Canadian National Railway Company

Good afternoon. My name is Donna, and I will be your operator today. Welcome to CN's first quarter 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.

Thank you very much, Donna. 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 statements 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 risk 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 Riley, our Chief Operating Officer, Doug MacDonald, our Chief Marketing Officer, and Jusne Ul, our Chief Financial Officer. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracey Robinson.

Thank you, Paul, and good afternoon. And 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 want to 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 want to find a way to help. CN has donated more than a million dollars in support of Ukrainians displaced by the war. And I'm so very proud of my fellow CNers who have donated over $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. En ce moment, je m'installe à Montréal. C'est formidable de vivre ici à nouveau. Et bien sûr, je travaille mon français. Je le pratique depuis mon arrivée il y a deux mois. C'est une priorité pour moi et pour la science. Je vous remercierai que toute personne puisse communiquer avec le sien dans la langue officielle de son choix. C'est aussi important pour nous d'avoir des directeurs francophones. Dans les prochains mois, nous allons nommer un directeur francophone. Maintenant, et avant de commencer, je veux remercier Jean-Jacques Rouet, 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, to get their perspectives on us and how we can work better together in the future. And I've spent some time with some of you, and I've appreciated the feedback that you have offered to me as well. So 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. It 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 volatilities. We're in the right spot as we continue our sustainability journey. This team is deeply committed to safety as a core value. And 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. And 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 going to 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. And 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 with undertaking does. But 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 going to want more details on our plans. We're working through those now. And 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 on the air. I expect our EPS growth to be in the range of 15 to 20%. and free cash flow in the range of $3.7 to $4 billion. And we expect to have a full operating ratio, 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. So 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. I'm going to turn it to the team to discuss the quarter. I have Rob and Ghislaine 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 Ghislaine to bring immediate focus to our integrated plan and execution. Rob, over to you.