, if you can, just given Some of the weather disruption we've seen thus far, I know you said you could make up a good bit of it, but curious how you expect that to net out to margins?

Speaker 3

Yes. So thinking about this year, the headwind on grain, the Canadian grain side is going to be made up on base growth. So I'd say almost flattish on the base organic side from a volume point of view And then the synergies driving low single digit. And as Keith mentioned, we're being conservative. And I think That's appropriate at this point in the macro and at this point not knowing what specifically what intermodal looks like in the back half and where the grain crop comes in.

Speaker 3

That's our view. I think more of the growth on the revenue side, we feel very good about the pricing and that's just It's a, I think, a good output as far as what that brings to the earnings cadence. As far as the Q1 OR, January started off great and then winter hit and some of these challenges that we had In minus 40, minus 45 ambient temperature without even the wind chill. So the network is recovering. Network recovered quite well.

Speaker 3

There's a lot of business to be moved and depending on what February looks like and how we close March and Q1 on the weather side, we think we could make up a lot of that volume and get back to kind of a more normal environment Q1 as far as weather that's going to help us kind of deliver, I think, a better year over year OR and strong earnings growth. So more to come. I think we'll have to see how winter plays out, but demand is there, The network is there and we plan on executing.

Speaker 2

Very helpful. Thank you.

Operator

Our next question will come from Cherilyn Radbourne with TD Cowen.

Speaker 1

Thanks very much. Good afternoon. I was wondering if you could give us some color on crude by rail volumes in Q4 and whether you think that's an area which can have some Slide 4 you, just with the completion of the TMX expansion running into another issue here.

Speaker 2

Yes. Thanks, Cherilyn. It's John. I think our Q4 numbers were off a little bit. We had some facility issues that really drove that.

Speaker 2

I can tell you we've got a 24 plan that is stronger in the crude lighter rail space. We expect our BRU business continues strong and we picked up a couple of other business opportunities. The phones are ringing a fair amount around TMX and those issues. But it's just really not an area we're chasing. If the right opportunity presents itself, We'll go after it.

Speaker 2

So I think all that you put that into the mix, probably there's a little bit of upside in 2024, but not massive.

Speaker 1

Thank you. Yes.

Operator

Our next question will come from Brian Ossenbeck with JPMorgan.

Speaker 5

Hey, good afternoon. Thanks for taking the questions. Just wanted to see if you could give us an update on the COFAFE. We saw the headlines a little while ago. I'm not sure if we've seen the final scope of that review yet.

Speaker 5

Obviously, something that KCS went through a few years ago, didn't have much of an impact. So just wanted to see if you had updated thoughts on that. And then John, maybe give some update on just the fluidity of the border crossing. You mentioned that a couple of times with the 181, is that actually showing up in conversions? Are shippers willing to move some freight, especially as they see the second bridge of Laredo coming on towards the latter part of this Thanks.

Speaker 1

Again, bottom line up front, you answered the question. The Copa C piece to me is The government regulatory body that's charged in Mexico with protecting and making sure competition exists. There have been 2 different Historical COPPA C engagements with KTS, Damerico, nothing has came out of those. I can tell you this one is not targeted at CPKC. We've not been served.

Speaker 1

This is an industry wide review. And in our case, I know this. The facts don't support anything but pro competitive. We said we're going to create competition. We've done nothing but create competition.

Speaker 1

I can also say this, now that we have control, I've looked at the rates. We might be guilty of not charging enough for this premium service, but certainly not guilty of charging too much. So again, whatever that scope is, whatever that review is, I have nothing to tell me with any indication that we're going to do anything be supportive of our case, not dilutive of our case. And let me be quick about the border as well in the interest of everybody's kind as far as the way we've executed, that border

Speaker 6

has been fluid. That border has

Speaker 1

not been shut down, not just because it's the best route going into Mexico, but also because it's the most secure route. And that didn't happen because of but also because it's the most secure route. And that didn't happen because of CP, that happened because of the hard work and effort Over many, many years of investment, multilayers of security by the KCS team that have established a very secure border that's only getting more as we progress into this. You build a second bridge, you got more capacity. It's even more secure, more reliable, more fluid In spite of what might be happening at other borders that don't represent those same value propositions or securities elsewhere coming into Mexico between Mexico and the United States.

Speaker 1

So again, another unique Why are you creating opportunity for us to go to the marketplace? And when I kind of look at it this way and I said this, I actually was talking to my Board, obviously, to of the same questions. What does this all this mean? And I'd say I look at it this way. There's a lot of trucks every day.

Speaker 1

There's 1,800,000 There's 10,000 a day, however you do the math. There's going to be truck capacity going across that border. There's going to be train capacity. And you got a choice. It's a value proposition.

Speaker 1

You can ride the Falcon. You can ride Gemini, whatever you want to call the other alternative services, there's a value proposition. If you're prepared to Risk some of those very obvious undeniable experiences that our shippers their shippers have experienced, and price doesn't Better than you know what, I kind of look at that as that's your value proposition, but that's not ours. We're going to provide a reliable Premium service that warrants and commands and we're never going to apologize expects a premium price. It costs a lot of money to provide the reliable service.

Speaker 1

Our customers that have rewarded us with business have demonstrated it matters. And I can tell you this last full episode of challenges that the border has experienced, ours has not the same thing and as a result those customers that have chosen to move with us have expressed their deep appreciation and they're rewarding it with the business. So again, I make a choice every If my products got to get from point A to point B, I've got a rate I can pay if I want to put it U. S. Postal, and I'm saying this in American terms.

Speaker 1

And I've got a rate if I want to pay FedEx or UPS. You've got to decide what matters to you and your value proposition and where you choose to put your freight and make your decision. And I believe that this value proposition matters even more so than it ever has.

Speaker 5

Understood. Thanks, Keith.

Speaker 6

Okay. Our next question

Speaker 1

We got one more. All right. We're good.

Operator

Next question will come from Brandon Oglenski with Barclays. Hey, and thanks Keith for letting me sneak my question in here. And John, maybe this I'll close out with you on the low single digit growth outlook this year. I mean, I get it. There's a lot of uncertainty in the macro and obviously you've talked about intermodal and grain.

Operator

But I think that the commentary is pretty upbeat on merchandise. Can you talk about the incremental customer opportunities you see there playing out in 2024 and maybe where you see positive variance to where the industry is going to see growth rate in merchandise?

Speaker 2

Yes, Brandon, it's Hope. Historically, the legacy TTP franchise was in class with particularly the strongest merchandising franchise, but this new combination is it's an area of strength, and I'm pleased with what the team has been able to deliver in that space early in 2023. Honestly, you think about the synergies we've talked about that. That's been an overweight area. That's an area that we've achieved more and it's on the backs of Strong trip land, good local service, getting those cars and steel cars cycled and tank cars cycled.

Speaker 2

So as I said, we had some good wins the back half of the year in terms of share and synergies in that merchandise ECP space. We haven't even felt the benefits of the bulk of those agreements. We're going to see that ramp up. And I'm really bullish on our steel franchise between not only our Mexico production facilities, supporting the growth down there in automotive industry and other industries, but also our steel facilities in the U. S.

Speaker 2

And Canada. So that's an area, keep an eye on it. I think you're going to see

Operator

We have reached our allotted time for Q and A. I would now like to turn the call back over to Mr. Keith

Speaker 1

Thanks, operator. Listen again, thanks for joining us this afternoon. I hope that you leave this call understanding what we said in the very beginning. We are in the middle of creating history. We've created a very unique network, bringing these 2 wonderful companies together.

Speaker 1

We've got a unique value creating opportunity that It's going to prove the test of time. In a hard macro environment, we've shown growth. In the middle of integration, we've shown growth. And when I say growth, I'm not talking about just RTM growth, RTM growth, earnings growth. And we've shown an ability to improve margins all at the same time while we've never invested more to create more supply chain resiliency at a time our 3 nations have never needed it more.

Speaker 1

This formula works. It's standing the test of time. It's going to be here for generations to come. We're on a journey with the railroaders in this industry a very unique value creating story for our employees, our communities, our shareholders, all stakeholders that again will become in time the most relevant rail network in North America. We thank you for your trust.

Speaker 1

We fully intend to reward you For those that trust us and make your investment decisions with us, have a safe and productive day and we look forward to sharing our Q1 results in the months ahead.

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Earnings Conference Call
Canadian Pacific Kansas City Q4 2023
00:00 / 00:00