Canadian Pacific Kansas City Limited

Good afternoon, my name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific's fourth quarter 2020 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 speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to introduce Chris DeBruyne, Managing Director, Investor Relations and Treasury, to begin the conference.

Thank you, Jason. Good afternoon, everyone, and thank you for joining us today. As some of you are aware, Megan is at home with two new beautiful twin baby boys, and I'm happy to report that everyone is doing well. Before we begin, I want to remind you this presentation contains forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described on slide two in the press release and in the MD&A filed with Canadian and U.S. regulators. This presentation also contains non-GAAP measures outlined on slide three. With me here today is our President and Chief Executive Officer, Keith Creel. our Executive Vice President and Chief Financial Officer, Nadeem Villani, and our Executive Vice President and Chief Marketing Officer, John Brooks. The formal remarks will be followed by Q&A. In the interest of time, we would appreciate if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Hey, good afternoon. Thanks, Chris. I appreciate the opening comments. Let me start my comments by thanking our CP family. 12,000 strong team of railroaders that I'm honored to serve and lead and produce with daily. Their grit, their resilience that they've demonstrated and continue to demonstrate through the toughest times in 20 and as we progress through 21 enable these results. Without those collective efforts, none of this would be possible. So certainly a debt of appreciation in particular to the operating employees that their heroic efforts day in and day out to keep the North economy moving And it's time of exceptional need, again, is inspiring. You know, to step out every day, to put your own life at risk, to protect the livelihoods of others, to protect the livelihoods of our fellow employees, the communities we serve, and our customers, again, very inspiring. So I'm super, super proud of the team. I'm super proud of the body of results that we're going to get to discuss today. And speaking of that pride, we talk about pride a lot at CP. We talk about sacrifice a lot at CP. Contribution, certainly not a shortage of opportunities to sacrifice in this industry, nor demand for people's contributions. To recognize that, given it was such an extraordinary year in 2020, to match that extraordinary effort that enabled what I would call extraordinary financial results, we made a decision as a leadership team late in December to recognize all of our union employees, non-management employees with a special one-time recognition bonus that was payable on December the 30th to thank them for their efforts, for their contributions, and their sacrifices, again, that enabled this unique result that we're able to share with our shareholders and with the investment community today. So moving on to the results, I can tell you it was a phenomenal quarter overall. We delivered fourth quarter revenues of $2 billion, which was an all-time quarterly record, operating ratio at a 53.9, and adjusted EPS growth of 6%. An industry-leading performance. For the year, total revenues were down only 1%. We produced an all-time record operating ratio of 57.1. Operating income was up 6% to $3.3 billion, which enabled a record adjusted EPS of 1767, an increase of 7% versus last year. Truly an outstanding achievement across the board. On the operating front, the CP family again finished the year with another strong operating performance. Result in many four-year records being set for several metrics, including train leaks, which improved 9% year-over-year. Train weight, 6%. Locomotive productivity took another step up to 2% improvement over years. So to say that Mark Redd and our operating team continue to demonstrate what PSR is all about would be an understatement. The depth and the breadth of the bench at CP is strong. absolutely what I consider to be the industry best. So my hat is off to each Mark and his team, thanking them for their contributions. And on the safety front, what's even more impressive and inspiring was the strong safety performance the team produced in 2020. Train accidents were down 9% in 2020 to a .96, which is an all-time record for the company. This marks the 15th consecutive year that we've been the safest Class 1 railroad in North America. And at the same time in 2020, we realized that 22% reduction in personal injuries, which, again, was another all-time record for the Canadian Pacific. And I've always said this, and I'll be committed to this, safety is a journey. It's a constant pursuit of improvement. It's an area that we're never going to be satisfied in. It's foundational to a precision-scheduled railroad environment. It's about running the business the right way, earning a financial return so that we can continue to invest in the safe physical plant and creating and maintaining the right culture, which is a culture of accountability and care and concern for each other, and as a result, the safety performance will follow. A couple of positive announcements for the quarter as well, outside of the financial and the operational performance that we're super excited about at CP on the environmental front. In November, we announced that we were renamed to the Dow Jones Sustainability Index North America. This is something that's a milestone for the company we're very proud of to have achieved and recognize that success. That recognition, in December, we were honored also by CDP for our leadership on climate action with an A- rating. Put those two together with the other progress that we're making in this space, it caps a tremendous year of environmental progress and development in the Canadian Pacific. It's an area that we're just beginning to produce and will continue to set the bar high and continue to be leaders in moving this file forward. On the CMQ, another exciting announcement John's going to provide some color to. We were able to announce in the fourth quarter that HAPAC-Lloyd, a great partner of Canadian Pacific, announced that they're going to be calling on the Port of St. John beginning in 2021 as well. And rest assured, as we've talked about in the past, and we'll provide more color too, this is just the beginning as we scale out and grow and partner with St. John to create that world-class port on the east coast of Canada. Moving on to guidance, looking forward, I can tell you the momentum that we created in 20 we carried into 2021. We're targeting high single-digit RTM growth. We're going to have an opportunity to continue to improve margins in 21, well in excess of 100 basis points, reducing double-digit earnings growth. I'll note that 2020 was the third consecutive year that CPs delivered the best volumes in the industry. Realize some naysayers may say that there's less upside at this company, given the compares, but rest assured, this is a team that loves to be challenged. We relish the opportunity. I don't view a track record of success as a negative. Success breeds success. Rest assured, this team knows what it takes to create success for each other, for our customers and our shareholders, and you can expect another successful year in 2021. at Canadian Pacific. I've never been more confident in our team's ability to deliver. So with that said, I'm going to hand it over to John to bring some color on the markets, and then we'll let Nadim wrap up with a bit of color on the numbers.