Canadian National Railway CIBC Eastern Institutional Investor Conference

Thank you, Kevin. [Foreign language] C'est très apprécié. Et les gens qui écoutent sur webcast, thanks for you guys to be here today. It is a pleasure to be here, Kevin, and thanks to the people on webcast listening and taking interest in our great company called Canadian National Railway Company. If you agree, Kevin, I will make a few introductory remarks.

Yes And even if you don't, I'll make a few introductory remarks, and then we can go through the questions.

Let's do it. Listen, let's start talking about our volumes.

I think our volumes, we're very pleased with where our volumes are, either in quarter to date or year to date. As you know, our volumes, and we talk volumes in terms of revenue ton miles, because that's a better proxy versus car loads. Our volumes are up 4.5% quarter to date, and they're up 4% year to date. This is a lot on the back of Canadian Grain. As you know, we have, and we're benefiting from a bumper crop in Canada this year, which is good because that allows us to move grain well into the third quarter, which is quite unusual. Typically, when you have an average crop, you typically run out of grain by the end of Q2.

This is extremely good. I must tip my hat on the operating team. They're very, very efficient to move that volume every week for the Canadian grain farmers. If you exclude grain, then our volumes quarter to date are up 1%, and our volumes year to date are up also 1%. There's other sectors that are doing quite well. The energy sector is doing quite well. The metals is doing quite well. Automotive, believe it or not, is doing very well. Then there's sectors that we continue to see softness, which we anticipated. Obviously, lumber is one of them. Intermodal International is another one. This is really related to broader market conditions that we are currently facing.

Now, as you know, we are starting to lap tougher comps as we speak, and we will have that until the end of the year. From an operating standpoint, I am very happy with the way the network is working. As you know, you have a question, I think, that you have noticed that our car velocity is north of 200 car miles per day. That always bodes well. That means that your network is fluid, especially when you are able to move more volumes. We are very pleased with that. From a productivity front, I think it is going quite well. When I look at crew productivity, it is up 13% in the first half of the year. Locomotive utilization is up 7%. We are setting a record fuel efficiency in the first half of the year, and that is up 3% on a year-over-year basis.

From a cost-saving standpoint, I am going to repeat what Pat Whitehead, our COO, talked a little bit about during our Q2 earnings call. He gave an update on Fast Track Initiative. What is Fast Track Initiative? It is really taking a blank sheet of paper and reviewing all the processes of every yard that we have.

Every terminals, auto compounds, which are the facilities that we have finished vehicles. Looking at our fleet, believe it or not, we have about 5,000 vehicles at CN, and making sure that we are as productive as we need to be. He reported on Q2 that first half of the year, we delivered close to CAD 100 million of savings. That is very well, and that is very good. On the capital allocation standpoint, we are well on our target to invest our CAD 2.8 billion, which is a significant reduction versus 2025. With good, decent results, I think that bodes very well for us to deliver solid free cash flow and free cash flow conversion. On share buybacks, we have been extremely opportunistic, and we will continue to be opportunistic on our share buyback from now up until the end of the program at the end of January.

We had a ramp-up in our share price. Thank you very much. I am very happy. I am a shareholder of the company. I own a few shares. Look at the proxy. We still believe that we are cheap, and we are going to continue to be opportunistic in buying back our shares. Maybe on this, I will pause.

Okay and I'll turn it over to your questions.