Canadian National Railway Company

Good afternoon. My name is Krista, and I will be your operator today. All participants are now in the listen-only mode. 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. At this time, I would like to turn the call over to Stacey Elderson, CN's Assistant Vice President of Investor Relations. Ladies and gentlemen, Ms. Alderson.

Thank you, Krista. Welcome, everybody, and thank you for joining us for CN's second quarter 2025 Financial and Operating Results Conference Call. Joining us on the call today are Tracy Robinson, our President and CEO, Derek Taylor, our Chief Field Operations Officer, Pat Whitehead, our Chief Network Operations Officer, Janet Drysdale, our Interim Chief Commercial Officer, and Gisela Aul, our Chief Financial Officer. As note, we have forward-looking statements and non-GAAP definitions for your reference on page two of our presentation. These forward-looking statements include estimates, goals, and predictions about the future based on our current information and educated assumptions. These come with risks and uncertainties, and with that, there is always the possibility that the outcomes may differ from the expectations. That being said, forward-looking statements aren't guarantees, and factors like economic conditions, competition, fuel prices, and regulatory changes could affect actual results. It is now my pleasure to turn over the call to CN's President and Chief Executive Officer, Tracy Robinson.

Thanks, Stacey, and thanks, everyone, for joining us on today's call. Now, as you no doubt saw in yesterday's press release, Janet Drysdale, who most of you know, is stepping in as Interim Chief Commercial Officer following Lenny's departure. Now, I want to welcome Janet to the role. She knows our company well. She knows our markets. She's a longstanding leader within our company and our sector. And Janet is here in the room with us today, and she'll take us through the commercial performance and the market trends in just a few minutes. So we're going to start with the quarter today, and then we'll move on to the outlook for the remainder of the year. We delivered 2% adjusted EPS growth this quarter on flat year-over-year car loads and a 1% reduction in RTMs. Now, we knew heading into the year that Q2 would be a tough compare from a volume perspective, but it held up well against a positive Q2 last year when we had some pull-forward demand ahead of a potential labor disruption. Bulk volumes were very strong through the quarter. Now, this is great business, and it reflects our advantage network for the ag sector and the strength of our share. In the merchandise and intermodal segments, we started in Q2 to see the impact of tariffs and weaker industrial economies. Now, this shift in traffic mix with less merchandise created a drag on our revenues and margins despite continued same-store pricing ahead of inflation. We'll get into the details on the volumes and the revenues with Janet in just a few minutes. Our network is running very well. Our operating metrics, velocity, dwell, customer service, they're all in the right spot. And it's important that as our volumes or mix shift that we respond quickly. And this team has proactively and progressively adjusted the operating plan and resources throughout the quarter, maintaining good tension between cost and network fluidity and performance. And this helped us drive 50 basis points year-over-year improvement in margin and 150 basis points betterment over Q1. Now, everyone across this organization is focused on containing costs as volumes adjust. This team is aligned, we're focused, and we're disciplined. Now, as we look forward to the next six months, we need to consider the current environment. A few months ago, the trade deal seemed imminent. And instead, there is an increasing uncertainty around the tariff and trade environment, particularly in Canada, and some concerns over weakening macroeconomic environment. And we are seeing impacts in our forest products, metals, and our auto business. And there is a question on what happens to the international volumes for the last half as the tariff discussions continue. And we know that these questions will be resolved with time, and we'll have greater certainty on the traditional and perhaps some newly emerging trade flows. Now, in the immediate term, the uncertainty makes calling the merchandise and intermodal volumes for the second half more of a challenge. The range of outcomes is broader, and it seems more likely that the current softness in certain sectors will persist in the near term. And we're watching all of this closely as it unfolds across our business lines. And we're controlling what we can control in an uncertain environment. And here's what we're doing. We have efforts underway with our customers to further leverage the benefits of the strength in our diversified book. We have a very strong bulk in energy franchises, for example. These businesses will continue to grow. And there's work underway in Canada. to develop better access to global markets, particularly in the energy space, and these may provide further opportunity. In the areas that are impacted by tariffs, we're working closely with our customers on getting them to other markets. So in metal, for example, following the escalation of U.S. tariffs on Canadian-made steel and aluminum, which rose to 50% in June, We worked with our customers on intra-Canada and intra-U.S. moves, and we were able to mitigate some of the loss of the southbound flows. Now, we believe there is more opportunity here. We are doubling down on leveraging our service performance to increase volumes. We've had some wins, for example, in domestic intermodal based on our ability to deliver for our customers. And we're managing our cost structure in response to shifts in both mix and volume to protect our margins. And we made good progress on this in Q2, and there's more to come. We are all over that. Now, we delivered a solid Q2 in this environment, but there is ongoing uncertainty as we look forward. As a result, we believe it is appropriate to soften our expectations for the remainder of the year, and we're adjusting to low single-digit RTM growth. Now, make no mistake about it, this is a great network. It has tri-coastal access. It serves the resource and energy-rich regions of northern Canada. It uniquely bypasses Chicago congestion and has a well-diversified book of business. And remember, we also originate over 85% of our book and originate and terminate more than 65% of our business, more than any class one. And this means we control more of the service at origin and destination and a strong partnership with our customers that we can build on. I'm going to turn it over to the team to give you more detail on the quarter and how we're thinking about the balance of the year. Eric, I'll turn it to you first.