Canadian National Railway Company

Good afternoon. My name is Lisa and I will be your operator today. Welcome to CN's first quarter 2023 financial and operating results conference call. All participants are now in a listen-only mode. And after the speaker's remarks, there will be a question and answer session during which we ask that you kindly limit yourself to one question. I would now like to turn the call over to Paul Butcher, Vice President of Investor Relations. Ladies and gentlemen, Mr. Butcher.

Well, thank you, Lisa. Good afternoon, everyone. And thank you for joining us for CN's first quarter 2023 financial 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 US and Canadian securities law. These statements are subject to risk and uncertainty 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 yourselves 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, Doug McDonald, our Chief Marketing Officer, Ghislaine Houlle, our Chief Financial Officer, and Ed Harris, our Chief Operating Officer. It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson.

Merci, Paul. Bienvenue à l'appel du premier trimestre de CN. Welcome to CN's Q1 earnings call. We very much appreciate you joining us today. Now before I get into the Q1 highlights, let me just make a few comments on some recent developments. Firstly, I'm really excited to announce that CN with UP and the GMXT are launching a new transformational premium intermodal service that connects Mexico, the US and Canada. Now this is a steel wheel interchange service that leverages the best of our three networks and creates the most direct route and the fastest transit times between Canada and Mexico. It will provide our intermodal customers with the efficiency of bigger payloads and, most importantly, the ability to accelerate the shift of truck business to rail. And it's also an example of how we can collaborate to create the next level of service offerings for our customers. We're going to continue to work to create more of these creative and collaborative arrangements that will support our customers' ability to get to new markets or to their current markets, but faster and more efficiently. I'm also happy to announce that we have reached a tentative agreement in Canada with the TCRC covering approximately 6,000 CM locomotive engineers, conductors, yard conductors, and yard coordinators. Now, this agreement is subject to ratification by the TCRC membership, so we are unable to provide any details at this time, but I will say that we appreciate the work the union leadership has done with us to reach this agreement. And finally, I want to make just a couple comments on safety. The safe movement of all goods to the communities we serve across North America has never been more front of mind. Now this industry and our company have made tremendous progress on improving the safety of our operations over the past decades. And we're all working towards reducing and ultimately eliminating harm, both injuries and incidents, ensuring that we protect the communities there are communities in which we operate in which we live there has been continues to be considerable investments in technology and training and advancing leadership and culture we're not yet zero as an industry but we're making progress and I am proud of the way the industry is coming together to advance together now after the derailment in Ohio earlier this year All the class ones convened put all of our respective technology and protocols and wayside detection on the table and we together use that to develop new voluntary standards for our industry and for wayside detection. And each of us is in the process of implementing to those standards. Now our regulators can and they should be positive partners in this effort and they will be as long as there is a fact-based, data-driven approach that connects potential solutions with root causes. And if we apply all the wrong solutions, we'll not only fail to make the necessary gains in safety outcomes, we run the risk of unintended consequences that impair the performance of our supply chain. On that note, I'm pleased to report that at CN, as of yesterday, we've achieved 838 days without a fatality and 650 days without a serious injury. These are the longest periods in CN history, and I think it's proof that zero is possible. Now, Ed's going to provide a little more information today on our progress on safety. So let's get into the quarter. I want to first thank all of our CN employees for their dedication and their hard work to deliver some pretty solid performance. Let me highlight a few key points. Diluted EPS is a Q1 record. It was up 38% on an adjusted basis. Revenues were up 16% as we moved 6% more volumes more efficiently. The operating ratio was 61.5%, an improvement of 510 basis points on an adjusted basis, and the lowest Q1 at CN since 2016. We're continuing to deliver on our goal of driving the top line to the bottom line. We remain focused on the discipline execution of our operating model and on the basis of a strong first quarter, we're updating our financial outlook and we now expect to deliver 2023 EPS growth in the mid single digit range up from low single digit previously. Now it's important to note that our views on the economy haven't changed. Our current volumes reflect that we are in a mild recession. and we're uncertain about how deep or how long it will go on. But what we're modeling is negative North American industrial production for the full year. We've been through this before, the industry has been through this before, and we'll come out of it. We're going to stay focused on our scheduled operating plan. Ed's going to take you through what we're doing currently and to adjust to current volumes. We're not going to make the mistakes of the past. We will maintain our workforce and our capital plan. We will have less margin leverage as long as the volumes remain soft and more margin leverage once the more normalized volumes return. We'll be ready when that happens and as the economy lifts. Now, I'm very pleased with the work of Ed and the operating team. And while the winter was milder in T1 compared to last year, it was more of a normal winter. Our scheduled operation proved its worth as we demonstrated resiliency, recovering much more quickly from the winter challenges that were thrown our way. And we delivered for our customers. Ed's going to provide you a little more detail, but let me highlight our origin training performance was 86%, reflecting our continued disciplined execution of our operating plan. And Doug and the marketing team delivered a pretty strong top-line performance. Our commercial team remains in close contact with our customers, and Doug's going to give you A few more details on drivers of growth in Q1 and what we expect as we look forward to the remainder of the year. Jelan will get into the details of our solid financial performance in Q1, which is driving our updated financial outlook. So let's go. Ed, over to you.