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Edited Transcript of CP.TO earnings conference call or presentation 23-Apr-19 8:30pm GMT

Q1 2019 Canadian Pacific Railway Ltd Earnings Call

CALGARY Apr 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Canadian Pacific Railway Ltd earnings conference call or presentation Tuesday, April 23, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John Kenneth Brooks

Canadian Pacific Railway Limited - Executive VP & CMO

* Keith E. Creel

Canadian Pacific Railway Limited - President, CEO & Director

* Maeghan Albiston

Canadian Pacific Railway Limited - Assistant VP of IR

* Nadeem S. Velani

Canadian Pacific Railway Limited - Executive VP & CFO

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Conference Call Participants

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* Benoit Poirier

Desjardins Securities Inc., Research Division - VP and Industrials, Transportation, Aerospace, Industrial Products & Special Situation Analyst

* Brandon Robert Oglenski

Barclays Bank PLC, Research Division - VP & Senior Equity Analyst

* Brian Patrick Ossenbeck

JP Morgan Chase & Co, Research Division - Senior Equity Analyst

* Christian F. Wetherbee

Citigroup Inc, Research Division - VP

* Fadi Chamoun

BMO Capital Markets Equity Research - MD & Analyst

* Jason H. Seidl

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Kenneth Scott Hoexter

BofA Merrill Lynch, Research Division - MD and Co-Head of the Industrials

* Ravi Shanker

Morgan Stanley, Research Division - Executive Director

* Scott H. Group

Wolfe Research, LLC - MD & Senior Transportation Analyst

* Steven P. Hansen

Raymond James Ltd., Research Division - SVP

* Thomas Richard Wadewitz

UBS Investment Bank, Research Division - MD and Senior Analyst

* Walter Noel Spracklin

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Canadian Pacific's First Quarter 2019 Conference Call. The slides accompanying today's call are available at www.cpr.ca. (Operator Instructions)

I would now like to introduce Maeghan Albiston, AVP, Investor Relations and Pensions, to begin the conference.

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Maeghan Albiston, Canadian Pacific Railway Limited - Assistant VP of IR [2]

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Thank you, Rob. 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 the actual results may differ materially. The risks, uncertainties and other factors that could influence actual results are described on Slide 2 in our 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 3. With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, Executive Vice President and Chief Financial Officer; and John Brooks, Executive Vice President and Chief Marketing Officer. The formal remarks today will be followed by Q&A. (Operator Instructions)

It's now my pleasure to introduce Mr. Keith Creel.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [3]

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All right. Thank you, Maeghan. Welcome. Before we delve into our quarterly results, I think it's only appropriate to take a moment to express both mine and our team members' appreciation for the many notes and support, the prayers and expressions of sympathy that many of you on this call extend into our CP family after our tragic accident in early February that took 3 of our CP family members' lives.

As you can imagine, as a leader, there can never be a worse call to receive than the one I received that morning to notify me of that tragic accident. It's heartbreaking for the immediate family members obviously as well as the CP family members that remain at work. Rest assured, our CP family members will forever be remembered and honored.

And beyond the loss of life, it happened in a very busy part of our network in very challenging conditions. This incident led into what became one of the toughest months and quarters in my railroading experience as well as the company's. The period saw one of the coldest winters in the century with temperatures 20% to 30% colder than what we experienced last year. The record freezing temperatures and snowfall affected supply chains across North America as well as the fluidity of our network.

To put it in more -- closer specific perspective, February's challenges for our company, GTMs dropped at the lowest level in 8 years. I share all these comments not to make excuses but rather just to share the facts that obviously had a bearing on these results that we're sharing today. The challenges have been real, and yes, they've been material to the quarter. That said, it tested our team's mettle beyond doubt, but at the same time, this team stood up.

The resiliency of this team, the talent, the commitment, the sacrifices, the contributions exceeded my expectations, exceeded any that I've seen in my railroad career or that I've had the honor to work with. The challenge has made us stronger as a team, and as their leader, it makes me even more convicted about our ability to execute and convert the growth opportunities that we still have remaining ahead of us in a safe, efficient, sustainable manner.

But more specifically onto the results for the quarter, we grew revenues by 6% and earnings by 3%. The operating ratio increased 180 basis points to 69.3%, which Nadeem will provide some color to you in his detail shortly. But operationally, as a testament to the talent of the team, in spite of these challenges, train speed improved 2% while dwell remained flat versus last year. Train weights and train lengths were both down just what I would agree at about 1%. But with that said, more encouraging, since the weather is broken mid-March, we've seen this company recover quickly, network fluidity has recovered, volume trends are strong. Looking at April's performance to date, very encouraging. RTMs and GTMs have continued to strengthen to the point that we're on pace with the strongest April on record.

Similarly, we've seen car miles per day improved 27% from February levels. Terminal dwell sequentially has improved 20%, even exceeding month-to-date, our year-to-date performance, our month-to-date performance last year. And at the same time, facing record volumes, train speeds month-to-date in April have increased 8% versus last year.

So that said as well, I'd be remiss not to express my appreciation both for the operating team as well as a debt of gratitude and appreciation to our customers for their patience that it took to endure what we've gone through as a company to restore the service that they deserve and they depend upon us for. Looking forward over the recovery network, I'm encouraged by the momentum we're building and extremely inspired with the opportunities that lay ahead of us.

And one final network comment before I turn it over to John to provide some color. I do want to make mention of some of the expressions of concern or questions that were expressed at our last call about the CTA investigation that had been triggered in the Vancouver service issues in Vancouver. I'm pleased to report today on the call that CTA concluded that CP was found to have fulfilled its service obligations. As each of us know in this call, certainly at the Canadian Pacific, Vancouver is critical to our network, it's critical to this country, it's critical to commerce in Canada as well as North America.

It is a network that we intend to service well and we have served well, and it's -- I'm very encouraged that the CTA recognized that CP has not only met but exceeded our service obligations in the toughest of times in these key corridors. We reward the customers that elect to do business with our company with that record -- industry record-breaking service. As we look forward to the remainder of the year, I'm confident in our ability to deliver direct results both financially and operationally to achieve our guidance of mid-single-digit RTM growth and double-digit earnings growth beyond doubt.

So with that, I'll provide -- turn it over to John for -- to provide color on the numbers, and we'll wait for the Q&A to provide any other details that we might be asked today.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [4]

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All right. Thank you, Keith, and good afternoon, everyone. Total revenues were up 6% this quarter to $1.8 billion. RTMs were down 1% as the strong demand environment was weighed down by the network operating challenges that Keith just spoke about. FX was a tailwind of 3%, while fuel was flat. And as expected, same-store price continued to be strong, finishing at the upper end of our targeted 3% to 4% range.

Now taking a closer look at our fourth quarter revenue performance on the next slide. I'll speak to the results on a currency adjusted basis. So look, in spite of the challenges, our CP team delivered several records this quarter. On the bulk commodities, with network challenges certainly hindering our Canadian grain volumes as well as continued weakness in U.S. grain, volumes declined 4%. However, strong pricing helped to act as an offset, resulting in record Q1 revenue for Canadian grain. And now with the Port of Thunder Bay open and strong network momentum that Keith spoke to, expect grain volumes to remain solid right into early summer. The first 3 weeks of this quarter have been very encouraging both with Canadian and U.S. grain trending up double digits. I'd also note that we have now 650 of our new high-capacity grain hoppers in service, allowing us to drive efficiency and improved asset utilization throughout the grain supply chain. We expect to have approximately 1,900 more in service by the end of this year.

So moving on to coal and potash. As a result of collaborative efforts at both the mines and ports, we produced our record first quarter Canadian coal revenue. Additionally, potash volumes were up 4% in the quarter. And looking forward, with K+ S continuing to ramp up and Canpotex sold out through the end of June, we expect potash to continue to be a positive volume driver in 2019.

So now on to the merchandise space as it was mixed this quarter. The Energy, Chemical, Plastics portfolio saw a revenue growth of 18%. The growth was driven by record volumes of LPG, plastics, refined products and incremental volumes on our energy train from Edmonton to Vancouver as these customers continue to take advantage of the velocity this service offers on their cycle time to their private cars. Further, I'm very pleased to announce today that Canadian Pacific and Inter Pipeline have executed a long-term exclusive service agreement for the shipment of plastics from Inter Pipeline's new Heartland Petrochemical Complex that's being built adjacent to CP in the Alberta Heartland.

With the start-up of the facility taking place in late 2021, this new agreement leverages CP's direct service and capacity to get the IPL's key end markets, and we'll utilize our right of way to develop a brand-new rail line with direct access in the Inter Pipeline's plant. The Energy, Chemical, Plastics sales and marketing team delivered a strong win, solidifying CP's position in the Alberta Heartland and future growth with Inter Pipeline.

Last in this space, the crude-by-rail volumes slumped sequentially to 17,000 carloads as a result of production curtailments and the tough operating conditions. While under the current circumstances crude-by-rail remains highly variable, we are optimistic that volumes will gradually ramp up as new contracts start up and our existing customers resume shipping. We are definitely seeing increased demand for Q2 and expect the volume to continue to ramp up as we move through 2019.

Now moving on. Forest products were up 7% as we continue to drive asset utilization on our CP center beams and boxcars, offering greater service reliability to key markets for our forest products customers.

Automotive revenues were up 3% largely driven by GLOVIS as we completed the start-up of our Wolverton auto compound in January. We continue to drive growth in the auto space with our strategic partners despite a weaker auto demand environment overall and expect additional tailwinds as we move into Q2 as Toyota ramps up production following its changeover from producing Corollas to RAV4s at their Cambridge plant. And GLOVIS continue to utilize the Wolverton compound.

And last, I'll make note that our new Vancouver auto compound opened on March 4, ahead of schedule, and we are in the early stages of ramp-up with Ford as our anchor tenant. As a reminder about this facility, it has a capacity to accommodate 168,000 VINs annually and will be a meaningful driver for further growth in 2019 and for years to come.

So finally, moving on to the intermodal side of the business. Overall, revenues were up 2%. In domestic, the CP team did a tremendous job onboarding Dollarama in Q1, and as a result, we hit record March for both revenues and volumes. We continue to have strong momentum in domestic intermodal heading into Q2. On the international side, we continue to see steady growth with RTMs up 70%, and this momentum has carried into Q2 with volumes up 15% quarter-to-date. So look, despite the tough operating challenges, I'll also note the CP team worked tiredly, as Keith mentioned, in Vancouver with our customers and terminals to drive down dwell at the Port of Vancouver during this time period, while at the same time, CP Rail share with our partner GCT at Deltaport has grown from 20% not too long ago to now approximately 50% today.

So while Q1 was certainly a challenging time period for the entire CP family, I remain extremely encouraged with the momentum we've built over the last few weeks, and I remain confident in the demand and pricing environments as we look forward. The team continues to diligently execute on the playbooks that I spoke about at Investor Day, and we will continue to deliver sustainable profitable growth. The team remains highly confident that we will deliver to the mid-single-digit volume growth in 2019.

And with that, I'll pass it to Nadeem.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [5]

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Thanks, John, and good afternoon. Keith and John both noted this was a challenging quarter. We started the year strong with January volumes up 7% as we carried momentum from the back half of 2018 into 2019. As they also noted, we entered February, that momentum was interrupted. As a result, revenue growth was muted, and significant expenses were incurred, most notably through higher casualty costs, which fall under the purchased services line predominantly. This resulted in a Q1 operating ratio increase of 180 basis points to 69.3%. Had it not been for the challenges we faced, we would have expected mid-single-digit volume growth similar to January and an OR in the mid-60s.

Taking a closer look at a few items on the expense side. As usual, I'll be speaking on the results on an exchange adjusted basis, which is shown in the far-right column of the slide. Compensation and benefits was up 7% or $26 million versus last year. The primary drivers of the increase were increased stock-based compensation of $20 million and a reduction in labor productivity. This was partially offset by lower incentive compensation.

Fuel expense was down 7%, reflecting the benefits of lower fuel prices, partially offset by a 3% reduction in fuel efficiency resulting from weather and network disruptions. Depreciation expense was $160 million, a decrease of $12 million as a result of depreciation studies and a onetime adjustment. We expect this figure to normalize to the $180 million level for the remainder of the year.

Purchased services was $357 million, an increase of $76 million or 27%. Primary driver behind the increase was casualty, which was $69 million in the quarter. To put that figure into perspective, our average casualty on a full year basis is typically around $70 million. The increase year-over-year was a little bit over $50 million.

In addition, third-party expenses pertaining to snow removal and flood protection increased approximately $9 million. As well, there was an additional $10 million contractual dispute settlement booked in the quarter, which was a headwind.

For the year so far, there have been no material land sales year-to-date. However, we do believe now that there's approximately $20 million in land sale opportunities later this year.

Rounding out the income statement, adjusted income increased by 1%, and EPS grew 3%. Lower interest expense and our share buyback program provided earnings tailwinds.

I'm encouraged by the quick recovery in the volume and its operating trends we've seen over the first few weeks of April. As Keith mentioned, we are confident in our full year guidance, and we see no reason why we can't deliver an operating ratio starting with a 5 throughout the remainder of the year, similar to the trends you saw in the back half of 2018 where we delivered mid-50s level of operating ratios.

Turning to the free cash slide. We continue to generate strong free cash flow. Cash from operations increased by 4%, and free cash flow increased 18%. While lower CapEx was a contributor to the cash flow performance in the quarter, our capital guidance for the year remains unchanged.

In March, we issued $400 million of 10-year notes at a coupon of 3.15%, which was our first Canadian debt offering since 2011 and will serve to refinance our May maturity of USD 350 million as well as generate significant interest savings. Starting in the second half, you can expect quarterly interest expense to step down to the $112 million level.

As of the end of Q1, we have completed roughly half of our current share repurchase program at an average cost of approximately $260 per share, $35 lower than where we are trading today. We will remain opportunistic and disciplined in our deployment of capital.

Finally, we have talked about balancing our return of cash to shareholders. As we've typically done in the past, you can expect us to review our dividend policy in the second quarter, and we do have stated goals of getting our payout ratio closer to 25% over time. But despite a difficult first quarter, difficult start to the year, with all of the positives that John has highlighted, we're tracking with the strongest volume growth in the industry through the first 3 weeks of April. A lot of the costs we faced in Q1 were of a onetime nature, so we have extreme confidence in our ability to deliver -- generate double-digit EPS growth and, frankly, lead the industry in operating ratio performance.

So with that, I'll pass it over to Keith.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [6]

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Okay. Thank you for your comments, John and Nadeem. Let's open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Fadi Chamoun from BMO.

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Fadi Chamoun, BMO Capital Markets Equity Research - MD & Analyst [2]

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The first question, maybe for you, Keith. So I mean we're always going to see kind of seasonality in the first quarter and these issues kind of that are kind of unexpected like this, but do you see from this experience in the first quarter that you can do something different in terms of capacity and resources, especially in Vancouver on the West Coast where you tend to have some of these challenges and also strong demand during the same time? And I'm just wondering if there is anything different that you would do now in hindsight especially in terms of capacity and resources to kind of manage these kind of things a little bit more going forward.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [3]

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Listen, I'm a realist. There's always going to be something that we can do, Fadi. To your point though, let me back up and say that we're always continually making tweaks and making adjustments, but I think it's important that we keep this in perspective. What happened to us in February, especially in the first 2 weeks of March, were extraordinary. So for us to try to create capacity, invest into a level that we'd be able to absorb these extraordinary experiences, we'd go out of business the balance of the year. So I'm not going to suggest we'll do that.

But with that said, we have already looked as late as today, about 2 hours ago. We're looking at some strategic investments that are very surgical, rifle-shot investments [and the like itself] that create some additional capacities that allow us a bit to surge, to absorb a bit better some of the situations that we experienced through the winter. We're continuing to invest, and in the quarter, we're going to the states. We're investing strategically in our Calgary terminal. We're investing strategically as well into Saint Paul. So all those things and looking at our existing capacity, we'll continue to make some surgical strategic investments to enhance our ability to respond, but again, keeping it in perspective to think that we could ever properly respond to extraordinary circumstances would be remiss for me to say that.

I think another key point benefit and many of you were exposed to, Dr. Mulligan, who is our engineer specialist that we have in Calgary back during Investor Day, we have created a team as well using strong data analytics for him to mine the data to look at opportunities for additional surgical investments to help us improve the reliability of our fleet, the reliability of the locomotives, to give us more predictive testing methods so we can identify suspect cars, suspect wheels, suspect locomotives as well as track conditions, all of which are designed, number one, with safety in mind first, but all have a direct immaterial productivity and capacity benefit as well.

So those will be the key things that we're looking at, Fadi, but I'll finish where I started. There's always more that we can do. As part of precision scheduled railroading, we execute, we analyze, we measure, we tweak to improve with a continual pursuit for operational excellence, which never resting on our laurels or assuming that we've gotten there. And in times like this, rest assured, when you get stress tested and you get your mettle tested the way we did, we do not miss opportunities to convert to help us in the future should something occur. But again, I pray and hope that we never face a tragic extraordinary circumstance like we faced in February again in this company's history.

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Fadi Chamoun, BMO Capital Markets Equity Research - MD & Analyst [4]

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Okay. And maybe one more question. The IPL contract that you've mentioned, John, can we get a little bit more detail on kind of the scope of this contract, maybe the size and the -- it sounded like there's some upfront CapEx that may have to go in, in order to prepare. If you can quantify that as well.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [5]

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Let me take the CapEx point. I'll let John speak about the size of the price. There's not a capital requirement from CP. Our capital -- our investment is the property that we own in the Heartland that allows for the track to be built to realize this opportunity both for the customer as well as for Canadian Pacific.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [6]

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Yes. And just maybe a little more on that. It's property that CP has had for quite some time, and it not only now gives us a -- certainly a strategic into IPL, which we're excited about, but also really plants us deep into the Alberta Heartland. So I think the story is just really starting on that front.

Specifically to this contract, roughly, let's call it, $30 million to $40 million annually. And as I said, it's what I would consider very long term. So it's something we're excited about. We expect again the construction of both the plant and our rail spur into the facility to be -- put us in position to start moving some of those freight end of 2021.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [7]

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And I think to add a little additional color to that. Beyond the direct dollars that John spoke to for the specific product coming out of the plant once it goes into operation, there are additional shipments that are being shipped by rail now in the Edmonton area. External or exported, I would say, for lack of a better term, out of Edmonton, it will be serving the feedstock and the plastic process coming into that facility that we'll realize a benefit from as well.

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Operator [8]

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Your next question comes from Brandon Oglenski from Barclays.

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Brandon Robert Oglenski, Barclays Bank PLC, Research Division - VP & Senior Equity Analyst [9]

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Nadeem, sorry about this, but you went through I think a lot of impact from the quarter that you said could potentially reverse as we look out throughout the year. And I think you also mentioned a 5 handle on OR for the next 3 quarters. So if you could just confirm that. And then maybe help us think about why is that, especially purchased services and other where you think we should be trending on some of these cost items.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [10]

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Sure. So I think the biggest headwind that we had was the increase of $50 million in casualty. And so as I mentioned the last 3 years, our average has been about $70 million to $72 million for the full year. That's something that was our cost in Q1 alone. And so typically, you have a range of about $15 million to $20 million per quarter as opposed to what we realized. So that's the biggest headwind. There's also some costs that we had in comp and benefits side too, casualty as well, but majority was in purchased services.

We also had a onetime settlement that we had with a magnitude of about $10 million. And then in the category of good problems to have, obviously, stock-based comp has been a -- was a big headwind in Q1 just with the recovery of the stock and the strong performance year-to-date. Now I'm not going to say that we won't have that going forward. We're seeing that already Q2 to date, but that's just something to be mindful of. I think the overall inefficiencies that were due to weather, I mean when have you heard us talk about fuel inefficiency? That's something that you just don't hear from us, and it's a direct result of the weather challenges. And so the shorter train length, et cetera, the idling of trains, so we see that reversing course.

As I mentioned, Q2 so far has started off very strong and better than we anticipated, and it's a result of some of the volumes that we didn't move in Q1 being deferred into April. And we're seeing the recovery of the network and postflooding, postwinter, et cetera, that the operating team running a very strong network and our ability to recover so quickly. We're seeing the ability to capitalize on some of the deferred bulk revenue that we're moving this quarter. So combination of strong volumes and these onetime costs kind of departing was what gives us confidence that -- to have a sub-60% OR in Q2. And certainly, the back half of the year, I think we have a high level of confidence to be -- to improve year-over-year. And as you know, back half of last year, we were in that 56.5%, 57% operating ratio range. So if you improve over that, you're talking some pretty strong performance. So hopefully that helps, Brandon.

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Brandon Robert Oglenski, Barclays Bank PLC, Research Division - VP & Senior Equity Analyst [11]

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No, it does. Appreciate that, Nadeem. And then, John, I know you talked specifically about some automotive opportunities this year, but can you just remind us some of the company-specific contracts that you guys went through at your Analyst Meeting and where you hope to show through in the business this year maybe agnostic what the economy is doing.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [12]

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Yes. So I think we're -- the automotive is a prime example, Brandon, of an area where certainly overall, I think most of the rails and, generally speaking, production across the automakers are fairly flat or maybe even down, whereas we've seen certainly strong growth as GLOVIS begins to ramp up. As I mentioned, we've got our Wolverton plant that was built site-specific for them up and running. In addition, Vancouver is going to be a long-term opportunity for us. So the Ford contract is well underway. I just had a team there. I think they already have close to 1,000 VINs at that location.

And then there's -- as I spoke to at Investor Day, there's a number of other auto opportunities that come [déroute] here later in the year that we think we've got a great shot. And this is all about attracting these shippers basically foundationally on our service. And we've -- I think I'm fairly proud to say that we partnered with quality partners such as Toyota and Honda that -- where maybe some of the other companies have struggled for growth in Canada. Our partners have done quite well. And I look at Toyota's recent change from the Corolla to the RAV4.

So we're still hauling the Corollas in coming now from Alabama, but we're also now producing the fastest-selling SUV, small SUV class in Canada at our Cambridge plant. So I think there's $15 million to $20 million of upside just in that change with that plant. So I think that tailwind continues right into Q2 and Q3 for us.

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Operator [13]

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Your next question comes from Tom Wadewitz from UBS.

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Thomas Richard Wadewitz, UBS Investment Bank, Research Division - MD and Senior Analyst [14]

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I wanted to ask you for some more color on your view of the way the crude-by-rail may ramp and how we're thinking about that. I guess you've got -- just maybe you talked about what spread levels we needed to get to and how the contract starting up with the province and I guess, July, how that may affect things. So I guess specifically, you said 17,000 in first quarter. Do you have kind of a ballpark for what you might see in second quarter and second half run rate?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [15]

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Yes. So look, I looked this morning, spreads were in the $10.5 range or so. It's -- I think it still frankly has a little ways to go before we see maybe a large scale move of train sets coming back. We're close with all our customers on this, Tom. And I think the consensus has a feeling that come, let's call it, July, August is where the sort of the spread starts to really widen out again. I don't think it has to get super wide. I think what we're seeing is a number of customers now wanting to bring on set in prep of that, knowing that we just can't turn it all on once we get to that point.

Looking at our latest modeling and what the customers are saying for Q2, I think we could potentially get back to, let's call it, Q4 levels. So 17,000 in Q1, maybe we can pop it back up into the low-20s, maybe even 25,000-ish in Q2. And then as you stated with contracts with Suncor and Cenovus and APMC all sort of ramping up, then we'll see where that goes in Q3, Q4.

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Thomas Richard Wadewitz, UBS Investment Bank, Research Division - MD and Senior Analyst [16]

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Okay, great. That's helpful. I appreciate it. Within the revenue per car, there were a couple that were a bit different from what we were thinking, and I'm just wondering if there were temporary effects. So potash arc was -- it was down slightly, and it had been running up last year. So I don't if that's temporary and that's going to ramp back up or just how to think about potash arc and then I think automotive arc as well on a year-over-year basis.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [17]

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So thinking about potash, Tom, it may -- given the outages and the issues we had in the Vancouver corridor, I'm just thinking out loud around more Portland volume in which we interchange to the UP and share that revenue, might be shining through, but Maeghan can sort of verify that. And what was the other commodity?

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Thomas Richard Wadewitz, UBS Investment Bank, Research Division - MD and Senior Analyst [18]

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Automotive.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [19]

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You know what, we are -- we're -- I know cents per RTM basis, we were seeing a lot more longer-haul GLOVIS business that's sort of been impacting that.

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Thomas Richard Wadewitz, UBS Investment Bank, Research Division - MD and Senior Analyst [20]

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Okay. So probably the automotive trend continues, and maybe the potash would add some noise from weather impacting the quarter?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [21]

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Fair enough, Tom.

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Operator [22]

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Your next question comes from Chris Wetherbee from Citi.

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Christian F. Wetherbee, Citigroup Inc, Research Division - VP [23]

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I guess I wanted to ask, maybe following up on the yields. Specifically about pricing, I wanted to get a sense of what you think the pricing environment looks like today. Obviously, the yields are quite strong, and you had some nice momentum coming through the end of last year to this year. How much of the book has been fixed at this point? And how do you think about pricing generally?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [24]

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Yes. So not unlike prior years, Chris, I think we've got somewhere in the range of around 40% of the book that rolls over, and you can kind of think of that as up 10% a quarter. It's pretty evenly spaced out. You know what, pricing has remained fairly strong. So I'm pleased with it. I don't see anything that is causing me a whole lot of angst when I look down the commodities and the contracts we have coming up, that we can't maintain that pace and momentum. And as we get into the back half of this year, I still believe capacity remains fairly tight.

And in the whole driver log issue, still I think has a big question mark on what the impact is or isn't in the Canadian trucking space as you get towards the end of the year and into next year. So frankly, that -- I think it was underestimated in the United States. If you have to be seen what -- how that sort of plays out in Canada, but that certainly could provide a little bit of tailwind towards the back half of the year also.

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Christian F. Wetherbee, Citigroup Inc, Research Division - VP [25]

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Okay. Okay, that's very helpful. And then maybe a question further to Nadeem or Keith or both. When you think about CapEx and some of the things that we've been talking about in terms of it's not like rifle-shot for specific investments in the network that could benefit the recoverability or so the durability in these really harsh conditions. Should we be thinking anything about bigger picture CapEx sort of projections, what it might -- what the network might need over a longer period of time or be sort of very specific and somewhat smaller in nature?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [26]

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Tom, I'll let Nadeem elaborate, but what I'm speaking to is it's not material. It certainly has the flexibility within our existing envelope to make these rifle-shot investments and to provide that additional flexibility.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [27]

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Yes. And Chris, I'd just add that we maintain a pipeline of capital opportunities, and we keep some money available to be able to respond to the needs of the network or opportunities as they arise. And so within what we've guided to that $1.6 billion level of CapEx, we can accommodate what Keith has described and be able to kind of reprioritize, et cetera. And so for us, the way we manage the envelope, it's not something that we see spikes in CapEx that we can't just manage throughout the year around that $1.6 billion level. And again, over the next several years, in that range, maybe even down slightly from $1.6 billion.

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Operator [28]

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Your next question comes from Walter Spracklin from RBC Capital Markets.

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Walter Noel Spracklin, RBC Capital Markets, LLC, Research Division - Analyst [29]

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Could you talk a bit about your headcount, how that evolves with weather activity having to staff up and then how that might change through the -- quarter-to-quarter and then where we might end the year there, Nadeem, given all the kind of the volatility with regards to the weather activity, how that will play itself out in the headcount?

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [30]

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Sure. So we -- our workforce was about the same level, 13,000, as we ended 2018 at. So it didn't ramp up. It was pretty much flat. And despite the increase of volumes of mid-single-digits that we're guiding to that we expect to achieve this year, we see workforce staying relatively flat, maybe up 1% or so. So no material change there on the workforce, Walter. Obviously, there's the -- within that number, some of the headcount changes as you adjusted demand in specific locations, but the overall workforce number is that 13,000 to 13,100 level.

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Walter Noel Spracklin, RBC Capital Markets, LLC, Research Division - Analyst [31]

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Okay. And just stepping back a little bit, and this one I guess for Keith here, your competitor is starting to make some investments and looking into expenditures outside of rail. Just curious, your thoughts on strategically looking outside of rail investments as opportunity for growth. And if so, what areas would you focus on?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [32]

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Well, I would say that, number one, we'll always keep our eye -- opening our mind, opening our eyes looking forward. But with that said, we're at a different phase in our evolution at this company. We still haven't converted the capacity that we've created from our PSR transition several years ago. We're in a very unique position, Walter, internally where we have capacity across our network that represents meaningful opportunities to invest organically on our own physical footprint to grow revenue streams.

So until we exhaust those, unless there's something very compelling that presents itself, our focus over the next 3 years, 4 years is inward, it's not outward. But again, if it makes sense, we'll consider it. We certainly have the balance sheet to be able to do it and the dry powder protect it to act if something is warranted. But right now, we're focused internally with a list of opportunities for us to invest and continue to grow with our customers, providing them something unique that they can't replicate in this rail space in the marketplace today, especially in Canada.

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Operator [33]

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Your next question comes from Brian Ossenbeck from JPMorgan.

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Brian Patrick Ossenbeck, JP Morgan Chase & Co, Research Division - Senior Equity Analyst [34]

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John, I just want to come back to the ELDs and potential impacts, I guess, more thoughts on that. And to your understanding, has the rule been finalized yet? And where do you think which part of the network or which opportunities do you think you'd see the most impact potentially? Because as I understand, you still have pretty good amount of the trucking fees running across border into the U.S. So they would have probably already been ELD compliant or have some sort of impact already. So I just want to get your thoughts on how this is progressing, if it's still a late '19, '20 impact and where you see the biggest opportunities for CP.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [35]

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Yes. Like full compliance still seems to be, Brian, moving around a little bit. I don't know if there has been a late sort of line drawn in the sand. I can tell you, in terms of our providers sort of outside the 100-kilometer level, I feel good about where our freight providers and trucking providers are in terms of compliance. I think the opportunity becomes unknown as you start thinking about just the likes of Montreal and in Vancouver and in Toronto and what that looks like. We went through a, what I would consider, 4- to 6-month period particularly in the Chicago market with the U.S. change that I think was far more disruptive than most people anticipated. And certainly with some of the long-haul sort of dynamics that are unique to Canada, at least across Canada trucking, I think it's somewhat yet to be seen or understood and what the capacity that could come out of the marketplace would look like.

So again, it's not a sky is falling and it's going to be a huge issue, but it's something we're keeping an eye on. And to the point of pricing, certainly could provide an additional tailwind as we get towards the end of this year.

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Brian Patrick Ossenbeck, JP Morgan Chase & Co, Research Division - Senior Equity Analyst [36]

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And on the businesses that will be mostly intermodal, do you think you'd be able to convert some additional transload and merchandise?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [37]

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I would say it's pretty intermodal-focused. A lot of that in or around between transloads in Toronto, in Ontario market, it's pretty short haul stuff. It would be more of the long-haul opportunity, so that would be largely intermodal.

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Brian Patrick Ossenbeck, JP Morgan Chase & Co, Research Division - Senior Equity Analyst [38]

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Okay. Just a real quick housekeeping for Nadeem. The $20 million of land sale gains expended later this year, original guidance didn't include that. I'm assuming that this is now reflective, along with all the other charges from the weather.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [39]

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Right. I mean I think that's just incrementally positive. I'd say, over and above, all else being equal, our guidance would have been the same at the beginning of the year. And I would add some additional land sales that would be incremental to our original guidance. We can absorb this difficult first quarter and still overachieve. Thanks, Brian.

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Operator [40]

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Your next question comes from Steve Hansen from Raymond James.

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Steven P. Hansen, Raymond James Ltd., Research Division - SVP [41]

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Just a single one for me on the train speed. Keith, I think you noted in your earlier remarks that the April GTMs are basing at near-record levels. That's largely consistent with some of the traffic metrics we see every week. But the metrics that surprised me to some degree was that your traffic -- your train speed is up 8%. With a lot of the recovery coming in, some of the bulk categories that metric struck me as fairly strong, I just wonder maybe you could give us some sense of where that speed is coming from and how you're achieving it given the record volumes.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [42]

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Great question. More specifically, the operating team, the way they're executing the bulk cycle times as well as terminals, the trains are moving quicker to the terminals. Obviously, they've got them spaced out well. We're working extremely well with the bookends, with a lack of a better term, what I call the bookends, both on the loading side as well as the unloading side of the ports.

As a matter of fact, last week, on the South Shore, we continue to set record -- weekly unloading records. Specifically, last week, it was Viterra. The week before, it was AGT. So the operating team overall, they're just doing a very, very solid job of getting better at what they do day in and day out executing our scheduled operating plan, maintaining balance, maintaining the right pipeline and making those asset turn into workforce. And at the same time, it's enabled through the investments that we've been making. Every year when we do this, our strategic investments and our network capacity -- or our productivity capacity, I could call it one of two things, it's done very surgically with a focus on eliminating train delays through train meets, through executing, give us an opportunity to increase rail train speed, which is exactly what's transpiring.

So -- and it just shows once you do that, in the absence of network disruptions, and the absence of some of the significant curveballs we experienced in February and the first part of March, what this network is actually capable of. There's more to come. So it's very encouraging, yes, but at the same time, it's what I expect. We've got to earn the return on our capital to invest. We invested with a business case. It's invested with much thought, intentional and surgical, and I expect it to be paid for. It's simply the standard we have within this company.

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Operator [43]

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Your next question comes from Ken Hoexter from Bank of America Merrill Lynch.

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Kenneth Scott Hoexter, BofA Merrill Lynch, Research Division - MD and Co-Head of the Industrials [44]

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Just with maybe Nadeem or John, with volumes up 6% kind of quarter-to-date, do you see this sustaining upper single digits as you catch up? Or is this really just kind of brief cleaning up some of the backlog? I guess I'm just trying to get to understanding if double-digit revenue growth is a reality. And then just following on that, I guess looking at grain, is there any impact from the U.S., China tariff overhang where you've seen increased demand for the Canadian grain exports? Or is the wheat market just totally different?

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [45]

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Sure. Let me start off, John, and then you can provide additional color. But no, I mean certainly, there is some catch-up from Q1. So as I described some of the winter, what we couldn't move in Q1, we're moving in early parts of April. But beyond that, there's -- I think you'll see a steady pickup in terms of, throughout Q2, an increase in our RTM performance week-to-week. I will point out, we had a challenging Q2 last year with some strikes and disruptions as well in the network. So we expect a very strong second quarter. I think quarter-to-date, revenues are up in that 15% level, so this isn't something that's a onetimer in nature. So John, maybe a bit more color?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [46]

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Yes. Can I say, January, I think revenues, we're looking around 14% up. Quarter date, we're hitting 15% up. When I look down commodity by commodity, there's some ebbs and flows, but generally, I feel pretty good about every one of these -- well, most of these commodity areas. And certainly, crude-by-rail is sort of over and above on top of that.

As I think about the U.S. trade with China, there really hasn't been a whole lot of change in developments that relate to our P&W export business. I can tell you a good offshoot of that is we've moved 80 trains over the last 2 quarters of corn out of our U.S. territory into Alberta, in which we're feeding the cattle market in Southern Alberta and, thus, exporting barley out of that territory. So it's a market that typically we plan as a fairly low level, but we've been able to sort of take this opportunity and expand a whole new business opportunity in the grain space. And it's sleek because it's a great car utilization. It's a loaded grain car out of our U.S. territory. It's unloaded in Alberta. And it's -- the cars fit at the same elevator, gets reloaded, and then gets exported in Vancouver. So it's a highly efficient move.

And I don't know, as a result of the U.S., that we've seen additional Canadian grain lines. I would consider them somewhat normal. I was looking at export wheat volumes here the other day, and it's been a fairly strong year. And maybe that's a result as of late with some of the canola issues that's going on in Canada. But I think that's yet to be totally understood.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [47]

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And Ken, just one final note. I mean it's broad-based strength in revenues, so it's outside of Canadian coal and fertilizers and metals, minerals and consumer products. Every other category is double-digit revenue growth. It's quarter-to-date.

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Kenneth Scott Hoexter, BofA Merrill Lynch, Research Division - MD and Co-Head of the Industrials [48]

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Yes. Now we're very strong. So I appreciate that insight. So just a quick follow-up, Nadeem. Just to understand that 50 comment, it was pretty strong for second quarter. And obviously, we've got the difficulty of the strike, as you mentioned, last year. So just trying to put that into perspective. Is there any parts of transportation costs that continue into the second quarter, I don't know, such as lease locomotives or anything that you had to bring onboard to move some of the traffic in that first quarter?

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [49]

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No. I mean I think that's the other railroad. But we have had some costs associated with flood -- flooding but nothing of the magnitude that we saw in Q1 or nothing that I'd call out. No, I mean obviously, the strong pricing, the revenue growth that I just described continued with our -- combined with our strategy of moving it sustainably and profitably and in growing at low incremental cost.

So outside of the kind of one-off natures that I described in terms of the lack of productivity from winter and the casualty cost, the expenses behaved very well from our perspective. So there was nothing there that we need to alter significantly. It's just running the model and the plan that Keith leads us by and similarly to what we did the back half of last year and into the first month of January. So...

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Operator [50]

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Your next question comes from Scott Group from Wolfe Research.

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Scott H. Group, Wolfe Research, LLC - MD & Senior Transportation Analyst [51]

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So Nadeem, you made a comment about having the best OR, and I'm guessing that was not a full year '19 comment, but was that a thought about sort of going forward starting in second quarter? Or was that more of a sort of longer-term comment?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [52]

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You're underestimating his optimism, Scott. It's -- I mean our eye with a strong -- obviously, a strong second quarter showing versus last year. And again, to the point that Nadeem made, the second half, we showed you what we could do last year, assuming everything comes to fruition, that we see those opportunities on the table. We'll have stronger performance second half this year than we did last year, which still gets us to a sub-60% OR.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [53]

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I couldn't have said it any better myself.

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Scott H. Group, Wolfe Research, LLC - MD & Senior Transportation Analyst [54]

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Okay. And then I wanted to just follow up on crude. Any thoughts on the elections in Alberta? I know there was rhetoric on the campaign trail, but just how you think about sort of the sustainability of the contracts in Alberta. And then I don't know if there -- if we need to think about any liquidated damages in this quarter or going forward as it relates to crude at all.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [55]

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Yes. So look, curtailment aside, supply, production levels versus takeaway levels, crude-by-rail fundamentals are strong. And in my view, even with Enbridge coming on, this still looks like a good 2- to 3-year crude-by-rail opportunity. That being said, as it relates to the APMC contract, just like we would do with any customer, it was negotiated in certainly good faith, and we feel good about it.

And I can tell you this, Keith was on earlier today, we're looking at preparations on how we begin to ramp up for that, with the expectation that we're going to be starting to haul it come here July. So those investments that we need to make, whether it be in people or infrastructure, are underway.

I'll just comment, I'm not going to say a whole lot about the liquidated damages other than -- I know we talked about it quite a bit on the last quarter call, just other than sort of each contract we have is structured a little differently and how those ultimately get paid. But the fundamental structure of those contracts are designed to backstop our investments, our cost of capital related to those contracts, and we feel good about those.

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Operator [56]

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Your next question comes from Jason Seidl from Cowen and Company.

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Jason H. Seidl, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [57]

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Just one quick question. What have you seen thus far from your interchange partners that are undergoing the PSR implementation in various forms? And what do you expect going forward?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [58]

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I've seen a fluid railroad. Chicago, in spite of some of the challenges during the winter, whether you relate that all to PSR or not, it stayed more fluid than I would have expected it to, which is encouraging. I've seen other gateways. I'll speak to the gateway we share with Union Pacific, the one with Pacific Northwest, where we bring our ag product up through Canada and back down to Portland, Oregon. The throughputs since they've recovered from the very challenging [drama] that they had in their tunnel has exceeded my expectations. It allowed us to move quite a bit of product through that gateway.

So overall, it's early in the game. What I'm seeing, I'm encouraged by, given I know a little bit about this. And all railroads, the metrics are moving in the right direction. At the end of the day, when all the railroads get better, it creates capacity. There's a direct material impact obviously for those individual railroads, but we all connect and/or compete or do business over 1 city, which is a key focus area of mind, and I see it getting better overall. So, so far, so good. And I continue to be their biggest cheerleader and encourage each one of them individually and collectively to stay the course because, ultimately, they're going to be able to create additional capacity for customers to enjoy, additional monies to invest back in infrastructure to grow capacity, not shrink capacity. People truly don't understand what PSR means. But as this evolves and is -- some of the rhetoric goes away and the facts prove out, this is the right way to run a railway for long-term sustainability both from a capacity standpoint, from a safety standpoint, from a productivity standpoint, from a customer standpoint and a shareholder standpoint. It truly is a win-win. So I'm extremely encouraged at this point in the game.

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Jason H. Seidl, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [59]

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So Keith, would you think this was more of a necessity for the industry to go this route?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [60]

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I mean ultimately, if I stand by, I'm going to stand by what I said a long time ago, that this industry is going to run out of capacity, which is going to drive consolidation. So from a necessity standpoint, you could say yes. Because it's creating capacity, that prolongs that discussion, but individually, you'd have to ask the individual railroads if they felt it necessary. I just feel that it's very beneficial to the overall industry. And obviously, I can see from the outside looking in, it certainly appears to be very beneficial to the individual railway.

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Operator [61]

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Your next question comes from Benoit Poirier from Desjardins Capital Markets.

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Benoit Poirier, Desjardins Securities Inc., Research Division - VP and Industrials, Transportation, Aerospace, Industrial Products & Special Situation Analyst [62]

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John, I was wondering, given the strong pricing environment you see, whether there was an opportunity to lock up some contracts over a longer duration given the strong pricing environment that you see these days.

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [63]

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Yes. Benoit, I think that's fair. We've been very choosy in that space. I think by nature, we like to maintain pricing flexibility, but we have been and try to be very strategic over the last 12 months with those customers that not only fit our network well and sort of our key partners but also in this pricing environment to where we could maybe lock up some greater inflationary plus type number we've done so.

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [64]

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As far as duration though, Benoit, our model has not changed. I'm one that believes in a normal economic cycle of 3-year term is a good time. It's good for the customer, it's good for the railroad to be able to plan. It doesn't lock us out or lock us into bad economics, what we have done being what I would say is progressive. Some of the recent deals we've done have been the base 3, and there's alternative, there's auctioneers in there both for the customer and for the railway. So if it makes sense, the economic cycle makes sense, the legwork is done, it certainly encourages, it enables extending an existing agreement more so than what we've done in the past. But as far as just going forward more and longer-term deals, my thesis has not changed in that I'm still a 3-year guy.

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Benoit Poirier, Desjardins Securities Inc., Research Division - VP and Industrials, Transportation, Aerospace, Industrial Products & Special Situation Analyst [65]

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Okay. That's great color, Keith. And my second question is, looking at fuel prices, it's up slightly versus February, January, kind of. I was wondering if you see any impact in terms of a fuel lag or impact on the OR or the impacts so far is not strong enough to move the needle from an OR standpoint and fuel alike?

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [66]

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Yes, I'd say it's a bit of a moot point right now if bears watching, Benoit, to your point, but nothing I'd point to that says it's creating an OR headwind.

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Operator [67]

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Your last question comes from Ravi Shanker from Morgan Stanley.

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Ravi Shanker, Morgan Stanley, Research Division - Executive Director [68]

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Best for last, I'm sure. So just a follow-up on the -- on crude-by-rail. Just let me understand it properly. Are you guys agnostic to the Alberta province kind of keeping their program or dismantling it just given the net effect of potential liquidity damages and maybe the spreads widening out if they dismantle it or the kind of guaranteed volumes if they keep it?

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John Kenneth Brooks, Canadian Pacific Railway Limited - Executive VP & CMO [69]

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Let me say this, we -- I would say, we spent, Ravi, a fair amount of time working with the Alberta government in putting this contract together. And I didn't do it to have it be ripped up. As I said, I -- we're planning for it. We've reserved the capacity to handle that business. That being said, we want to work open-minded with the Alberta government. If there's concerns or issues, we're more than happy to spend the time to work through that. At the end of the day, I'll go back to sort of what I opened up with in the subject, the fundamentals under sort of what I call normal market conditions support crude-by-rail. So ultimately, if it's Alberta government or some other customer, I see a path of sort of these volumes over sort of the prolonged next 2 to 3 years.

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Nadeem S. Velani, Canadian Pacific Railway Limited - Executive VP & CFO [70]

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And Ravi, I'd just add that, keep in mind, there's a number of companies within the supply chain, a number of railroads beyond the Canadian railroads that are involved in this. So it's -- it takes a lot of companies to come together and create this supply chain that can provide value to Canada, to Alberta as well. And I'd say that we're also watching the curtailments closely. I'd say -- argue that, that's more impactful to what's being produced obviously, but that's more impactful to the economy, and so what that means to Alberta and to Canada as a whole. So that's an important dynamic that we're watching very closely. So I mean if you don't believe in regulation, well, curtailing the production and picking winners and losers is something that should also be addressed.

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Ravi Shanker, Morgan Stanley, Research Division - Executive Director [71]

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Got it. That's helpful. And just, Keith, just lastly, to follow up on some things you said earlier. You said that you're internally focused right now, but you are open to looking at the right opportunity that comes along. Can you just help us understand kind of what is on that list of the right opportunities? Is it a trucking company? Is it ports? Is it technology companies? Kind of what potential M&A or kind of nonrail opportunities would you consider?

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Keith E. Creel, Canadian Pacific Railway Limited - President, CEO & Director [72]

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Any that would be accretive to our earnings that makes sense for our transportation company to consider. Nothing specific, Ravi, at all.

Okay. With that being said, we can wrap up the call. Listen, I appreciate your time this afternoon. I want to close with where I started.

I'm extremely proud of this team and talented railroaders we have at this company. Having been in this business for 27 years, the resiliency, the commitment, the talent that they displayed to not only endure but, no pun intended, to weather the storm that we went through this first quarter, it's not only encouraging, but it fuels my convictions as a shareholder and as honored to be their leader, the strength that they displayed will allow us to continue to the second quarter seize the momentum that we've created through the quick resiliency recovering our network and execute not only a strong second quarter result but the remainder of 2019. We will meet or exceed our guidance in 2019, and we look forward to sharing the results with the second with each of you in July. Thank you for your time this afternoon.

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Operator [73]

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This concludes today's conference call. You may now disconnect.