Good afternoon. My name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific’s Fourth Quarter 2021 Conference Call. The slides accompanying today’s call are available at www.cpr.ca. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] And I would like to introduce Maeghan Albiston, Vice President, Capital Markets to begin the conference.

Thank you, Sylvie. Good morning, everyone and thank you for joining us today. Before we begin, I want to remind you that this presentation contains forward-looking information and actual results may differ materially. The risks, uncertainties and other factors that could influence actual results are described on Slide 2 in the press release and in the MD&A filed with Canadian and U.S. regulators. This presentation also contains non-GAAP measures which are outlined on Slide 3. With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, Executive Vice President and Chief Financial Officer; and John Brooks, Executive Vice President and Chief Marketing Officer. Also attending our call today on behalf of Kansas City Southern are CEO, Pat Ottensmeyer; and CFO, Mike Upchurch, who will be happy to answer questions regarding KCS, as CP investors are aware KCS is now beneficially owned by CP through a voting trust, pending control approval by the STB. During this trust period, and prior to the STB approving CP’s control of KCS, CP and KCS operate independently and KCS' business is managed by its own officers and is overseen by its own board of directors. During this trust period and prior to the STB, making a determination regarding control, CP and KCS operate as two independent arm's-length companies. As a result only KCS management is truly in a position to answer investor questions regarding their performance and results. I would highlight that KCS has posted an information package to their website. And should you have any questions about KCS’ performance that aren't addressed on today's call, please feel free to reach out to Mike, Ashley and the KCS team. We will start the call with some formal remarks and follow that with a question-and-answer period. In the interest of time and to allow as many participants as possible, we would appreciate if you could limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Okay. Thank you, Maeghan. Let me welcome. Welcome Pat to the call today as well, and then proceed to thank our CP family. I say this a lot, railroading is an outdoor sport, but I can tell you this quarter had some exceptionally challenging conditions that the team's commitment, grit and determination certainly was tested but to overcome and produce this result under those truly incredible conditions, I think deserves a special thanks. From the catastrophic flooding in British Columbia, which we're all very aware of that occurred in November. They took a deep breath from what I would call was a miraculous effort to get the railroad open again in eight days to step right into 40 degree temperatures again, as we close the year out, which carried into January. So again, outdoor sport, yes, winter, yes, we know of it, I'll tell you this was an exceptionable outcome, given the challenges that they faced. Thank you for that. And thank you for your commitment, your sacrifice. To the results themselves, the quarter we delivered fourth quarter revenues of $2 billion, an operating ratio of 57.5% and adjusted EPS of $0.95 for the full year. Our total revenues were up 4%, the operating ratio 57.6%, which is 50 basis points increase over last year's record OR. Adjusted EPS of $3.76 represents revenue grow growth of 7% versus last year. As I said, the CP family finished the year with a strong operating performance. In spite of the challenges we face to think that we were able to drive productivity improvements and still increase train lengths and weights 3% respectively, again, as an outstanding result. Fuel efficiency as well, in spite of those challenges improving by 1%, an outstanding result and all three of these metrics were new record lows…

All right. Well, thank you, Keith, and good afternoon, everyone. So as Keith spoke about the fourth quarter, it was certainly that other reminder that this is an outdoor sport. We knew this quarter was going to be challenging, certainly given the grain comps, but the B.C. outage certainly a pride even more pressure to our customers into our volumes. My team did as they always do. We stayed super close to our customers and our operating team and they worked hard to find solutions across our marketplace as our western part of our network continued to recover through the quarter. While Q4 performance certainly was challenging, all-in 2021 full year with a record for our freight revenue and our total revenue. Now looking specifically at Q4, revenues were up 1% in the quarter, despite an 11% decline in RTMs. Fuel and FX combined to be a 4% tailwind and price and mix combined to be positive 8%. As you've all heard, over the past few weeks from many in the transport industry, the pricing environment continues to be very strong. Now taking a closer look at our fourth quarter revenue performance, I'll speak to the results on a currency-adjusted basis. Grain volumes were down 21% in the quarter, while revenues were down 12%. As expected, the 40% reduction in the Canadian crop is driving this decline in volumes. The good news is we've taken the decline in the Canadian grain crop and created an opportunity. We had an all-time record quarter and year for our U.S. grain franchise with 30% year-over-year RTM growth. As an example, the team worked extremely hard with our shippers and receivers to create a new supply chain to offset some of the challenges in Canada by moving U.S. corn into Canadian cattle feed lots…

Thanks, John, and good afternoon. 2021 was a year of challenges that highlighted the team’s resiliency. As we look to 2022, we are excited about the opportunity ahead of us, but it’s not without some noise. You will notice that we did not provide formal guidance in our press release. With so many moving pieces, we think it would create false decision to provide guidance as there are more variables than usual that we don’t control. For example, on the KCS front, we do not have control of their operations and did not create their 2022 plan, so we’ll not be providing guidance as to their expected performance and its impact on our earnings. With the timing and conclusion of the regulatory process in the hands of the STB as well as with Omicron and other macro factors presenting some near-term uncertainty, we felt it was prudent not to provide formal guidance. We are committed to providing as much transparency as we are able to and I’ll provide key modeling data points in my remarks where appropriate. So now looking at Q4 overall, the operating ratio increased 530 basis points to 59.2%. On an adjusted basis, the operating ratio was 57.5%, a 360 basis point increase from Q4 2020. I will remind you that Q4 2020 included a 330 basis point impact from the Detroit River Tunnel transaction. Taking a closer look at a few items on the expense side, I will speak to the variances on an FX-adjusted basis. Comp and benefits expense was down 6% or $25 million versus last year. The primary driver of the decrease is lower volume in the quarter. Fuel expense increased $66 million or 40%, primarily as a result of higher fuel prices. This year, we once again achieved a full year record…

Okay. Thanks, Nadeem, and John. Let me close my remarks by saying sort of looking forward, as we move back some of the uncertainty and disruptions, we’re super excited about the opportunities that lie ahead of us in 2022, the demand environment is strong. You couple that with our unique initiatives and our service capabilities – succeed in 2022 and beyond. You combine our standalone opportunities without this combined CPKC network, the future is extremely, extremely bright. [Technical Difficulty]

Please standby while we reconnect Keith’s line.

Keith, we can’t hear you.

Please standby everyone. Ladies and gentlemen, please continue to standby while we reconnect the host site.

Hello.

Please go ahead, sir. You’ve been reconnected.

Okay. So I’m going to assume that everything that I said, that’s quite frankly, I think the remarks that I made a minute ago were not heard. So I apologize for the technology difficulties. So let me back up and just say thank you, John and Nadeem, for that color, and I’m going to close my remarks by saying as we look forward to 2022, we get past some of the uncertainty and the disruptions. We’re excited about the opportunities that lie ahead. This demand environment is extremely strong. We couple that with our unique initiatives and our service capabilities. We’re extremely well-positioned to succeed. [Technical Difficulty]

Please standby, ladies and gentlemen. Once again ladies and gentlemen, please continue to standby while we reconnect.

Operator, I think – it’s Nadeem Velani. We have myself and Keith Creel.

Please go ahead.

We can open up for Q&A.

[Operator Instructions] And your first question will be from Walter Spracklin at RBC. Please go ahead.

Yes. Thanks very much. Good afternoon, everyone.

Hey, Walter.

Yes. So perhaps what we could start with just a question on concessions. I know I get a lot of those. Keith, you can hear me. If there’s – we get a lot of those from investors. There’s been a lot of noise in the filings. You mentioned that you’re separating what’s reasonable from what’s not reasonable. Can you highlight what areas of request that you might deem reasonable that you received and that we may see? And are you – do you continue to be of the view that material concessions continue to be unlikely as part of the outcome for this review?

Well, let me – Walter, hopefully you can hear me okay. I’ll start with confirming the statement that you just made. Often, we think about this. Significant concessions have required offset losses to competition. Network overlap, regulatory processing for service and none of those points are true about this transaction, this proposed transaction. So that’s the starting point. The requests that have been made so far, not a surprise, obviously. We expected everybody to come at the table asking for certain things. But at the same time, as we said from the very beginning, we’re going to negotiate on reasonable terms and reasonable is a two-week conversation, obviously. Again, pro-competitive fact to me, leads to a good outcome for the customer, for the country, for the freight network. So significant concessions, when you have good facts and they all support competition. They’re not a reasonable expectation for anyone we come to stable with. That’s probably the best way I can say it. I can tell you, Walter, I was very encouraged to see the STB recent ruling. I think about what that says to me, I think it’s – this is a fair and open process. I think it demonstrates the commitment to the procedural schedule and a commitment to an efficient and timely review of our proposed transaction, all of which bodes well for the very positive pro-competitive fact of this combination.

Appreciate the time as always. Thank you, Keith.

Thank you, Walter.

Thank you. Next question will be from Tom Wadewitz at UBS. Please go ahead.

Yes. Good afternoon. Keith, my understanding is that you’re obviously constrained on the operating side. You can’t touch the KCS network. But from a customer perspective, you can go to customers, obviously, I mean, you said, I guess, I don’t know if it was in conjunction with KCS management, but 100 calls or meetings is a lot. Do you think that we would expect any kind of new win type of announcements in 2022 of business related to the combination that you’re able to reach talking together with KSU auto contracts, new ag sites you’ll be serving, things like that?

Let me start by saying we have to handle this in a very singular fashion. Pat and his team are handling KCS’ business, CP, obviously, myself and our team handling ours. There’s nothing that prevents us from going to a customer that might be interested from or that might benefit from this new proposed single line service, assuming the STB approves the transaction, we could make any discussion contingent upon that. So the answer is yes, that’s possible. But at this point, I can tell you the meetings that we’ve had, the line share I participated in their CP team talking about CP opportunities with our customers. And then obviously, we discuss what the future might look like. So the groundwork is being laid, the key point with our customers – we get into long-term contracts that lock you out of the opportunity to benefit from the pro-competitive nature and opportunities and options in this transaction. To me, it’s a customer decision to make, but obviously, we’re doing our best to educate them through the benefits of not choosing that so that they can uniquely benefit this combination is going to create. So hopefully, that answers your question, Tom. We got to be very careful not to exert and we will not exert control or influence over KCS stand-alone. But again, the two together can talk about what the future looks like and what that might mean for the customer, assuming the STB approves our transaction.

So it sounds like maybe keep the expectations low for this year and probably setting the stage for more to come after the approval.

Yes. We’re certainly not taking in any customer wins or business as a result of the transaction. We’re just preparing for and laying the groundwork for what’s to come, they are as possible.

Great. Thank you, Keith.

Thank you, Tom.

Thank you. Next question will be from Fadi Chamoun at BMO. Please go ahead.

Thank you. Good afternoon, everyone. A question along the same lines, I mean, you have this Amtrak support statement, which clearly addresses the key concern by regulators. Are there other things that you can potentially kind of try to firm up ahead of this regulatory process with other key parties in this transaction, like short line or even other railroads? I just wonder if there are things that you can address potentially before this – if we go to the hearing process, maybe a little bit later on.

Yes. Fadi, great question, and the answer is absolutely yes. And I would suggest that the individual part is if we can reach agreement on whatever the item might be, come to reasonable terms between ourselves, whether it’s with the short line, whether it’s for the main line, whether it’s for the customer, whether it’s with an association, I think the STB would prefer that. So obviously, those discussions are being had in all those areas. We’ve had discussions, some more than others, with all the Class 1. We’ve had discussions with short lines. We’re having discussions with shipping organization. So we’re prepared to making ourselves available to have reasonable discussions, to listen to concerns and hopefully come to reasonable, acceptable solutions between all of those parties prior to alongside, I guess, in parallel with the merger application process.

And are the views like when you kind of address some of these things with the other Class 1 carriers. Are the views widely different between where you see things and where they want things to go?

Well, the way I look at it, number one, I’m going to listen what you ask is. But the backdrop I compare it to, obviously, I’ve got a lot of precedents, I’ve got a lot of history that we can review because this is moving forward over the old rules. So obviously, there’s a catalog of different deals that have been done in concessions and agreements that have been made that have been filed with the STB. So we have the benefit – precedence and the benefit of those that have navigated these waters before us. We’ve made certain commitments, obviously, to keep interchanges open on reasonable terms and in physical terms. We’re not going to create new bottleneck pricing. We’re willing to enter into some reasonable arbitrated settlement process in individual discussions with our shipping groups and/or our customers. So there’s a menu of options that are on the table, but always with the backdrop. Look, I understand – we understand what the laws are. We understand that pro-competition is what the STB seeks. And when we represent pro-competitive facts that puts us in a very strong position to have these discussions on reasonable terms, again, to come to reasonable solutions. And if they’re not up to this before, if we can’t resolve it because someone is being unreasonable, then if we have to at the end, that will be payable, and that’s what the STB ultimately will have to find out.

Okay, great. Appreciate it. Thanks.

Thank you, Fadi.

Thank you. Next question will be from Chris Wetherbee at Citi. Please go ahead.

Hey, thanks. Good afternoon, guys. I appreciate that there’s a lot of moving parts to this year, certainly. But I was hoping that maybe we could talk a little bit about you’ve got two fronts, maybe how you see the volume dynamic playing out? Obviously, there’s been some challenges outside of your control in 2021, but maybe thoughts around at least maybe the ramp of volume as we go through 2022? And then just any thoughts that you may have in terms of operating ratio. I know you gave us some help on some individual line items within the cost, but I guess, I want to get a sense of on a CP stand-alone basis, how you’re thinking about overall for 2022?

Let me – without getting into guidance, I’ll give some high level color, and I’ll let Nadeem to explain that he might want to. But this is the way I see it, Chris. This is a Tele2 story this year. We obviously have pretty tough comps. First half, we don’t have grain this year. We had grain last year. We had a unicorn January, the best weather condition in January that I’ve experienced in my history railroading in the Canadian railroad as compared to last year. That’s not the case this year. So there are some obvious pressures from fluidity, from operating conditions and from a compare standpoint on volumes that we won’t benefit from that are headwinds in the first half. So you can expect RTMs to be down in the first half, but in the second half. And again, what’s true in the first turns to a tailwind in the second. We’ve got weather on our side. We’ve got very favorable costs. We hope and we anticipate with all that still that’s falling, we’re going to see a more normal grain harvest that comes in. The fourth quarter when the new grain starts to move and I think you’re going to see autos, some chip shortages that start to normalize and stabilize. So again, with that demand environment, if you go that valley in with grains and with all these other initiatives with these contract wins that John spoken to, that gives us to from a run rate on the second half double-digit RTM growth. So that leads us to positive RTM growth for the year. That leads us to margin improvement for the year that being reaches to positive EPS growth for the year, all on a stand-alone basis.

Okay. That’s super helpful. Appreciate that.

Thank you. Next question will be from Jason Seidl at Cowen. Please go ahead.

Thank you operator, Keith and team, thanks for taking my call. I wanted to talk a little bit about the intermodal sector. It seems like the way you guys are couching it, it might be more of a back half story as congestion eases. I just want to make sure I’m reading that right. Also, I wanted to see if you guys have seen any inquiries given sort of the vaccine mandate there for cross-border traffic in the trucking industry.

Jason, this is John. I’ll jump in there. I think, certainly, on the international side of the business, we’ve got a lot of pent-up import demand out there, not only in Vancouver on the water. But – so I do think it’s going to take a little bit of time to grind through that. The good news is that the volumes are nowhere representative of the demand environment if you think about international intermodal for us. Domestically, we’ve hummed strong. I expect our domestic intermodal franchise to continue to execute. I think you’ll see a strong Q1, Q2. And as I said, I think we’re expecting another record year for our domestic intermodal franchise in that space. So maybe it’s a little different between the two. Yes, probably more of a second half story on international. But I would expect a strong full year in our domestic franchise.

Okay. And regarding the cross-border?

You know what, we were looking at sort of our volume on a few of our train pairs earlier this morning. And we haven’t seen a lot of variability yet. I can tell you there’s a fair amount of discussion going on with our customers on that front. But I would say we’re kind of in a wait-and-see mode right now in that cross-border.

Okay. I appreciate this time as always gentlemen.

Thank you. Next question will be from Steve Hansen at Raymond James. Please go ahead.

Yes, thanks guys for the time. John, I wanted to circle back on one of your comments on the pet-chem side where you talked about the opportunity on – I think it was both plastics and the ultra-low sulfur diesel opportunity. Your peer has also been talking about this concept of renewable diesel and the big opportunity it might present in the coming years. Is that something that you see also starting to ramp up on your line as well? And just give us some context around that broader step up over time?

Steve, thanks for the question. It definitely is. Not only across Canada as we’re working certainly close with the input side with the – whether it be canola oil or other oils, but also on our U.S. franchise as we’re looking at opportunities for additional soybean crush on our franchise as feedstock for those opportunities. So, I think the easier answer is, yes, we see this as sort of a long-term opportunity for the franchise. And frankly, if the STB grants control and as we look to the future relative to CP-KC, I think it’s a tremendous opportunity as we’ve got the feedstock in the origin franchise planted in the right spot with the grain customers and potentially the single-line haul to get down to the refineries and into the gulf market. So, I think, stand-alone, it’s a good story for CP. And in the future, CP-KC could provide a pretty good opportunity also.

Appreciate the color. Thanks.

Thank you. Next question will be from Brandon Oglenski at Barclays. Please go ahead.

Hey, good afternoon everyone and thanks for taking my question. Just putting for clarification. I think I heard earlier that Pat Ottensmeyer and Mike Upchurch who were on the call. Is it okay if I ask a question of them on KSU?

Of course, absolutely.

Yes, hey guys, and I apologize, I didn’t realize you put out your earnings release until this call, so I’m not that great at multitasking, but it looks like things came in pretty much in line with where maybe we thought it would be, maybe margins a little bit ahead. I guess what can you talk about some of the opportunities and challenges that you see approaching here in 2022 for your network? Appreciate it.

Yes, this is Mike. I’ll give you just a quick overview here. I think on the volume and revenue side, we would expect to continue to see nice growth. We believe that all of our segments, with the exception of chemical and really due to the refined product issue, that I think has been well discussed in the past, should grow. We have a lot of new facilities on our line, particularly in the steel side of the business. We have Mittal, Ternium, Steel Dynamics, all with major facilities built in the U.S. Gulf Coast or down in Mexico at Pesquería and Lázaro, should see a little bounce back in auto. Grain, I think, looks really strong with significant growth in the cross-border grain shipments. We also are really excited about an expansion of the diamond green renewable diesel facility that’s going to add some growth. The DRU facility down in Port Arthur should add some growth. So, we’re pretty excited about the growth opportunities, and that should lead to good volume and revenue growth. On the cost side, as you know, from our first three quarterly earnings releases we had in 2021, we had some cost challenges. Those are behind us. Really to John’s leadership and the entire operating team. Many thanks to them. We really have a network that’s running very, very efficiently right now and 2022 is going to be all about continuing to generate productivity on the labor side and around fuel efficiency and continuing to better leverage our equipment and our franchise. So, we’re pretty excited about those opportunities here in 2022.

Yes, Brandon, I would just add to that. If you look at the package that we put on our website, look at some of the operating metrics and statistics that we included in that package, including the performance of our grain fleet. So, we definitely had some weakness in a couple of the areas that Mike mentioned. The cross-border refined fuels continues to lag because of some regulatory changes in Mexico. But our service has improved just substantially since the middle of last year. So, we are well positioned. We think we’ve got good visibility to some of these opportunities coming back, and our network is performing extremely well. And I think we’re in great shape to see and take advantage of those growth opportunities when they come back.

Thank you.

Thank you. Your next question will be from Ken Hoexter at Bank of America. Please go ahead.

Hey great. Pat, Keith, congrats on closing the acquisition. Keith, obviously, a lot of cost impacts here. Maybe you can talk a little bit about anything ongoing costs, talk about the restructuring costs and what you plan to spend? I don’t know if it’s too early for that or maybe just walk us through what we should expect this year in terms of the impact on costs? And then Pat, just coming back to your thoughts there on KCS, any thoughts on the outlook that you’re providing for KCS at this time?

Yes. So Ken, it’s Nadeem. So I just want to clarify, when you say impact of costs, can you just clarify that?

Yes. I guess there are two phases. One is on M&A and the second would be any kind of restructuring costs. I guess it’s too early until you blend the companies, right? So just a stand-alone operating, it’s just a mathematical example. Is there any other costs we should be aware of in terms of the ownership structure here in 2022? And I guess it’s too early to talk about restructuring into 2023.

Yes. No, you’re right. It’s too early on 2023. But I would say we’ve talked about this being a growth story. So that’s going to be additive to headcount over time as we grow the two networks and add on the synergies that we talked about, the $1 billion of synergies, and then some cost savings through IS and finance and some headcount, as we talked about their shifting to Kansas City. But apart from that, in 2022, I talked a little bit about the equity pickup, and we’d have – our net income from KCS would be – we come up through our net income, but there would be some depreciation step-up, about USD 220 million. And there will be an offset to that of about $40 million of credit for the fair value increase in Kansas Southern’s debt and also an offset of about USD 55 million credit for deferred taxes. So that’s the income statement impact that I’d highlight. So apart from that, nothing as far as cost or restructuring.

And then, Pat, any thoughts in your outlook, did you provide an outlook, any different than what CP is talking about in terms of forecast?

We have not, and we’re going to shy away from that at this time, just so many uncertainties about COVID and the impact on workforce and supply chain congestion and chip issues affecting auto and auto-related business and then the future trend in refined products. We’re going to stay away from specific guidance at this point. But as Mike covered and I touched on with our service, I think we see opportunities for some pretty nice productivity gains when volume recoveries occur.

Great. Thanks for the time.

Thank you. Next question will be from Jon Chappell at Evercore ISI. Please go ahead.

Thank you. Good afternoon. Good timing for the follow-up. Pat, you’ve touched on just really briefly there, refined products. Obviously, Mexican administration has made a big announcement since we last spoke to you in October on oil dependency or independency, I should say. Refined products has been such a huge growth silo for you over the last couple of years. I know you’re not giving guidance, but how should we think about the Mexican administration’s new views on oil and refined products and how that relates to your rail and either growth or maybe even some deceleration there?

Yes, this is Mike. I’ll go ahead and take that one. Obviously, this market has been a terrific opportunity for us, at least through midyear 2021. Then the government really stepped up regulations, inspecting cars because some shippers were legally labeling the product to avoid excise tax. And the next step the government took was to inspect and shut down a number of refined product rail terminals that were receiving this product in Mexico. We’re beginning to see stabilization in that business, so that’s good news. Hard to predict exactly where that’s going to take us here in 2022. But if you think about the overall macro environment here, the demand is still relatively weak in Mexico. PEMEX did in 2021 over easy comps in 2020, increased production but really not above 2018 and 2019 levels. So we'll kind of see what their production is for 2022 – but imports have clearly shifted from rail to truck, and that's what's hurt our business because of the closure of these rail receiving terminals in Mexico. They've inspected pretty much every terminal in Mexico. The good news is companies are beginning to get approval to continue to be open. So we're optimistic that market will stabilize here and hopefully even grow because the macro environment, PEMEX is only producing about a third of the overall demand in Mexico. So the other two-thirds has to come from imports. And that's where we are very hopeful that we'll see a shift back from truck to rail, which is much more economical. And then maybe 1 final point PEMEX just recently announced acquisition of the Deer Park refinery and they're really looking to ship a lot of fuel, heavy fuel oil, into that facility and then refined product down back into Mexico. So we're going to be ultra focused on finding a way to work with PEMEX to make them successful, both on the shipments north and the refined products back. So hopefully, that gives you a little bit of color on this market. And still, long term, we believe this is a good growth opportunity for us.

Definitely does. Thanks for that detail Mike.

Thank you. Next question will be from Scott Group at Wolfe Research. Please go ahead.

Hey, thanks. Good afternoon guys. So last year, we talked about potential for a 55 OR stand-alone. And obviously, there were a lot of challenges last year. Keith, do you think there's possible of getting there this year? Or is that more of a 2023 when we get the grain recovery?

Yes. Realistically, Scott, we're not giving me guidance. Obviously, again, tell two stories it’s going to be challenging. Obviously, to get to that level, I see a path to more improvement. And obviously, if things normalize, we get into 2023 with a normal grain crop. And the benefit of that meaningful volume and those outcomes become more achievable. Not in 2022.

Okay. And then can I just ask John just one question. So with the revenue synergy targets, I'm sure there's some bigger, lumpier kinds of contracts that you have in mind. Just directionally, do those – are there a lot of those opportunities in late 2022, 2023 in terms of the bigger contracts in mind?

Yes, I think so, Scott. As Keith said earlier, we've undertaken a pretty aggressive outreach to the customers in some of those areas that might have lumpier contracts to talk to them about why they need to think about if the STB does grant control that don't miss the opportunity for this new competitive option in the marketplace. And it's been received well. Scott, so you've got that bucket of opportunities. And I think you got a whole bunch that are out there that this contract timing works well. And as we create a new product, it opens up those opportunities for those customers regardless of their contract status. And I'll just give you an example, and you probably saw some of this. But most recently, you've had two major Canadian companies announced where they've made acquisitions into the United States and more of the global and North American markets, one being Richardson International and the other one just most recently being Viterra. And you look at those opportunities, and those are synergies that sort of go above and beyond, but they're totally indicative of what we believe this North American combination can create. And in the desire for some of these companies to invest to be able to help create the opportunity or share in the new routes that this combination creates is powerful. And with those two examples and those are big base customers for CP today that are very excited about what this combination, if we get approval, presents them.

Helpful. Thank you guys. Appreciated.

Thank you, Scott.

Thank you. Next question will be from Konark Gupta at Scotia Bank. Please go ahead.

Thanks and good afternoon everyone. Just wanted to come back, to the demands from your competitors, that you have received so far and potentially will receive from the remaining guys shortly. If in case, Keith, I know you mentioned that you will address all reasonable demands. When you address any reasonable demand from your competitors actually, do you see or anticipate any kind of impact on your stated synergy targets, considering you may be acquired to perhaps divest some sections or let go some lanes. As can you talk a little bit about the impact potentially on synergy targets are from those demands?

I'd be speculating, but let me take it back. Think it always works best for me. When it comes to significant concessions, the facts don't support it. Specifically divestiture, I know there was one particular railroad our main competitor that suggested they'd love to see us the best along Springfield to Kansas City. But if you get to the fact some of the assumptions that were made in that request or that proposed requests are based on that fact. There's factual errors, there’s misstatement. If you truly get into the details of our filing and understand what our plan calls for, that specific line will grow. It's not being to shrink. It's not an overlapping track. It doesn't go to Chicago. So again, when I think about a reasonable request, I would say that is, and you can expect this company to vehemently opposed to that and certainly not compete with that, and I don't think as when the facts are heard the facts are ruled upon, that's going to carry the argument for one moment. That's going to be a viable part of our network. It's part of our single line, that events, that this transaction brings uniquely to the table and competition that is introduced. So again, that, I would say, is very unreasonable, and I'm not concerned on that based on that. If you get to the other one, if you think about what synapse for BNSF is asking for additional rights of the Meridian Fairway, which frankly, they're not currently concentrated in the JV agreement. That was an associated agreement between the KCS and the internet, back in 2006. So again, if you think about precedence, the new transaction to gain advantage or to gain a better position that you otherwise wouldn't benefit from, there's presence around that. There are rules around that. There are laws around that. The BNSF and what’s attractive drive South of Laredo and from Franklinton North of Savannah. Again, as that has been as before, these facts don't change or create that fact. And if it did make sense, then I can't understand how it might make sense now. So again, in the context of the settlement, we'll talk about reasonable ask and reasonable terms and reasonable outcomes in the longest it's reasonable for both parties then we can get there. But if it's unreasonable, we're not going to be in a position to reach there. Our full competitive facts don't indicate that we need to.

Great. Appreciate the time. Thank you.

Next question will be from Benoit Poirier at Desjardins. Please go ahead.

Yes. Thank you very much and good afternoon everyone. Gentlemen, given the congestion with the West Coast ports, do you see an increased interest for East Coast ports? And maybe for Keith, do you see an increased interest for Lázaro Cárdenas?

What all those things speak to a case for all those potential outcomes and while we know those are all things that we're discussing at different stages of discussion with our steamship lines. The Port of Lázaros, obviously, they're talking direct to KCS about that. But what I know about it from my diligence is support built with a ton of capacity, deepwater access. It can complement what's going on La Long Beach it will never replace it. But there's certain business cases to be made looking at today's traffic much less considering what nearshoring is going to bring in the future. But that's a viable board that should uniquely benefit this franchise. KCS today, CPKC in the future, assuming the STB approves our transaction. And the same can be said for Port of St. John. The Port of St. John has a tremendous amount of capacity it's a route miles from tidewater to the key markets. The CP solution is the shortest route. So in our best day, with the capacity as long as they can handle it expedition and efficiently through the port, we've got a better product, and that's exactly what we're selling. And again, when you have these discussions, the beauty of this now and in the future, assuming the STB approves our transaction, we now have three costs to triangle that is a powerful solution enabler, supply chain enabler for growth for our customers and our stakeholders. And that's all something we continue to be extremely excited about in those messages in the art of the possible – it's exciting to those customers, too. So I see a perfect – coming for growth, and that's exactly why we're pursuing this transaction, and that's exactly why we're excited. There's something in it for everyone here. Pro competition, pro growth, our employees get better paying jobs, more those. Our customers, KCS customers, CP customers and customers of tomorrow that either of us might serve today. All have an opportunity to benefit from what the unique transaction brings to the table that otherwise would not be possible, and I believe to be the last major transaction, major combination of merger in the North American continent that will uniquely connect all three countries at a beautiful time in a world where because of all those supply chain challenges, we need a solution like this. So it's extremely compelling and all those conversations are following that narrative. It just makes too much sense at a perfect time in history.

That’s great. Thanks Keith.

Thank you. We are now out of time. I would like to turn the call back over to Mr. Keith Creel. Please go ahead.

Okay. Well, let me close by thanking you for your time this afternoon. I can tell you, as we look forward, obviously received with number one, running the railroad efficiently, safely for our customers. Throughout this process, we'll be running and participating, completing the merger application process in parallel with planning for integration of these two great companies so that when we do get a favorable outcome on the STB, which we hope for and anticipate, we'll be prepared to hit the ground running day more as seamlessly as possible and start to create all these unique benefits for all of our stakeholders that we've been so proudly talking about. So that's what we'd be focused on about 2022 and we look forward to sharing our second quarter results or first quarter results on the next call. Thank you.

Thank you, sir. This does conclude today's conference. You may now disconnect.