Good afternoon. My name is Donna, and I will be your operator today. Welcome to CN's Q1 2022 financial and operating results conference call. All participants are now in listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Paul Butcher, Vice President, Investor Relations. Ladies and gentlemen, Mr. Butcher. (Foreign Language) 2022. Good afternoon, everybody, and thank you for joining us for CN's first quarter 2022 financial and operating results conference call. Now, before I begin, I'd like to draw your attention to the forward-looking statement and additional legal information available at the beginning of the presentation. As a reminder, today's conference call contains certain projections and other forward-looking statements within the meaning of the U.S. and Canadian securities law. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements and are more fully described in our cautionary statement regarding forward-looking statements in our presentation. After the prepared remarks, we will conduct a Q&A session. I do want to remind you to please limit yourself to one question. The IR team will be available after the call for any follow-up questions. Joining us on the call today are Tracy Robinson, our President and CEO, Rob Reilly, our Chief Operating Officer, Doug MacDonald, our Chief Marketing Officer, and Ghislain Houle, our Chief Financial Officer. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson. Thank you, Paul, and good afternoon. Now, let me start by saying how honored I am to be here with you today. I'm excited to be back in this industry and especially to be sitting in this chair at CN alongside an outstanding group of railroaders who are working hard and excited about the future. Now, I wanna take a moment as we start to just acknowledge the difficult challenges being faced by the people of Ukraine these last two months. We all wanna find a way to help. CN has donated more than CAD 1 million in support of Ukrainians displaced by the war. I'm so very proud of my fellow CNers who have donated over CAD 100,000 of their own money towards this important cause. Our company will provide a match for these donations, and our thoughts continue to be with the people of Ukraine at this time of unimaginable suffering. [Foreign language] (Foreign Language) [/Foreign language] Now, I know that you're interested in early thoughts on where we are as a company and where I see us going. My priority of the last two months has been to get out into the field and across the network, getting to know our team and our operations, our strengths and our challenges. You just can't do something like that from the office. I've also started to meet our customers and our stakeholders, some for the first time, and some whom I've known for some time now, you know, to get their perspectives on us and how we can work better together in the future. I've spent some time with some of you, and I've appreciated the feedback that you have offered to me as well. As I sit here 60 days in with all of that, I can tell you that I'm more excited about our prospects than when I first arrived. At CN, we have an incredible tri-coastal network, the best on the continent, with the benefit of a diverse customer base across commodities and geographies and a pipeline of growth opportunities across most sectors. We have a healthy balance sheet, provides us with financial flexibility and the ability to be nimble in driving our growth. Now, this is a treasure, especially in these times of rising interest rates and market volatility. We're in the right spot as we continue our sustainability journey. This team is deeply committed to safety as a core value. We have a team here of proud railroaders, and with the right team, everything is possible. Now, we all know what this network is capable of delivering, and we would all acknowledge that we haven't performed fully to our capabilities over the last number of years. We're putting that behind us. As we go forward, here's what we're doing. First, we're running a scheduled railway with a laser focus on velocity. This will help us to deliver more consistently to our customers and to get the most out of our assets. Second, we will curate our book of business to better fit our network and leverage our strengths. Now, this means that we'll be more strategic about how we use our capacity to ensure that we can deliver effectively and that we position ourselves for the future, not yesterday. Third, we're gonna work in a much more integrated basis between the way we operate and the way we sell, between the way we invest and where we grow. Fourth, we'll continue to invest for the long term in both our network and our capabilities to drive efficiency and to position us for growth. Now what all this will do is drive our top line growth to the bottom line in the near term and into the future. Now this is not all going to happen overnight. No important effort this undertaking does. You have my full commitment that as a team, we will bring this company back to being best in class. That's our strategic goal and our daily focus. Now, I know that you're gonna want more details on our plans. We're working through those now. I'll be in a position to share a lot more as we advance our work and our plans become more definitive, so stay tuned on that. Now let me say just a few things about the year. We've updated our financial guidance for this year. Harsh weather, mostly in Western Canada, and supply chain disruptions impacted our ability to fully capitalize on the strong demand environment in Q1. The uncertainty from the war in Ukraine and the continuing pandemic disruptions in China and elsewhere all suggest just a little bit of caution in the air. I expect our EPS growth to be in the range of 15%-20% and free cash flow in the range of CAD 3.7 billion-CAD 4 billion. We expect to have a full-year operating ratio that starts with a five. I'll note, this will be the first time we've delivered that since 2017. This will be a good year for CN, notwithstanding the global environment. I'm encouraged by our operating momentum since mid-March and through April. We are moving heavier volumes even without the normal grain, and our velocity and consistency is improving. Demand continues to be strong. We're expecting a more normal grain crop this fall, and we continue to monitor the situation in Europe and the shutdowns in China and how that could impact trade flows. Our team is working closely with our customers to ensure that we understand demand and that we can prepare for their needs. We will need to have the right resources, people and power to respond to what we expect to be a busy year. Recruiting running trades in particular is a challenge in certain parts of the network as we look into the latter part of the year. It's a tough start to the year, but we will deliver to this financial outlook. I am both excited and confident about the future that lies ahead for CN. Now I'm gonna turn it to the team to discuss the quarter. I have Rob and Ghislain here with me, both of whom you know. I also have Doug here today, our new Chief Marketing Officer. Now many of you have had the privilege of meeting Doug over the years during investor days and the like. He brings a wealth of experience in sales and marketing, but also in operations, where he served as VP of our Eastern Division and in IT, where he was a Senior VP of Information and Technology. He knows our markets, and he knows our organization. I'm looking to Doug to work closely with Rob and Ghislain to bring immediate focus to our integrated plan and execution. Rob, over to you. All right. Thanks, Tracy. First, thanks to the dedicated team of CN railroaders who helped get us through a very tough winter season where we saw Tier two operating conditions in place for nearly 85% of the days in January and February. As a reminder, Tier two is when conditions are minus 31 degrees Celsius and colder, which forces us to reduce train size, use more locomotives and crews, and overall, be able to move less freight through the very cold portions of our network. With the weather moderating at the end of February, we were able to regain fluidity on our network in the month of March. We are working closely with our customers that are continuing to face supply chain challenges, particularly in the merchandise sector. We saw all of our core metrics rebound in March and continue to improve in April with our daily GTMs up 24%, our car velocity up 35%, train speed up 18%, and our train length up 9% from the January lows, allowing us to get back to running a more scheduled railroad. As we look forward to the remainder of the year, we are working to have the resources in place to accommodate the growth expected in the second half of the year. Finally, while the extreme weather conditions in Q1 contributed to degradation in our accident ratio, our team of railroaders continued to reduce our injury frequency ratio with an 18% reduction year-over-year, reinforcing that safety is a core value at CN. With that, I'll turn it over to Doug. Thank you, Rob. Let me start by saying how excited I am with the opportunity of leading the sales and marketing organization, leveraging the best network in the industry and delivering value to our customers. Let me provide you with an update on our top-line performance in the quarter. Revenues were up a solid 5% to around CAD 3.7 billion, despite volumes on an RTM basis being down 8%. The volume drop did not come from demand, which remains strong but was mostly driven by extreme winter conditions in January and February, as Rob just said, continued supply chain challenges, and a weaker Canadian grain crop. We did experience significant volume increases in certain markets. U.S. grain shipments to the Gulf Coast for exports, Canadian coal from the new Teck business, as well as two coal mines that reopened in late 2021. Broad-based growth in petroleum products and higher frac sand shipments from our unique reach into Western Canada, where drilling activity is strong. As we look out for the balance of the year, we are still expecting volumes to be up in the low single-digit range for 2022, with broad-based growth across most segments. We are assuming a normalized Canadian grain crop starting in the fall. Let me conclude with the following. The current demand environment is strong, and with improved network fluidity, our focus is to improve our service to our customers and drive this growth to the bottom line. Our yield management strategy is broad-based and is backed by a solid pricing environment. I'm working very closely with Rob's operating team so that we are fully aligned to deliver the service required for our customers during the ongoing recovery. With that, I'll pass it on to Ghislain. Merci, Doug, et bonjour à tous. Je voudrais prendre l'opportunité pour souhaiter à Tracy la bienvenue à Montréal à titre de PDG du CN, et c'est avec beaucoup de plaisir que j'anticipe travailler avec elle. I will talk to page 12 of the presentation and provide more visibility on our first quarter performance. As Doug mentioned, we experienced a solid top-line performance despite volume in terms of RTMs being down 8%. Our ability to move the strong demand was impacted in the quarter with very harsh winter conditions and continued supply chain challenges. In addition, geopolitical risk have put significant pressure on fuel prices over the short term. Despite these headwinds, our team of railroaders delivered 7% growth in adjusted earnings per share year-over-year. Let me provide you with more details on the quarter. My comments will reflect adjusted results, which exclude advisory costs related to shareholder matters. The conditions I just referred to impacted the fluidity of the network, leading to cost headwinds such as re-crews, deadheads, and more snow clearing, to name a few. We continue to benefit from the non-operating headcount reduction that took place last fall, as average headcount was down 7% in Q1 versus last year. Our fuel expense was up 44% as we saw fuel prices significantly rising in the quarter, with WTI touching around $125 a barrel and on-highway diesel prices spiking up in March, up 27% versus February. We have an efficient fuel surcharge program that deals with fuel price fluctuations like this, but it does create some noise in the short term. In the quarter, we were impacted with unfavorable fuel surcharge lag of seven cents of EPS versus last year. Our Q1 adjusted operating ratio came in at 66.6%, which was 30 basis points higher than the same period last year and reflecting the headwinds I just highlighted. We delivered adjusted net income of nearly $925 million in Q1 and an adjusted diluted EPS of $1.32, up 7% versus last year. We generated free cash flow of $571 million for the quarter, up $32 million from last year. The increase was mainly from proceeds on the sale of non-core branch lines, which was partly offset by lower net cash from operating activities. During the quarter, we repurchased shares in excess of a simple dollar cost averaging approach as we clearly saw value in repurchasing at prices that prevailed in early Q1. We have a strong balance sheet that provides us financial flexibility, and we will allocate our capital in a manner that drives long-term value for our shareholders. In conclusion, let me reiterate a few points. The current demand environment remains strong, which should translate in solid volume growth for the balance of the year, including a normalized Canadian grain crop. Network fluidity definitely started to improve in the latter part of March and is continuing in April. We are closely monitoring inflationary pressures with the continued uncertainty in the world. With that, I have full confidence that the team will deliver on our 2022 financial outlook, including a 15%-20% growth in adjusted diluted EPS versus 2021. We have the best network in the industry, and we know what this network can produce. Let me pass it back to Tracy for some closing comments. Thanks, Ghislain. Now let me close by saying again that I'm excited and energized about building the railroad of the 21st century. This is a great company with significant potential. Our focus is on unleashing the capabilities of this exceptional network and this experienced team of railroaders. We're gonna focus on driving long-term sustainable growth to the bottom line as we run a scheduled railroad focusing on delivering for our customers. We'll invest for the long term in our talent and develop the next generation of railroaders. We'll invest in our network and our capacity to accommodate our pipeline of profitable growth opportunities. Our goal will deliver long-term value for all of our stakeholders. Be the best in the business. Now we're happy to pause here and take your questions. Thank you. We will now begin the question and answer session. To ask a question, as previously mentioned, we ask that you kindly limit yourselves to one question. To ask a question, please press star one on your telephone's keypad. Your first question comes from the line of Jonathan Chappell from Evercore ISI. Your line is now open. Thank you. Good afternoon, everyone. Tracy, I know you're only 60 days in, and you've laid out some of your ambitions already. You did step into a pretty big, widespread corporate strategic plan, adopted just 6 months before you started. I'm just wondering, given some of the uncontrollable headwinds that you're seeing in the market today, are there any areas of that September plan that you think need adjusting, whether that's the growth-focused element of it, the resource base, or some of the strategic initiatives? To jump into that question, it's been a great few days with the East and West networks and the time with our employees, with our customers and our stakeholders. It's been wonderful to reconnect, you know, with the industry and get to know the people a bit. You know, this company has great bones with an excellent network, port-to-coast, great optionality on each coast, strong carload bulk intermodal franchises, great customer relationships, strong growth prospects, and a great team. There's a lot that's really strong here. As I look at it, what we need to do is just lean in on refocusing, running that scheduled operation, focus on velocity, making sure that we are intentional about the business that we take on so that we can deliver to our customers. I think that that's the way we're gonna drive, you know, the growth right directly to the bottom line. As we get this team set up to work in a much more integrated manner, there's no doubt that all of what was laid out in September, that's in us, without a doubt. I'm excited about chasing it. It's gonna take us a bit of time to get all of this organized, but from 60 days in, as you say, I'm optimistic. Thanks for the question. Yes. Looking forward to it. Thank you, Tracy. Thank you. Your next question comes from the line of Konark Gupta from Scotiabank. Please go ahead. Good afternoon, and thanks for taking my question. Congratulations, Doug, on a new role. Tracy, maybe first question for you here. You mentioned about, you know, spending some time reviewing the operations and meeting stakeholders, et cetera. I just want to understand, you know, given what's going on in the U.S. right now with the STB, you know, I think there's so many obviously U.S. Class I railroads regarding the performance and, you know, deliverables basically, and their focus on operating ratio. What's your biggest takeaway from talking to your customers, maybe regulators and shareholders in terms of what needs to be done to get back on track? Yeah. It's an interesting question. Listen, the most important thing we all do every day is make sure that we provide the service that we've committed to our customers, and we're all focused on that. Now, the supply chains in the last, you know, 2 years, 2.5 years have been, there's been a big shock in the supply chains. We're working very hard to get our rhythm back and our operation back and to serve our customers well. Each one of us in the industry will have different challenges on that. I'm gonna ask Rob to make some specific comments around some of the proceedings that are taking place in the U.S. Rob? Yeah. Konark, we certainly understand the concerns of STB, and we're working with the STB to provide the potential solutions there, and especially with our customers on any service issue that may arise. You know, at CN, we do have a very strong track record in terms of growth, particularly in the intermodal space, and also the investment to help support that. Customers are a big part of what we do, and we're gonna continue to stay partnered with them and working with the regulator, in this case, the STB. I'll be there tomorrow and look forward to the discussion. Thanks for the question. Thank you. Thank you. Your next question comes from the line of Ken Hoexter from Bank of America. Please go ahead. Hi. Good afternoon. Just a clarification question before I get into mine. Just, I think three times on the call you said you're now forecasting an above average profit. I'm sorry, an average profit. I think in the fine print on your 2022 assumptions, it says you're looking for an above average profit for 2022, 2023. I just wanted to clarify that. But my question is, Tracy, the company's been talking about, you know, focusing on the right freight for years. Just wanna understand what is the wrong freight, right? You talked about, is it just mispricing on business? You know, maybe just talk about your thematic of what needs to be changed with the base of freight. Thanks. The important thing. Thanks, Ken, by the way. It's good to hear your voice again. The important thing is we think about being intentional about what we put on our network, that we understand what our capabilities are. 'Cause when we take on traffic, we need to have the capability of delivering to it. Part of this is first understanding what our capacity and our capability of our operating plan is, and then selling into that so that we're capable of consistently delivering what we've committed to our customers. It's only once we do that we'll really understand what our capacity is, and then we'll sell into that. From there, we lift our head, and we take a look at, you know, that pipeline of great growth opportunities that's in front of us. That's the way, you know, I'm thinking about that as we go. I'm gonna ask Doug to comment on your first question around the grain crop assumption. Hi, Ken. Just to clarify, the industry always talks about a three-year average. That would be the prior three years. What we're doing is we're talking more of a normalized, so we've eliminated the drought year last year, so we just have a more realistic view of a normal Canadian crop. That's all. Okay. Great. Doug, congrats on the new job, and Tracy, welcome and good luck. Thank you, guys. Appreciate the time. Thanks, Ken. Thanks so much. Thank you. Your next question comes from the line of Brian Ossenbeck from J.P. Morgan. Please go ahead. Good afternoon. Thanks for taking the question. Tracy, if you can just clarify, you mentioned being best in class. How are you going to measure that, you know, internally on, from the team pricing maybe Q4? And then just to follow up on that as well, your view on technology application of that. It's probably still a little early, but the railroads could have been one of the big proponents of applying technology and joining along the PSR path in the past. Thank you. Thanks, Brian. Listen, I wonder if you could repeat the first part of your question. I caught the second part about technology, but what was your first piece? I'm sorry. You mentioned talking about being best in class, from our perspective at EPS Growth, how would you measure that? Well, listen, when I left this industry, you know, CN was the one that was setting the pace and that everybody else was chasing. We all know what this network and what this team is capable of doing. It's not a matter of is it operating ratio? Is it growth? I think it's both. In order to grow, you need a tight, efficient operation that moves quickly, delivers effectively to our customers, and that's where we're gonna get at our real capacity, and we're gonna be able to grow. It's a matter of both. This company knows how to do it. There's a lot of muscle memory here, and I'm excited about stepping into that with them. With regard to technology, you're right. It is something that I haven't got deeply into yet, but I can say that it is one of the changes that I've seen as I've come back into the industry. It's really exciting to see some of the new thinking and the new capabilities that have been brought to bear. I know this company's got a lot going on on that front. As I sit here 60 days in, I haven't got into it deeply yet, but I'm excited about the potential that it has to offer. Thanks so much for the question. Thanks, Tracy. Thank you. Your next question comes from the line of Cherilyn Radbourne from TD Securities. Your line is now open. Thanks very much. Good afternoon. Tracy, I've got another one for you. In terms of your objective to curate the book of business, I do appreciate it's still early, but I was hoping you could give us a bit of perspective on how you see intermodal in terms of the scale of that growth opportunity and how attractive you view that opportunity relative to the return on capital. Okay, sure. You know, intermodal is important part of our book, and I think it is now and it will be in the future. The question for us, we've got a really strong pipeline of growth opportunities and they all call upon different parts of our network differently. It's not a single answer. As we look at this, it's gonna be about being intentional about putting the right volume on the right parts of our network so that we can deliver effectively. And when you can do that, and you can do that with some velocity, then you know, you tend to like the returns that you get on the capital that you invest. We're getting into that work now. I can't tell you exactly where it's gonna end up, but as I said earlier, I'm excited about the prospects here. Thank you. Yeah. Thank you. Thank you. Your next question comes from the line of Christian Wetherbee from Citi. Your line is now open. Hey, great. Thanks. Good afternoon. Tracy, the answer to your first question was at least a little muffled as far as I could understand it, earlier in the call, so I apologize. I was hoping maybe you could kind of give us your perspective on what you think the, you know, the strategy of the company should be relative to the operating ratio versus balancing that with sort of profitable growth, which I know is ultimately the goal, I think, for every railroad. Want to get a sense. Obviously, leading up to you being named as the CEO, there's discussions about taking the PSR path or revisiting the PSR path and potentially different folks who are interested in the job at one point who had different opinions about that relative to maybe where the company had been before. Really wanna make sure I understand the perspective you bring to the table when you think about balancing things like operating ratio relative to, you know, top line and maybe volume growth. Thank you. Thanks, and sorry if the previous one was muffled. I'll go a little slower this time. You know, the game has changed in this industry over the last, I don't know, 10, 15 years. It's now table stakes to operate a tight, efficient kind of operation. We're gonna do that by focusing on a very balanced, scheduled operation and model with a focus on velocity. That, I think, you know, is a thing that's gonna allow us to do a few things. It's gonna allow us to deliver consistently to our customers. It's gonna allow us to get the most out of our assets, and it's gonna allow us to be able to see more clearly where our available capacity is now and to be able to decide how to sell into that. In my mind, you need both. You need a tight, efficient operation in order to generate your top line growth. Top line growth, that growth is only interesting if you can find a way to have it fall from the top line to the bottom line. The way that we're gonna do that is by leaning into the schedule approach with focus on velocity. We're gonna move our assets well, and we're gonna be intentional about our business. Hope that made sense. Thank you. Okay. Thank you very much. Thank you. Your next question comes from the line of Amit Mehrotra from Deutsche Bank. Your line is now open. Thank you, operator. Hi, everyone. Tracy, Hardy, congratulations on the appointment. I'm trying to understand your philosophy around, you know, running a business, what a railroad needs to accomplish. The question is, you know, three to four years from now, if we can fast-forward to that point, if you look back, what would be a successful outcome for you? I wanna leave it open-ended because I wanna understand your philosophy. But I would ask, if you could, to be somewhat specific so we can understand how you are going to gauge a successful outcome over the next three to four years. Thanks for the question, Amit. Look, we're 60 days in. You know, let me say this for now. 3-4 years from now, what we will have done is exactly what we're talking about today, but focused on driving long-term sustainable value. The way we're gonna do that, give velocity and a schedule in the operation. We're gonna move our assets quickly. We're gonna sell into our network. We're gonna drive our top-line growth to our bottom line, and then we're gonna lift our heads and look at what is a very healthy and interesting pipeline of growth opportunities for us. As I said, you know, we're doing a little work on this right now, and we'll be happy to share a lot more details on it, as our plans crystallize and you know that we get all the specifics in place. Is operating ratio, is it growth? Is it all of the above? Because, you know, the yardstick in which successful railroads have been gauged is through an operating efficiency ratio that is impressive. You know, in a fixed cost business, growth and margins are not mutually exclusive, which is what the message of CNI has been for the last many quarters. I just wanna understand your philosophy around if three or four years, is there an opportunity for CNI with its network, with its velocity potential to be the best OR railroad in the industry? Is that an opportunity that you see and that's important to you as having a successful outcome? Well, if I think about the way I'm gonna measure success as we go forward, you know, it's gonna be around the long-term growth, bottom line. The metrics that we'll be looking at as we do that, you know, we're gonna look at, once we get our plan set up, we'll be looking at compliance to plan, we'll be looking at velocity, we'll be looking at growth, and we'll be looking at margins. Yes, operating ratio is important, and I think we all know what this network and this team is capable of driving on that front. What the gift of a very effective tight operation and a good operating ratio is a manner in which it allows you to grow, so you can capitalize on the growth opportunities and drive that growth to the bottom line. That's the way I think about this. Right. Okay. Thank you very much. Appreciate the answers. Thank you. Thank you. Thank you. Your next question comes from the line of Walter Spracklin from RBC Capital Markets. Please go ahead. Good afternoon, hi, Tracy. Good to hear from you again. Hey, Walter. Nice to hear your voice. Just a question on, I guess, the strategic direction of some of the non-core items that have been highlighted previously and just your thoughts on those. I'm referring to trucking operations. Do you view trucking as a growth enabler, or is this a non-core business that you'd look to shed? Are there any other similar types of kind of non-core opportunities that you could see through divestiture going forward? It's an interesting question. What I can say now, Walter, is that we're gonna continue to evaluate all those pieces of our business. I am aware that there has been some discussion in the past around what we should do with those. There's no change in direction at this point. We're focused on ensuring, you know, that we've got the right business on our network for our network and making sure that top line goes to bottom line in the most effective way. I wanna be part of evaluating those options. You know, I've laid out what our first priorities are. As we lift our head in a few months here and start looking at longer term growth and what choices we're gonna make, I wanna ensure that we look at all of these pieces through that lens. We have this great advantage network and a strong set of growth opportunities. I can't tell you yet which ones of them will factor in over the long term, but I think we've got some great choices, and I'm pretty excited about getting into this. Your current forecasts are not predicated on any divestitures? That's right. You know, I Got it. I wanna take just a quick pause so that I can, you know, make a decision with the team on them, but I'm gonna ask Gis to just comment on that as well. Yeah. That's right, Walter. We're still assuming that we may reorganize TransX, as we publicly said. That's still on the table. As Tracy said, she's gonna review this with us, and I would stay tuned with what we decide to do. We're reviewing. Great. Thank you very much. Thank you. Thank you. Your next question comes from the line of David Vernon from Bernstein. Your line is now open. Hey, thank you, operator, and good afternoon, everyone. So Ghislain, I wanna kinda stick with you for a second on the guidance. When we take a look at the first quarter RTM performance and look at the fine print, they are expecting up low singles. I think it applies sort of a mid to high singles RTM growth in the back half of this year or the next three quarters anyway. How much have you sensitized that against You know, what could happen as a result of the China lockdowns in Intermodal and Rupert. As you think about kind of the puts and takes from this year's guide to adding in sort of the annualization of the coal growth and the expansion of Rupert, you know, how good are you feeling about that 2023 to 2022 RTM build? Not looking for guidance on 2023, just kind of sense of the puts and takes would be helpful. Thanks. I'm just gonna jump in on that one, and then I'll hand it over to Ghislain Houle. You know, I would say that as we've crafted kind of an updated outlook on the year, it takes into consideration all of that as we put this range of 15%-20% EPS growth. We are assuming in that as Doug MacDonald said, the normalized kind of crop level from a grain perspective. That's going to be really important to us achieving, you know, our goals on the year. We are watching very closely what's going on in China and, you know, some other places in truth around the pandemic. You know, that's. We'll kind of watch that as it goes forward and, you know. It is a risk, but as we look into 2023, we'll see things normalizing, I think. Ghislain? Yeah. I think as you said, I think that currently, as Doug mentioned in his remarks, we see the demand being very, very strong. As you know, sometimes this can change quickly. At this point, we see this, you know, demand being quite strong. Actually what we're doing is we're hiring. Rob talked about this to make sure that we can deliver on good customer service in the fourth quarter. We are hiring and all hands on deck, especially in Western Canada where there's some locations that are harder to hire. At this point, we see the demand being quite strong, but we are monitoring the global, you know, environment very closely because, you know, things are volatile and things change. At this point, we're quite bullish, and we're quite comfortable about this 15%-20% EPS guidance. Thank you, guys. Thanks for the question, David. Thank you. Your next question comes from the line of Scott Group from Wolfe Research. Your line is now open. Hey, thanks. Afternoon. The idea of being intentional with the business, when does that start? Is that reflected in the volume guidance for the year? Maybe, Tracy, your perspective on the balance sheet. You guys have the lowest leverage ratios in the industry. Is that something that is important to maintain, or do you think that there's potential there? I'll start and then I'll hand this over to Ghislain Houle. You know, from a volume perspective. Well, maybe I'll hand that one over to Doug MacDonald in a moment. You know, our guidance as we look at it this year kind of incorporates all of what we've talked to you about around our assumptions. Demand is strong now. We'll see where it goes. On capital allocation, you know, I think I like the fact that we've got a really strong balance sheet and the flexibility that that gives us. As we think about capital allocation, we will always prioritize, you know, look at it through the lens of long-term value, and we'll prioritize building our business. Always gonna be our first priority. You know, we'll want to maintain a strong balance sheet. After those things, you know, we'll consider incremental shareholder distributions as we've done in the past. I think it's interesting time right now to think about the advantages of a strong balance sheet like ours as we go into a period of higher inflation. Ghislain first and then maybe Doug. No, I think you've covered it well, Tracy. I think that, you know, this, the use of our balance sheet is remains the same, and it's the first use of cash is towards the business. We do debate on a quasi-regular basis the leverage. We do that. I think that for this year, we're committed to do our share buyback of CAD 5 billion. I think that we started executing on that since February. I think that at the end of the day, to your point, Tracy, I think that the key is to use the balance sheet to create long-term shareholder value. I think that's the key, and that's what we're focused on. Doug? Thanks, Ghislain. Just to highlight. The plan does contain all of our current business, so it's great. It's fully into the plan. It's baked in there. We believe in it. It's there to have. What we also have is a very strong pipeline of other opportunities. When we look at those, we have to look at what fits into our network, how do we move it and all that. That's when we talk about curating the book of business. We have to be very selective how that fits in with our operating environment and Rob's team and what we can move and when we can move it. We're pretty confident that we're gonna be able to hit all those numbers. Ghislain, if I can clarify one thing in about investing in the business. You guys had a long period of spending, you know, over 20% of revenue on CapEx. I think this year it was closer to 17%. Any thoughts on where that trends in the future? Thank you. Yeah. I think we're still on 17%, Scott. I think that you know, and you know, we do reassess our investments on a regular basis. Again, like, just rest assured that if there's a good project that's got a great return, we're not gonna turn it down just because we want to get to the number. I mean, we'll do the right thing for the long-term shareholder value that this will create. I think at this point, I would tell you that we're still in the 17% of revenue range. Thank you. Thanks, Scott. Thank you. Your next question comes from the line of Steve Hansen from Raymond James. Please go ahead. Hello, yes. Good afternoon. Thank you. Just a question on the service reliability and fluidity improvements that you're starting to see. I think we all understand there's been a number of constraints for specific industries. Forestry and fertilizers both come to mind recently across the broader North American platform. You know, how long do you think it takes to get back that fluidity in customer service that you had and known, you know, historically so well for? Thanks. Yeah. This is Rob. Thanks for the question, Steve. Appreciate it. You know, in terms of fluidity, the railroad, like I said in my comments, we've really rebounded quite nicely and actually we're seeing our metrics back to where they were pre-B.C. flooding. Doesn't mean there's always room for improvements. We recognize through January and February, just with the weather impacts itself, that had impacts on our customers. We continue to work with them and, particularly out where you're at in British Columbia with some of our forest product customers. You know, that'll be our continued focus going forward. From a railroad standpoint, we're very fluid right now and, really focused on service to our customers. Thanks, Steve. appreciate the call. Thanks. Thank you. Your next question comes from the line of Tom Wadewitz from UBS. Please go ahead. Good afternoon. I wanted to get a sense and, yeah, Tracy and Doug, you know, congratulations to both of you as well. I'm trying to kind of develop some intuition on what you have in mind for, you know, for running better. Obviously, you're emphasizing velocity, but I guess, you know, I think if you could change the schedule, you could expand the sidings, you know, things like that, you know. I guess if you change the schedule, maybe that can be a little bit quicker. But what Tracy, what's your intuition in terms of are there some things from an operating perspective that can be changed fairly quickly, you know, 6 to 12 months to really drive that network improvement? you know, if we're talking about reworking the book, it makes me think this is more like kind of a, you know, 2- or 3-year type of play to really drive that network improvement. I don't know, you know, if you can lend some insight on what you're talking about and what the timeframe is. Thank you. Thanks, Tom. This team's done a fantastic job over the last six months of working through some pretty significant service disruptions in the Western corridor last fall and right into a very difficult winter. As we've regained our fluidity, as Rob says, gives us an opportunity to look at the business that we're moving and whether it's led to a balanced operation, right? I think we've got some near-term opportunities as we think about building some balance into our operational plan and then selling in, selling into that balance. There'll be some near term. We're gonna work on that right now, see what we can get done this summer before what could be a very heavy fall hit. Overall, it's gonna be a longer-term effort to find that right sweet spot between balance and velocity and volume growth. I don't know, Rob, if you wanna add anything to that. No, I think you hit it. You know, the opportunity is ahead of us, and the railroad has recovered quite nicely from the challenges in January and February, and we look forward to preparing for the second half of this year in terms of the volume growth. Okay. Do you think there are some kind of quick things in terms of schedule and changing some of the operations that we'd see over a couple months? Yeah. Okay. Thank you. Thanks, Nick. Thank you. Thank you. Your next question comes from the line of Justin Long from Stephens. Your line is now open. Thanks, and good afternoon. I wanted to ask about the 2022 guidance. How much of the trim in the EPS guidance was a function of the first quarter and some of the weather events and supply chain issues you faced versus a change in the outlook for the remaining three quarters? And then specifically on the OR, I was wondering if you could unpack the change in the outlook there from 57 to sub 60. How much of that is fuel versus other items? Yeah, Justin, thanks. Thanks for the question. Obviously, when you look at our guidance and, you know, going from 20% and now to 15%-20%, obviously, you know, the growth that we had in the first quarter of 7% has an impact, for sure. Then when you look at the OR, I mean, we delivered a 66.6% OR in Q1, so obviously, this played into it. The good news is, I think that the demand is very strong, as we've said. I think the pricing environment is favorable. I think to Rob's point, we're getting our cadence back in terms of our network fluidity, and we can see that clearly, you know, in the latter part of March and then in April. I think that, you know, we're not gonna uncouple fuel on OR and with and without. I think that at the end of the day, we do consume fuel. It's included in there. It's included in our guidance that now, you know, we'll have an OR that starts with a five. We did provide our assumption on fuel for the full year, and it's between $90-$100 a barrel. As I said, we do have an effective fuel surcharge program, but it does create noise, and it did create a 7-cent EPS negative unfavorable lag in the first quarter. you know, when you put all of these pieces in, I think that's where, you know, the team, trust me, we looked at this quite hard. We feel comfortable that we will deliver on that, on that updated guidance. Thanks for the question, Justin. Okay, thanks. Thank you. Thank you. Your next question comes from the line of Brandon Oglenski from Barclays. Please go ahead. Hi, good afternoon and congrats to Tracy and Doug. You know, Tracy, obviously Canadian National used to be viewed really top in class with a really great culture. You did mention, you know, in your opening remarks about getting operations and marketing and sales efforts maybe a bit more aligned. I don't know if you want to hit that one or Doug, you know, how is this changing and maybe, you know, can you push the culture in a more favorable way to get better outcomes there? I'll maybe take that and then Doug, you can come in behind me and give your perspective. Listen, this is a great company. It's one of the iconic companies in Canada, and as I said earlier, we all know what this network and this team can do. As I've been out across the property and, you know, meeting our employees, you know, I am overwhelmed by both the talent out there, but also the enthusiasm and the desire to kind of put a shoulder into this and win. Without a doubt, you know, I think that the first step is that we need to work more tightly together between what we sell and how we operate the network, and we started that already. I think that's gonna give us some tremendous opportunity not just to kind of start to deliver better immediately, but also to work more tightly together around where the opportunities are and get on top of the challenges. In a network like this, you need to approach it in an integrated way. You know? Between finance, operations, commercial, we need that kind of balance and that interconnectedness between what we're building our operation and what we're selling into it. You can only do that together, how to drive the growth to the bottom line. I'm seeing some great energy in this company as we lean into this, and I'm really optimistic. Fantastic network, great opportunity. Thanks, Tracy. Listen, the teams have always worked well together. The sales and marketing team has always been hand in hand with the operating team. A lot of it has always been, "Hey, let's sell, let's operate." Now it's, "Let's sell and operate together." It's gonna be Rob's team and the sales and marketing team at the table saying, "Here's where we have the assets. Here's where we actually have the fluidity. Here's where we have the actual capacity to handle them. Can you guys sell into that?" Sure. Let's turn the sales and marketing guys loose. Let's do that. Versus, "Here's where we have some sales opportunities. Hey, Rob and guys, can you guys build the capacity here? It's gonna be a lot more give and take and working together to make sure we get the best value for the railway and drive all that new business to the bottom line. Thanks. Thank you. Thank you. Your next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead. Thank you. Tracy, welcome, and thank you for all the calls today. If I were to continue the line of questioning here, correct me if I'm wrong, but I think in your prior role you were a rail customer and may have been a CN customer side as well. I'm wondering if there's anything you're bringing to the table on day one, or you could ever thought to yourself those people at CN, if I was ever their CEO, this is what I'd do on day one. Kind of as a key. Again, maybe a general railroad versus shipper question or a specific question about the CN and your experience there, but what does your experience as a shipper kind of bring to the table here? Hey, Ravi. Actually, I wasn't a customer of the railways. In some regards in the energy industry, I guess we kind of competed with the railways. I ran the Canadian natural gas pipelines for TC Energy, and I spent a lot of my time running a big operation of pipelines across Canada and you know, a lot of time building pipelines. No, I wasn't a customer of the railroads, I've always been a fan of the railways, and it's an honor to be here and particularly in this company. Got it. My perspective was, given the crude by rail kind of situation, right? Is there anything that kind of you have seen from the other side that you think you can implement kind of relatively quickly here? Well, listen, I think that, you know, I wasn't in the oil side when I was in the energy industry, as I said, I was in natural gas. But I'll tell you this, what I've learned over time is that there is absolutely a place and a need for both. There is no better capacity doing big volumes over, you know, long periods and, you know, pipelines play a great role there. Railroads are very nimble. You can come out, you know, of a pipeline in Hardisty, and you can get to any market in North America on an existing rail network. That kind of flexibility and the ability to be nimble is pretty critical to the energy industry right now. I think that they complement each other, and I think you've seen that happen pretty effectively over the past number of years, and that'll be an important part of our collective ability to serve the energy industry going forward. Got it. I just want to follow up on the question on the second half volume outlook. I just want to clarify your comments on the kind of, you know, China lockdown situation and maybe some of the risks or opportunities there. Do you see potential for like a big international intermodal wave, you know, once these lockdowns in China are lifted? Or do you think it's gonna be fairly normalized and kind of more of an overall macro view from this point forward? Thanks, Ravi. It's Doug. You know, looking at the way the lockdown has progressed, it's just another supply chain disruption. We've been dealing with them on and off. Obviously, as all the other railways have, the ports have, the warehouses have. This next wave will come out of China again. It will cause more overcapacity at the coast. It'll always come in and flow inland. It'll cause bottlenecks again at the warehouses. Guess what? We'll all work through it again. It's great. We're actually getting some experience at it now, and we're planning for it as best we can, but there's only so much every part of the supply chain can do. We're all gonna play our part and we're all gonna work with our customers to get through it. All right. Thanks for the question. Thank you. Your next question comes from the line of Jason Seidl from Cowen. Your line is now open. Thank you, operator. Rob and the CN team, appreciate you taking the time for the call here. Wanted to ask a little bit about headcount. Can you talk a little bit about your projections for headcount, excluding attrition? Are you gonna grow that? Where this headcount is really targeted? Does CN and really the rail industry as a whole run the risk of sort of hiring into a potential downturn given all the sort of economic, geopolitical and potential supply chain black swan events that we have ongoing in the crystal ball that we have? Yeah, Jason, this is Rob. From an operating standpoint, of course, I mentioned we're resourcing up for the second half, and that's the demand we see in front of us right now. It is strong, and we're preparing for that accordingly. Obviously, there could be changes in that, and we'll adjust accordingly as those times come. Right now we're preparing for that more normalized grain crop in Western Canada and the opportunities that are ahead of us. I think from an overall standpoint, you know, you'll see our headcount down year-over-year because the adjustments we made, and on the ops side, we're hiring for volume, and it won't be necessarily on a one-to-one basis, but on the projections that we see in front of us. I hope that helps. It does. Thank you. Thank you. Your next question comes from the line of Benoit Poirier from Desjardins. Your line is now open. (Foreign Language). With the potential labor issues at L.A. Long Beach, we've seen a shift in market share from western ports to Gulf Coast, eastern ports. Could you provide some color about the market dynamics these days and opportunities you see with Halifax, St. John, and also Rupert? Thanks, Benoit. Doug, I'll take that on, actually. We have seen a shift that's gone more east, and I think all the railways have seen that. While we've seen some great business still in Vancouver and Prince Rupert, and they continue to be, you know, sold out for us, we have seen a shift over. Our Halifax business is growing. Our Montreal business is, you know, relatively stable or up a little bit. We're very happy to see that 'cause it actually helps balance out the network. We have lots of capacity in the east, and we're able then to, you know, drive that to our bottom line. It's actually very good for us to have that balance. We're also seeing some growth at Mobile as well and New Orleans even. Great opportunity to talk about our three coasts and the ability to move that right across our network. We're very enthusiastic about the shifts, and we hope to see more of it. Thanks very much. Thank you very much, Doug. Thank you. Our last question comes from the line of Jeff Kauffman from Vertical Research. Your line is now open. Thank you so much. Thanks for sneaking me in, Tracy. It's great to have you back and congratulations. I guess all the really good questions have been answered at this point. I'd love to think about the curtail decision that you outlined, and I think I understand what you're looking to do with that. I wanna kinda shift beyond the downsizing and the cutting and the restructuring part to the growth part and think about, you know, businesses that maybe CN doesn't do as much as you'd like it to today, or businesses where you see larger opportunity with the assets repurposed. Just kinda give us an idea. This is obviously a multi-year process, but what kinds of business would you like to do more of than you do today? What types of assets or what types of capabilities does the railroad need to handle that you're not in a position to do today? Jeffrey, thank you for that question. This is one of the things that excites me the most. I mean, of course, we're focusing right now about lifting out of some of our winter operations. As we lift our head and look forward, I am so impressed with the number and the range of opportunities that we have ahead of us. We're doing a lot of work right now thinking about how trade flows may change over the short term and the longer term. We have this great asset of having, you know, touching three different coasts and having optionality on all of those coasts. That positions us in a really unique way to think about how we step into some of the growth, whether it's, as you know, we've had the questions on today, some of the consumer products or container traffic, whether it's stepping in a different way with our partners in the industry, some of the domestic traffic, or whether it's looking at, you know, the change in flows of some of the commodities as a result of what's going on in Europe, or what I think will be a pretty fundamental change in energy flows over time. We're gonna have some really cool choices, and, we've got the best, you know, network and the optionality to step into it in the right way. I don't have the answers yet, but it's gonna be a lot of fun to take a look at it. Thanks for asking that one. Best of luck. Thank you. Thank you. Thank you. This concludes the question and answer session. I would now like to turn the call back over to Tracy Robinson. Thank you. Thank you all for your time today and for your interest. I'm looking forward to meeting some of you in person over the next few months, and we'll talk other than that on our Q2 call in July. Thank you, and stay safe. The conference call has now ended. Thank you for your participation. You may disconnect your lines at this time.