Canadian Pacific Kansas City Limited

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 speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press start and number two. And I would like to introduce Megan Albiston, Vice President, Capital Markets, to begin the conference.

Thank you, Sylvie. Good afternoon, 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 two 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 three. With me here today is Keith Creel, our President and Chief Executive Officer, Nadeem Volani, 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, our 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's 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's 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 up 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, Megan. Let me welcome Mike and 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. You know, 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 it, but I'll tell you this was an exceptional year. outcome given the challenges that they face. So thank you for that and thank you for your commitment and 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 95 cents for the full year. Our total revenues were up 4%. The operating ratio, 57.6, which is a 50 basis points increase over last year's record OR. Adjusted EPS of 376 represents revenue 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 faced 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 for the company. On the safety front, something we're extremely proud of, personal injuries were down 17% year over year to a new all-time CP low. This marks the sixth consecutive year of improvements on the personal injury front, and it's a testament to the team's commitment, and that's all 12,000 employees to coming home safely every day. That said, this is an area where we don't rest. Safety is a journey. I say that often. You never arrive. While we're certainly proud, of the progress that we've made on the injury front. We did see a bit of step-up in train accidents from our all-time record low of last year, but that said, again, for the 16th consecutive year, we're proud that our commitment to people, process, and technology allows us to enjoy the best safety record in the industry. We know there's more to do with that said. We're going to continue to leverage technology and this strong safety culture that we have at this company to drive further improvements in this area. Focusing on the sustainability front, this is another area that we continue to make significant progress. We're proud to be named the highest ranked freight transportation company on the Corporate Knights Global 100 Index, as well as named for the second consecutive year to the Dow Jones Sustainability North American Index. And on the hydrogen front, which is all becoming more topical as the days progress, we continue to demonstrate our leadership in this space, commitment to a more sustainable future through our hydrogen locomotive project, With the additional grant funding that we received from the Emissions Reduction Alberta, we've been able to expand the scope to three locomotives and two fueling stations as we enter into 2022. We look forward to moving from the last setting into the next phase of switching and road trials. And I am very happy to say that our hydrogen locomotive in the fourth quarter moved from concept to reality. It actually moved in its own volition, under its own power. So it's not a concept. It's not spin, it's fact, and it's going to change in a very meaningful way the emission footprint of freight locomotives in this industry. On the transaction itself, that's another area. Again, in the fourth quarter, very excited to hit a milestone with our CPKC journey, closing KCS into trust on December the 14th. The regulatory review process is well underway. No doubt many of you have likely seen some of the early headlines related to this process. We're going to respect the regulatory process. We're going to work with the other rails and the shipping groups to find reasonable solutions to address reasonable concerns that might arise. And we're extremely excited, too, about our ability to reach an agreement with Amtrak, demonstrating our commitment to passenger service, not only on the CP network, but most specifically to the Baton Rouge and New Orleans network on the KCS Railroad. Our customers are enthusiastic about the opportunity for the seamless, efficient, reliable single-line rail service across the U.S., Mexico, and Canada. John will elaborate, and I'm sure we can address it in Q&A, but we have all been intimately involved, getting in front of our customers. We've made over 90 customer contacts, talking about the art of the possible, talking about what this new transnational railroad, assuming it's approved or when it's approved by the SCB, and we'll be able to go to work creating and reaching new markets and service that, quite frankly, has never been possible and I believe will only be forever is a long time. But I think the single one and only transnational railroad to exist in the North American continent. So with that, let me hand it over to John to bring a bit more color on the markets, and then Nadine will elaborate on the numbers and we'll save the balance of the time for Q&As.