I just lost my. Okay. Put this here then. Bear with me sec. We're gonna get going. We're ready? Okay, fantastic. All right, everyone, we're gonna get going with our next session. Really happy to have Canadian National back at the conference. I'm not certain, but I think it's possible that you guys are one of the few that have been at all 16 of the conferences. Thank you. Could be. It's just because you're a great sales analyst and- There you go. ... you write great reports, so it matters. Very good. That's why we're here. Well, thank you. Thank you for everyone in the room. I mean, the room is almost full, and thank you for people that are listening in and taking interest at CN. We've got Ghislain Houle, the CFO, and Stacy Alderson from the investor relations team. Ghislain has a few comments he's gonna start with. We will get to questions. Yeah, just a few comments. Scott, you have a bunch of good questions that I wanna spend most of our time going through. A couple of comments. Number one, I wanna congratulate my good friend, Paul Butcher. Paul Butcher, VP IR, did a tremendous job for the last seven years. He's just retired, so well-deserved retirement. I wanna welcome Stacy as his replacement, and I'm sure Stacy will bring investor relations to the next notch, and offer the great service and be accessible to all our investors and so on. I think your first question, Scott, is on volumes, and I think the big questions for people is how does volume trend? What does it look like? What do we see knowing that railroads are, you know, the economic weather bell of the industry and so on. Let me touch base a little bit on this, then we can go in more detail with your questions. I think as you can see, volumes are definitely trending weaker, and they're trending weaker than what we anticipated. When you look, volumes were up 6% in Q1, but that was a little bit masked by the normalized Canadian grain crop. When you look at Q2, our volumes are down 8%. If you adjust for Canadian grain, they're actually down 14%. I mean, they were down 7% in April. Now May month to date, they're down 9%. When you look at the big culprits, it's really the consumer products, segments like intermodal. Intermodal international down 26%, intermodal domestic down 16%. Lumber as well. When you look at lumber prices, it's like $340 US dollar 1,000 board feet. It used to be like 1,600. These are the big culprits. Volumes are weaker. Obviously, that calls for a probably a tough second quarter with those types of volumes. Just as a comparable, when you look at last time we performed into a recession, because to me, in my view, we're not in an economic recession, but we're truly in a freight recession. We call it mild recession, call it recession, but we are in a freight recession. Last time we performed into a recession, if you recall, Scott, it was in 2009 when the economic indicators were way weaker than they it is today. That's why we're calling it a freight recession. Our volumes for the entire year then were down 10% and our EPS was down 13%. Now our volumes are down 8% for the quarter. I think it will be a tough quarter. I'm hopeful that we're gonna hit bottom in the second quarter. We can see signs that things could be starting to get better, like when you look at blank sailings. We had about 86 in Q1. I think now that's coming down to about half, Stacy, in the second quarter. There's signs as well that there will be some inventory restocking in the second half of the year. We are counting on some type of rebound in the latter part of this year. Like I said, Q2 hopefully will be the low, maybe spread a little bit in Q3, but we are counting on some type of rebound in the latter part of 2023, including we're counting on a normalized Canadian grain crop. So far, it's early, but so far so good. Seeding is happening as we speak. The conditions are as good as we can call it. For the year, you will ask me, we're still very comfortable we can deliver on our guidance. We had a stellar Q1 performance with 38% EPS growth. Like I said, Q2 is gonna be a bit difficult, obviously, with those types of volumes. With that rebound that we're expecting, I think we're still very comfortable at this point that we will deliver EPS in the mid-single-digit EPS growth. From more of a mid to longer term standpoint, I think that CN is in a very good spot. CN is in a very good light. I mean, you participated, and thanks for you who participated or listening in to our investor day a couple of weeks ago. Like, when I look at our service levels, they're as best as they can be. When I look at our scheduled operating plan, it's humming, it's working, it's providing reliable service to our customers, it's providing service as well, moving more volume with less cars. I mean, it's astounding when you believe that we were able to move 6% more RPMs with 15,000 less cars. Imagine for a customer with private equipment that now can return some of those leases back to the lessors, and then we go in and it allows us to get, you know, a little bit more aggressive on price and get better price. I think that, you know, this is great. We're back. We're back to where we used to be. I think that when you look at a team, the team is gelling. I mean, you met a lot of them during the investor day. I think that we have a solid pipeline of next-generation railroaders that are gonna come and move up in this organization. A lot of them were at Investor Day. I think I'm very ecstatic to be part of that team. I think that under the leadership of Tracy, I think that, you know, CN is in good light and CN is in a good space for the next few years. Very happy about this. We're going through a little bit of a turbulence. We're the best railroad probably to go through this with the strongest balance sheet in the industry, but we will be ready for the rebound. Like I said, the last piece I'll say is we're not gonna do knee-jerk reaction on people and on crews. We're getting ahead of the game in terms of locomotive engineer training, which is what we said we're gonna do. We will be ready for the rebound and again, service is great and the team is having fun. On this, I'll turn it over to your questions. Fantastic. I'll start, but again, jump in if you have questions. Maybe someone will surprise me and actually raise their hand one of these sessions. Volumes Q2 sound worse than we thought. Yeah. It sounds like you're optimistic that Q2 is going to be the bottom from a volume standpoint and we'll start to get sort of less negative in the back half of the year. I am. Yeah. I am. The other piece- Okay Like I said, like, so the culprits I talked about intermodal. Intermodal domestic down 16%, plastics down 5%, refined petroleum products down 5%, lumber 16%. The good news is bulk is doing quite well. Potash is doing quite well. I think when you look at coal indices, both thermal and metallurgical are well above break-even point, so we have a good coal franchise. That's going well as well. Then frac sand, Stacy, we had a little bit of a lull in the spring because of the spring break on frac sand, but we think that frac sand will be strong, and there's some additional drilling activities happening in Western Canada. The bulk is obviously continuing to be strong. So far so good on the Canadian grain crop. I mean, remember, we had a grain crop of about 73 million metric ton this year or so, which is now almost the new average because in the past used to be 68, 67. Seeding is happening, has happened. The moisture level is quite good. You know, hopefully we get a good grain crop. When you put all of this together, like I said, I think that on the turning around a little bit to your point, I think that we're hopefully seeing bottom. I think there is. When you look at inventories levels at the big retailers, now it's back down to the 2019 levels. Customers are telling us that there will be some replenishment of inventories related in some case to school supplies or to winter products. Hopefully that will create a little bit of a rebound. When you look at inventories on autos, however, that's starting to build up. I mean, your waiting list to get a vehicle is way less than it used to be. I can see it a little bit in our auto compounds because remember that auto manufacturers use the railroads as a buffer between their manufacturing and production and the dealerships. That's starting to build up a little bit. Automotive, again, in the second quarter to date, I think we're about flat. It's holding up so far. to your point, I think that hopefully that, we're bottom up, bottom down, sorry, in the second quarter. It sounds like where you have maybe the most confidence and improvement is in that international intermodal with given inventories and blank sailings. That's where, I mean, that's where your volumes are down more. Your intermodal's down more than anybody. You've got the most. Yeah international intermodal exposure of anybody. If we see the import activity start to pick up again. That's the- ... that's the driver. That's right. Okay. That's the that's the piece that's the most. Okay ... that's got the most opportunity. When you look at, we were looking, Stacy and I, at Rupert. If you look at Rupert, what we're moving right now in Rupert, Q2 to date on an annualized basis, it's running 50% capacity. If you took Q2. Yeah ... to date, okay, and you annualize it- Yeah Rupert has a capacity of 1.6 million TUs, and it's running around 700,000-800,000 TUs as we speak, if you analyze it. There's a lot. Vancouver's about the same. There's lots of opportunity on intermodal international, obviously. Very near term, are we seeing some impact from wildfires in Canada impacting the volumes right now? I mean, we, the team has done a tremendous job. Yeah. The team has done, I mean, I must say it, you know, James Thompson out west, you know, and then Pat and all the ops guys have done with our Brent, our engineering guys has done a tremendous job. I think we've been able to work with it. We've been able to control it. What the team has done really is put a lot of sprinklers on some of our timber bridges. Like, so you go to the railroad and you feel like you're in a golf course, but it's those sprinklers to make sure that, you know, we protect it with fire. We had as well, some trains that go out there and spray water and so on. So far we've been able to manage it. I heard that, you know, there was some rain a couple of days ago and cooler weather. Impacted a little bit, but I would say not all material due to the fact that the team has done an unbelievable job, being able to continue to operate in those conditions. Okay. You mentioned a couple times it's gonna be a tough Q2, just to sort of help, you know, level set expectations, right? If volumes are gonna be flat to down from Q1-Right? Should we see some margin improvement from Q1 to Q2 like we typically do? Yeah. is that-. Well, as you know... Yeah ... from a seasonality standpoint, we don't guide on OR and margins, but we said that we were gonna improve our margins. From a seasonality standpoint, the OR is typically the highest in Q1 because of winter, it's typically the lowest in Q3. Q2 you have the thaw and so on, sequentially in the past you would see some improvement from Q1 to Q2 depending on the winter and depending on the conditions and so on. Now, you will tell me, Scott, "Well, you did have a mild winter, you had great operating conditions, your Q1 OR was 61.5%. You know, do you assume that the historical betterment in Q2 versus Q1 will remain?" You know, you have the answer better than me because, you know, probably not. T ypically, you know, on a sequential basis, like I said, seasonality standpoint, Q1 is the highest OR. Okay. Some OR improvement, but just don't, you know, less than normal, I guess is the way to think about it. Okay. Yeah. Let's talk about underlying pricing trends. Your rev per car load in Q1 was up 16%, excluding fuel up 6%, up 5%, so really good underlying pricing. Can we sustain that level of pricing given this volume environment? I think you're right. I mean, the intuition would say that in a lower volume environment it's tougher to get pricing. I think that with the service levels that we can see, with our scheduled operating railroad, and the reliability that we're providing to customers. Mm including the fact that, as I said, we're moving more volume with less cars, some of that benefit goes to customers. I think we're in as a good pricing environment as we've ever been. The benefits are there. We can show it. You know, we're spotting the cars to the customer at the time that we said we would do it. All of these things with the great customer service we have, I think we're in a great pricing environment. Remember, the last thing is, we're working very integrated between Doug, Ed, myself, Tracy, where all customer contracts are approved by us. We look at the profitability of the business. We look at the origin destination. We're very intentional on how we grow in Western Canada. Want to make sure that we don't oversell our network, we don't oversell our capacity because in the past we've done this a little bit, and grew Rupert way faster than we should have. What happens is you grow the top line, but you can't bring that top line growth to the bottom line. We're gonna be very intentional. We're very intentional on growing volumes in Western Canada to our capacity to bring that top line growth to the bottom line, making sure we have the capacity and the resources to provide great customer service. We're more aggressive on growing volumes in Eastern Canada and the South where we do have capacity, and we can bring that growth at very little, if no, zero CapEx. I'm very good, and we're very bullish on pricing. Doug is focused and we're all focused first and foremost on bottom line. That's what we're focused on. Just a couple pricing thoughts. Any explanation on the, why we see such a big divergence coming with the grain caps coming in the back half of the year with your up 12 and CP's up five? Yeah. We're in the... I'm not as smart as the- Me neither. ... you know. Stacy is smarter- Yeah. Right, right Right, right than both of us together, buddy. Right. Stacy can jump in here, but I can't speak for our competitor, but I can speak for CN. As you know, first of all, the grain cap is a cost plus type of pricing mechanism, so each of the railroads, including us, we give our cost to Transport Canada, cost of crews, cost of fuel, cost of car ownership, and you and I know that we've added a lot of brand new covered hopper in the fleet, so the cost of ownership goes in there and so on. They take it, they take a couple of months and come back and say, "This is the increase that you're allowed to charge." For us, they told us, you know, 12%. I don't know. I guess the cost of our competitor was probably I don't know what happened. I know for us, you know, it takes into consideration our cost and then some type of, they add on some type of cost plus margin in there, and, for us it's 12%. That's gonna help for sure, in the latter part of the year. I don't know whether you wanna add, Stacy, anything. Just that fuel's a big component of that as well. It lags, you know, we get it a bit behind. That would be another component that we get as well. You don't get a separate fuel surcharge on this regulated grain business? No. That's right. Last year when fuel prices spike, you sort of, your margins get hit a little bit on that regulated grain. That's right. A year like this where fuel's down, but the grain cap is up a bunch, you'll see, you know, a margin tailwind. It's a longer lag on this one piece. That's right. ... of the business than everything else. Exactly. Okay. We talked about this a little bit at the analyst day, but I thought it was interesting, maybe just worth talking about for a minute, some of the changes in terms of longer term contracts with inflation indexes and how you're, what some of the changes you're making to get a little bit more than just inflation. Maybe just talk about that for a second. Well, it's because that's right. When we sign up a customer for a couple of years, then we wanna make sure, we don't know where inflation's gonna go. Right. Doug and the team goes in and puts in some type of escalator to make sure that over the term of the contract we remain inflation plus. I mean, that's the key. That's what we've said. That's what we're committed to do. We do that. As I said, the good news is, because it hasn't always been the case, where we all, the leadership team all has visibility on these contract renewals, so the right hand knows exactly what the left hand is doing. In the past, sometimes marketing would go and negotiate a contract. Operations is just hit with the business, and now it's gotta move it, and you don't bring it to the bottom line. That's what we're doing on longer term contracts. We actually have a question, let's get the mic there. I'll ask one before the mic gets there. Just one more, just to keep it moving. Fuel's been a pretty big tailwind from an earnings standpoint. I know a year ago you made some changes in the fuel surcharge tables. That helped as well. As we think going forward, does fuel just flatten out in terms of a year-over-year impact, or does it actually turn to a year-over-year headwind? It flattens out. Okay. When you look at the net, and you've asked that question. Yeah which I thought was a good question in the earnings call. Yeah. You look at the variance of fuel surcharge on a year-over-year basis and you look at the variance of fuel expense on a year-over-year basis, you put them one against the other, they flatten out. However, as you know, fuel in a given quarter gives a lot of noise, okay? In the first quarter, as you know, because of the fuel lag, we stated that the fuel lag was favorable by about CAD 0.10 of EPS or 130 basis points on the OR. In the second quarter, we expect a favorable lag, smaller, much smaller, but still a favorable lag. It's noise in a given quarter, but on a year basis, net-net, it flattens out. Okay, great. There's a question. Do you have a guidance on the timeline for hitting your new leverage target? Good question, thank you. We said over time for everyone. At the last investor day, and this is something we debated a lot about leverage. And as you know, we've been very conservative on our balance sheet and had a leverage of around two, maybe a little lower than two. We're gonna leverage up to 2.5x, and we're gonna do this over time, and we're gonna do this under favorable economic conditions. We're not giving ourselves a timeline per se, but, you know, obviously we're gonna be prudent. We're not gonna have a knee-jerk reaction when we're gonna go from two to 2.5 in one swoop. It's gonna be done over time, you'll see it inching up, definitely this is where we wanna go. We wanna go to two and a half. We feel that two and a half is the right spot. By the way, I'm happy to report that when we met the rating agencies, you know, first of all of them removed the negative outlook they had on us. Moody's not only removed the negative outlook but did not downgrade us. We issued CAD 1.7 billion of debt in Canada, and bondholders, you know, priced it as a no downgrade. S&P downgraded us and Moody's did not, they priced us as a no downgrades, which is good news. We'll get there over time. We're not giving ourselves a timeline per se, a year, two, or three. As the economy gets better and we get out of this freight recession, I think you can expect us to inch up to that 2.5. No downgrade means you can take it now to three. Sure. One step at a time. No. You just had. That's why I like you, Scott. You just had the Analyst Day, right? What, you know, just quick one-minute recap, what do you want us to know was your key message? Then, you know, what, if anything, do you think, you know, was misunderstood coming out of that as you read the, you know... Yeah. ... 20 or 30 notes that were written? Yeah- Right I think the notes were well written. I think that, we wanna go back to being boring and predictable. I think that people expected probably, you know, when we guided to 10%-15% EPS growth, I think we did not surprise a whole lot of people with this. I think that, you know, CapEx going up surprised some of you guys, surprised, you, Scott, a little bit. We're inching up on CapEx, but we're not going to the levels of 2018, 2019. Trust me, that's not gonna happen. I think that at the end of the day, we're confident that we will deliver an ROIC of 15%-17%. As delivering 17% ROIC, I think the good use of cash is towards the business. Our capital allocation has not changed. The first use of cash is for the business. You know, when you look at all of this, I think that what was important for us is to demonstrate that we can organically grow because there's not gonna be a slew of consolidations in any time. Like, I'll be retired, Stacy will probably be retired too before that happens. It's important for shareholders to see that solid pipeline of growth initiatives, we've spent quite a bit of time going through it. Also that people understand that this is not just to be about growth, but bring that growth to the bottom line, that we are not gonna overgrow our network and our capacity in Western Canada. That's key because that's lessons learned. I think what was important in my view, you can tell me what you think. If you believe the plan, then do they have the team to deliver on it? The key was for you to be able to meet the team, was to be able, when we talk about fluidity around Chicago, to go on the train and see we're the only railroad that goes through Chicago on our own tracks. We are the one, you know, controlling the dispatching when the light will be red or when the light will be green. No other railroads do that. You rode that train, to see it, you know, first eyes. Then it was to meet, you know, the Patrick Whitehead and to meet, you know, the Derek Taylor and to meet these people, the next generation of railroaders that are gonna bring this company, deliver on the plan and bring this company to the next level. I think that was the, that was the purpose, that was the intention. I hope that people felt as well that the team is having fun together, that, you know, we tease each other a little bit. I can say that having been there for 26 years, it hasn't always been the case. Finally, for our new leader, but not new anymore, she's been now for a year, but Tracy to be able to step in and say, "These are my tracks. This is the track of my team for the next three years. I think that was key. Investors were asking for that because we've delivered the best quarters in the last three or four, "Now tell me what you're gonna do for me in the next three, four years." That was key and we have a tremendous leader. I think we have a tremendous team. Look, I mean, Butcher retired, we've got Stacy here, that's probably gonna do a better job than he did. I'm kidding. Maybe. No, I'm kidding. You know, like, CN is bigger than all of us, and eventually, you know, I'll retire. Eventually, Edmond Harris will retire once and for all. I mean, he's had a couple of careers. He's like a cat. He's got nine lives, and he's got a couple of more left, but that was the key. I mean, it was the interaction. We haven't had, Scott, as you know, an Investor Day since 2019, so we're 2023, so it's four years. I think it was fun. I will say, you're usually the one that's doing the teasing, so it was nice to see it get flipped on you a little bit. Yeah from Tracy. Yeah, I know. I saw. Um- Well, I got fired. Yeah ... during the Q&A session. The 10%-15% earnings growth. You laid out a path that, you know, if we get all, we have a lot of opportunities, we could grow volume, you know, mid-single digits. I don't think you need mid-single to do 10% earnings growth. How much volume do you think you need a year to get to that 10%-15%? Like I said, we said, the key assumption is we said that we are assuming a constructive economy, so we certainly are not assuming a recession in those three years. What we said is constructive economy means, at least, 2% industrial production, and we said we're gonna grow volumes above that. Okay. I think, you know, to deliver 10%-15%, we need, first of all, we need good pricing above real inflation. We need to grow volumes by what I just talked about, and then we need to improve our margins. If, we need all three. If we do all three. You know, when you say because we've had the question, "Well, what's the difference between the 10% versus the 15%?" Well, the 15% is I get a little bit more of the three. The 10% is I get a little less of the three or, you know, so but it's a combination of the three. I feel confident. I mean, you saw these initiatives. I mean, they're real. Some of them, I mean, Stacy touched upon them. Some of them are happening as we speak. Like that terminal... Yeah, that was fine. in Toronto is happening. Some of the opportunities, northern British Columbia is happening as well. It's happening and it will happen more and more. Obviously we've started the Falcon Premium, which we're quite ecstatic about that because as I said, I think that we, I think this could be big. It's gonna start small, but I think this could be big. We can have access to Mexico with the UP and FXE. The key for us, and you and I have talked about this offline, is to work as a single line railroad to make sure that interchange is like a single line railroad. FXE, UP Chicago to our Markham Yard, okay, they come in direct. We have a governance team right now that's monitoring this with sharing data and scorecard to make sure that we pick up that train within an hour or two and then we go to Eastern Canada. Going Eastern Canada, we actually have almost a 300 routing mile advantage to our Canadian competitor. The key as well is we control the dispatching around Chicago. None of the other rails do. If we do this right, and I know the naysayers will say, "Well, partnership has never worked in this industry in the past," and you're right. We'll make this different. It has to work at the bottom. It has to work from the bottom up and as I said, we have to work as a single line railroad. This is not about going after other railroad's traffic. This is about going after truck traffic, like long haul truck traffic. We've done the work when we did our unsolicited bid to KCS. We know what's out there. It's about converting this to the rails. That's what it's about. I think this could be big. Has it started yet? Any. Yes, we've started it. Like I said, it's gonna start. Right ... you know, it's gonna start small, but I think the opportunities are there, and I think this could be big. One change from what we heard at this analyst day versus maybe prior analyst day, prior teams is we're committed to further margin improvement. Mm-hmm. Right. Couple years ago, right, we had the worst OR. Now we're back to the best OR. Do we care about that? Do we wanna maintain industry leading margins? Is that ultimately...? We care about, Ed has said it. Right. The margins or the OR is the result of what we do, and it's not just on the operating side. It's also the results of what we do on the top line. Mm-hmm ... and the pricing and the volume and how we grow our volume. I think we understand that we need to continue to be more efficient. In the rails, people look at OR as the metric for efficiency. We need to, as well, continue to leverage more technology. There's lots still of manual processes in the rail industry that are being used. Leverage technology, not just for technology's sake, but to deliver value and be more efficient. I think, and leverage technology first and foremost on safety. Safety is key. Safety is key, not just for CN, for the industry. I've said it before, the industry needs to collaborate on safety. We need to share data because, and we need to share technologies on safety because safety is the social license to operate for the railroad. Maybe this 10 seconds I'll make just a few points. Yes ... to close off. If you haven't had a chance to look at some of the things that we said into our Investor Day, please go on our website. It's all there. We have a one slide that encapsulates all of our targets that we're shooting for. I think that we're very confident we'll be able to deliver. I think we're confident about the short term as well, that we're gonna go through this very intentionally, being ready for the rebound, and I think that right now the team is as good as it can be. The service is as good as it's ever been before, and I think that CN is in a very, very good space and very good space for the next couple of years at least. We're gonna wrap it there. Thank you so much to Ghislain and Tracy. That was great. Thank you.