Canadian National Railway Company (CNR) Earnings Call Transcript & Summary

Okay. We're going to get going with our next session. Really happy to have Canadian National back at the conference. We've got Ghislain Houle, the Executive Vice President and CFO; and Doug MacDonald, Chief Marketing Officer; Ghislain has some opening comments he's going to make, and then we'll get right into questions. So thank you guys for being here. I appreciate it and I pass it to you.

Yes. Thanks, Scott. Thanks for having us. It's fun to be able to do this face-to-face. There's been a couple of conferences now that we're able to see face to face. I've seen some of you it's been 2 years. So I'm happy to see you today, and we're here in New York, sitting cozy brought my bouncer here, Doug MacDonald, our CMO, 250, 6'4. So Scott, if I were you, I'd be quite nice with us this afternoon. Yes. Let me make a few introductory comments, and then we will turn to your questions. So I think everyone will agree that CN has got 1 of the best, if not the best network in the industry. And when you look at our access, our 3 Coast access, either West Coast, we have Port of Vancouver and Port Prince Rupert. On the East Coast, we had Halifax and St. John's, and then we have Mobile and New Orleans on the Gulf Coast. Everybody will agree that CN has grown the top line, probably one of the best, if not the most, in the industry in the last few years. However, people will agree that not enough of that top line went to the bottom line. So that's our focus. That's going to be our focus under our new leader, Tracy Robinson. He's really to go back to basics on scheduled railroading. And what we'll do, Scott, is we will run a scheduled railroad that really reflects our capabilities and strength of our network with a focus on velocity, and you heard Jim Vena focus on velocity. So scheduled railroading is about focusing on velocity so that we get most out of our assets and out of our network. There is a plan. There is a plan for each car. There's a plan for each train. There is a plan for each local or customer assignment, including blocks on the train and train meets. And the model would be balanced so that again, we are better resourced our trains with power and crews. And then we'll ask Doug here to go and sell into that plan and build a portfolio that we can deliver consistently to our customers and do it in an efficient manner. And we need to do this and be very intentional about it. If we do this right, we see much more of the top line falling to the bottom line, and this is really our objective. So it's important for us to advance this because, as we see through the year, we expect even greater volumes in Q4 with the normal Canadian grain crop coming at us. And I know you -- Doug will talk a little bit about that in a couple of minutes. So maybe investors here are asking where are you? Well, we started on April 1 with a focus on our 4 big hump yards, mainly Memphis, Chicago, Winnipeg and Toronto scheduling on-time departures, block integrity and connection performance. We since then broadened to include flat switching yards. And those, Doug, I would say, they're Vancouver, Prince George, Montreal and Fond du Lac. So we monitor the daily performance and look at to the plan and look at root cause. And when I look at it, we can see some early signs of improvement. When you look at our car velocity, we've been hovering around our target that we issued last September '17, 211 car miles per day. I think we're at 210 in the last few weeks. So we're hovering around that. And Doug will talk a little bit about customer service, but our customer service is more reliable than it was obviously coming out of the winter. You heard Jim talk a little bit about this, and he's right in some fashion about -- it needs -- this needs to come together through the organization in an integrated fashion. And frankly, what we're doing at CN is starting from the top. We've instituted an operating committee that Tracy sits on, myself, Doug and Rob. And we're going to make the big decisions, all the key decisions in the organization, of course, support by a lot of people in the organization relating to the book of business, relating to contract renewals, relating to capacity, resources, locomotives, cars and with a keen eye on optimizing our financial outcomes. I mean, that's the key. Network operations team will coordinate the daily running of the trains, but with optimizing the entire network versus optimizing a specific region. So I think when you hear us, it's not a new plan, it's coming back to the basics, coming back to running the way we used to run under late Hunter Harrison and getting back to the basics to make sure that, again, we're not just focused on top line growth, which we've done a lot of, but if it means to sacrifice a little bit of top line, and you've heard Tracy talked about curating the book of business, we're talking about getting the right business on our network, getting it at the right price and bringing this with a very, very tight operation -- integrated operation to bring all of this down to the bottom line. And that's the focus, and that's the focus under our new leader. And I'm very, very excited to be working with this lady, this lady and CN will be in very good shape with her. And I think the lightest bright under her leadership going forward in the next few years. Doug, do you want to briefly talk a little bit about the markets?

Sure. So we have a fantastic pipeline of growth opportunities, like we have a pipeline out for the next 3 or 4 years. So what we're going to have is how do we integrate it into our planning sessions and really decide what best fits our network to really drive that growth and those revenues to the bottom line. So just to touch on some of the key markets that we're going after that are doing well right now. So as everyone's going, how do you see demand? Demand is very, very strong. We don't see weakness in any market right now. Automotive, we're running way ahead. So yes, there's some chip shortages here and there, and then they send a slew of cars because they're prepositioning now. It's doing great. Plus you have the whole EV market really starting up over the next year or 2. So we have a bunch of new clients coming up online. Those will be fantastic. Coal is going gangbusters now long term after. Like another 10 years, will that start to decline? Yes. but unfortunately with what's going on with Ukraine, coal markets are top hot. So we're moving lots of product, both out of the U.S. out of Western Canada. We had 2 new mines restart in Western Canada in Q4. So good news there for us. Domestic Intermodal, super strong. With the way the fuel prices are going, we're kind of -- we're effectively sold out on our train service there. So we see that continuing on for the rest of the year. On the overseas, very strong. We're looking -- expecting another wave to come in from Asia again. So once again, it's bumpy, but it's going to be there. So we'll be ready for that, and we'll move it on existing train service. Grain is going to be -- grain has been great in the U.S. So a lot of that comes back to Ukraine again. So we've done a great amount of volume in Q1 and Q2. That will kind of cool down a little bit for Q3. And then in Q4, everything will ramp back up, especially on the Canadian grain side, which we're expecting a normal sized crop. So we're now hiring the crews to get all that done. And then really, the rest of it is very strong. Forest products, we still have the backlog to move. Now I know people are worried about a recession there. We have such a backlog we're not that worried. We should be able to continue to see that strong both in the pulp and paper side as well. Metals & Minerals, we're sold out. Honestly, we can't get enough cars to supply all the different segments in that area. And lastly, I'll just say Petroleum & Chemicals has been very strong. We use crude as a filler in some of our gaps in our program. But outside of that, the main business is very strong, and we're sold out there as well. So overall, we're pretty happy with the way our markets are going.

Okay, great. So I'll start with questions. If anyone has any, raise your hand, we'll get you included. So maybe let's start on the volume side. So volumes are up 2%, give or take, quarter-to-date on RTMs. How is that relative to plan? And then it sounds like there's demand everywhere you look. Your service metrics have actually been showing some nice improvement second quarter relative to first quarter. Why are we seeing even better volume growth right now, it feels like the demand is there for that?

Well, some of it -- it's a great question. Some of it we're holding back. So if you look at forest products, a lot of our cars were offline into the U.S. networks and to the other railways. And their service hasn't improved enough where we're getting in the back. So we're seeing delays there. Every day of delay is worth like 400 cars, right? So we're seeing significant delays still down there. It is getting better, but we won't be able to meet the demand until, say, their metrics come back the way they were over the last few years. Some of the other areas like grain's just down. But outside of that, volumes, we're trying to manage what's on the network. I'll be very honest. So if we want to take a lot more intermodal, we could, but we don't. It's not the right fit for the network right now, especially where it wants to come in through Western Canada. So we're focused on keeping what's there and filling that network up with higher paying freight, some of it being fuels, gas and diesel, some of it being grain in the U.S., but -- and some of it being coal in the West Coast. So we're being very judgment about what we put on the network.

And what would be your outlook for volume in the back half of the year? The Canadian grain comps will start getting easier in third quarter and then fourth quarter should turn positive, I would think. So how do you think about overall volume growth potential in the back half of the year?

Well, it's all built into the plan. So we're very -- we think we've got it measured out really well. We're sitting in that 2% to 3% RTM growth rate throughout the year. Well, some of it will drop off. We will replace that with Canadian grain when that comes on. So we're very confident we can hit our numbers.

So our assumption for volume, Scott, for the total year is still low single-digit RTM growth. And as you know, in Q1, I mean, our volumes were down 8%, while our revenues were up 5%, which demonstrates the power on the yield management that we've done, starting with JJ and now under the leadership of Doug. So I think when you do the math, yes, I mean, we are counting on a very solid second half. Just to give you a bit of perspective on Canadian grain. So our volumes are up 2% to 3%, to your point, while grain quarter-to-date is down about 50%. Canadian grain I'm talking about. So the crop that we are dealing with that was a big headwind in the second half of last year and the first half of this year was 48 million metric tons, and the normal grain crop has -- starts with a 7. So we're assuming that we will have a crop that will start with a 7 that tell you how -- the difference of how big that is. And to Doug's point, and we had one-on-ones before, and we made that point to a few groups, that I think it's early -- it's very early to call Canadian grain, Doug. But I think it looks better at this time than it looked last year when we were looking at it.

Yes. And also, we have to remember that we just announced that we'll be able to take a 12% increase on our regulated grain rates starting August 1. So that will be a big positive as well for us.

Just quickly on that, when does that -- does that show up in grain RPU right away starting in August?

August 1.

Okay. And so maybe Ghislain, maybe just like a couple of quick guidance questions. So first quarter call, you're now saying 15% to 20% earnings growth for the year. How are we feeling about that a month later?

We feel quite confident. I think to Doug's point, I think the demand is there. The demand is strong. If anything, I think we have -- we will have more demand that we can move that in the second half of the year. That's why we'll be very thoughtful about what we bring on our network. I think we -- when Tracy joined us, I mean, she had us do a lot of different scenarios. Obviously, she needed to get comfortable with the guidance because that guidance was -- and that September '17 plan was not necessarily hers, it was Doug and I and others. So she looked at it very, very closely with all of us. So we're quite comfortable. Now obviously, this is an outdoor sport. So I'm knocking on leather, I guess, here, not wood, but that we don't have big service interruptions like we saw last year in terms of losing our mainline to Vancouver for 5 weeks or fires in British Columbia. I mean -- but we feel confident that we will deliver that 15% to 20%. And the team is very focused, and we're confident about that. With an OR, that starts with a 5 because remember, again, that we're a little bit behind in the back tees with the Q1 with an OR of 66.6. So -- if you just do the math with an OR that starts with the 5 for the full year, it tells you what we need to deliver for Q2, Q3, Q4. So we're confident that we can deliver that. And -- but all eyes is on deck, and we're focused.

So since that first quarter call, diesel price have continued to rise. Do you still feel like you can do sub-60 for the second quarter and sub-60 for the year?

We feel -- yes, absolutely. I think that we will get a much better -- like you know the seasonality of the railroads, especially for us being the Northern Railroad, typically Q2 and Q3 are our best OR quarters. And then, of course, there's lots of noise typically on Q1 because of winter, and then winter starts in the fall. Sometimes in some locations of our network, you trick or treat under snow. So that can happen. So from a seasonality standpoint, that's how it behaves. So we're confident that we're going to get a much better OR in the second and third quarter than we saw -- that you guys saw in Q1.

So I hit your guidance, you've sort of -- you've got to be comfortably sub-60 in 2Q and 3Q?

Yes.

Okay. And do you think that -- so you've seen a lot of sequential improvement in service metrics first quarter, second quarter? Do -- in order to make the back half plan, do you need to make incremental service improvements? Or is it about sort of maintaining the network from where it is today?

Well, I mean, we're going to continue to improve. I mean we're assuming that we will continue to improve. You're not going to see big steps, but you're going to see small incremental steps as this plan moves forward. And we need to have that schedule plan. We need to roll it out in the next 2 to 3 years, it's in the next couple of quarters. We need to be ready for Q4. Q4 is a big quarter in front of us. We've got a lot of demand ahead of us. We need to run very tight operations. So you can see, and we do report our car velocity every week, I think. So you will see -- you should see maybe not every week per se, but every little time, every couple of weeks, you'll see improvements because that's what we need to do. And we'll tighten up our operations. We'll tighten up our assets. We're increased velocity. And therefore, we are going to create ourselves capacity. And then we're going to give this to the big guy here in the team to go sell to that capacity to make sure that we get the most out of our assets and out of our network.

Some of the other incremental will be actually as we add in some of the local crews back that we cut during the last round was just that will come in, that will help us switch customers more. It will provide better customer service. It will turn the equipment faster as well. So that's kind of the key areas that still have to come. And those are the people that takes the longest to hire back in, but we should -- we're starting to see them come in as early as next month.

Doug, just give an update on what it means when we talk about curating the book of business and what -- how much of that have we seen so far? And I hear that and I think about pricing in rev per car or rev per -- sense per RTM, getting better from where we are right now, but help us think about all that.

That's great. One little word from our CEO and it's changed the entire way we think, right, curate. So really what that is, is we're going to go look at our book of business with every contract renewal I'll be honest, right? So we're going through all of our renewals, our team is. So it's -- once again, it goes back to the team, Tracy and Rob and Ghislain and myself, but the rest of everyone else and saying, what fits our network the best? Where do we have some potential bottlenecks? Do we want to price that out? Do we want to get rid of it? Do we want to shift some business over here? So we're looking at every contract, every lane, and really, there's no fixed number, right? It's not saying we're going to do this. We're not going to get rid of 5% or we're not going to get rid of this customer. There's going to be certain lanes we want to keep all the time. We might want to keep the whole contract and just increase pricing on it. So there's no answer to it, but it's going to be a constant process of driving these numbers to the bottom line. That's our sole focus on this. We really want to help that out.

And Doug, maybe you want to share with the group as well the work that you're doing to try to densify our Eastern and Southern network that you want to share.

So we're still going to -- yes, we're still going through the whole network where we can really have capacity and where we don't. But we know we have lots of capacity in Eastern Canada as well as the U.S. Now some of it is around hiring, but we don't have any physical, I'll say, bottlenecks down there. So we're focusing ourselves and trying to bring in more Asian business through Halifax and Mobile as an example for our overseas business. We're focusing on more domestic growth there for our intermodal. We're focusing on bringing a lot more fuels into, I'll say, Eastern Canadian region, which is basically short on a regular basis. So that's where the team is really selling into right now. So our focus is there, and we think there's a lot of growth there that we can do.

Same-store pricing trends, you guys have been talking about that maybe a little bit more transparently than some of the others. Is that still accelerating as you see it? Any signs of that starting to peak out?

No, actually, it is accelerating because inflation has really taken off since the beginning of the year. We've always said as a railway we will do inflation plus pricing -- for railway inflation plus pricing, sorry. And we continue to do that. Now beginning of the year, you're looking at railway inflation was 2% to 3%. Now you're looking at 6% to 7%. So as we renew our contracts, that's really what we're doing. That is now the new goal and as well as to be above that. And we're getting it. Customers are seeing it. They're seeing what's happening out in the trucking market. They're seeing what's happening in the rest of the rail market, and they're seeing what the value of the service is. And so far, we've been very successful.

Okay. We have a question in the back. Well, maybe I'll maybe bring the mic to the back, so I'll ask one more, and then we'll come to the back. So on the first quarter call, Tracy in her comments said a few times that we want to be best-in-class. And I guess my follow-up to that would be, and I'll ask you to sort of answer, what does best-in-class mean? Is it -- is that a revenue growth comment? Is that an operating ratio comment, earnings growth, train speeds, what's the metric that we're going to judge ourselves by being best-in-class?

I can start, and then Doug will jump in here. My view is to run as an efficient operations and as tight of an operation as possible to make sure that we sweat our assets the most and we get the most out of our assets. We get the most out of our valued network. And I think the key, in my view, is to get the best earnings growth, to get the best earnings growth. But to get the best earnings growth, you need to have a good OR. So, that's the key, in my view, is to get the best earnings growth and need to run a very efficient operation and sweat our assets at the most. Doug, what is your take?

You said it all. I mean it comes back to you, we're going to take -- every decision is going to be economic, and we're going to actually just do what it takes to drive that EPS growth higher and bring all that money to the bottom line.

As part -- because you mentioned the operating ratio, which is -- that's a change in answer from years past, do you think that there is a goal of getting back to the best operating ratio initiative which you issued for a long time?

So I'm not sure operating ratio becomes a target. I think operating ratio, and you heard Jim Vena talked just before us, and I agree with him that operating ratio is the result of everything we do. And if you really run a tight upper operation, a safe operation, first and foremost, and you sweat your assets the way you should, then I think the OR will just be the result of everything you do. It's not necessarily a target, but it's the result. And right now, we know that we can improve on the efficiency of our operations. We know that. As I said, we've grown the top line a lot. And as a lot of you in the room and on webcast have seen, not as much came down to the bottom line as we believe it should. So that's our focus. And the OR will become the result of what -- of the decision that we will have made.

So if you get to best-in-class efficiency and sweating the assets harder, which you just said, would you be surprised if you end up with the best operating ratio again?

No, no. Listen, after the last 4 or 5 years, there's nothing much that surprises me.

We have a question from the back.

I had a couple of questions actually. One is you mentioned that you're going back to the basics under Tracy of precision scheduled railroading. I guess, if you're doing that, maybe chicken and egg here, but why bring a non-railroad person in to go back to those basics? That would be my first question. The second question, I guess, totally different. But we've long admired the Canadian railroads, but I was talking to a pretty thoughtful investor recently who said that he's investing in the U.S. guys because they have a lot more capacity on their network and therefore, can grow at a lower incremental cost. And I have no way to -- no way of knowing how to evaluate that, but maybe you can shed some light on capacity opportunities, whether there's more opportunity in the U.S. to grow at a lower cost than in Canada?

Yes. Listen, I can jump in here, and then Doug can chime in as well. I'm not here to start saying why Tracy is or not the best choice. I think at the end of the day, she's a great business person. I think that Tracy, that's like a hockey team. You don't win the Stanley Cup by one person. You win it by the entire team. So the entire team is focused on running a tight operation. Maybe we lost our focus and our discipline a little bit in the last few years. She comes in with a lot of experience. She comes in with a clear focus. She comes in with a clear message. And I think that she needs the team, she needs the organization behind. Whether it would have been an operating person or not, at the end of the day, the CEO needs the entire team with them and behind them to deliver the type of performance that we need to deliver. So she needs Doug. She needs me. She needs superintendent. She needs my VP of Finance. She needs the VP of Marketing and others in the organization. So I think the Board did a very thorough search, and Tracy is the person. And I think that you will see the results of the team in the next -- we know our report card is coming up at the end of July, and I know that a lot of you will look at it very closely. And we'll let the results speak for itself, but we're confident that we will deliver. And your second question on capacity maybe, Doug, you want to jump in a little bit on that?

I'll throw my operating hat for this one. So listen, it's pretty hard to judge right now who has capacity and who doesn't. Like we'll be pre-blunt that we're strained a little bit in Western Canada. We have tons of capacity in Eastern Canada and the U.S. If you look at all the other railways, they're going through a hiring binge because they don't have enough staff. So it's really -- that's fine. So you look at their operating metrics that are out there today, and it's tough to tell how much capacity they have. Until they get to that point, I wouldn't say they have more capacity for sales. Like we have 2 large areas in our network, we can grow very easily. I'm not sure I could say the same for any of them because I don't know, not because they don't have it. When they finish staffing up and you start to see their dwell go down, you start to see their car velocity go up and their network trains fee go up, then you'll have to be at least a look at metrics and say, who can actually grow at that level. I don't think you have the numbers right now to judge that.

Doug just following up there, the comment about being more strained in the western part of the world. You guys have talked about that for a long time. And it's why -- I thought why you were spending so much CapEx in recent years to address the Western car where you've had so much outsized volume growth over time. Why are we still in a place where that is more strained?

Because got a really good sales team. I'll be honest, right? So they kept selling and selling and selling, and it's -- we couldn't keep up. So honestly, what we're trying to do now is take a step back, really judge what we want to take on to the network while we have a focused plan on increasing speed, debottlenecking it, getting our velocity up on it. And that's really what's happening over the next couple of months. We're going to be doing that because we don't want to just keep selling and keep bottlenecking it again because we're just spending money, but not seeing the value. And we weren't driving -- well I'll say it again, we weren't driving that money to the bottom line actually. So we have to stop, step back, reevaluate. Maybe we take a pause for a little bit and just spend the money normally, start to build that velocity back up, debottleneck it. And that way, we're -- and we'll sell at a more strained pace at that point.

And there's -- and you're right. I mean we've invested a lot of money in Western Canada in '18 and '19. I mean it was 25% of our revenue. And thank God we did because we need that capacity. We wouldn't be able to run the volumes in Western Canada that we run today if we wouldn't have that capacity. But to Doug's point, the sales team and Rupert is growing faster than what we'd like. So we have to pace ourselves. And when you do invest in capacity, the key is to be every year to do a chunk every year where you can get 100% of your investment in the ground. When you try to do too much in a given year, then you've got a lot of leakage because people do it over time, and you pay engineering folks at 1.5 tons. Contractors ask for a premium. So we do it every year, we invested in capacity, a couple of $100 million dollars in 2020 during COVID. We're investing this year. We're continuing to invest. And then we need to manage that growth coming at us because remember, Rupert is at 1.35 million TEUs, but they're putting another 250,000 TEUs this summer. And then there's another 200,000 TEUs coming in 2024. And that's only intermodal. But there's a lot of other commodities going to Rupert, right? There's the AltaGas that has -- and Pembina that has propane terminals. There's coal. There's grain. Coal is actually phenomenal. Like our coal volume going to the West Coast, Doug, I think it's in the range of 40% up or something like this, and coal prices and indices, either metallurgical or coal, is skyrocketing. So we got a lot of different commodities that want to use the same corridor. So we are building, but we don't want to build during the winter because then you have way too much leakage. So we're building and we're doing as much as we can, putting in the ground doing year in, year out, and then managing the growth in the business that comes with it at the right price to bring this to the bottom line.

So just to follow up there, I mean to your point, Rupert, West, going to have a better grain harvest?

Yes.

West, tech, coal, west, maybe some potash wants to grow. I know that's not much you, but you've got a little, right?

Yes.

Maybe, at some point, crude and sand all less. Like can you participate in that, because I think the demand is there for all those commodities?

And we are. But hence, why East trying to take some intermodal and have it go to Halifax for example, that's one of the things we're trying to do.

So we're talking with our customers who have that ability to ship to different ports, so Mobile, Halifax, and we've got interest there, right? They are both up year-over-year, I think, roughly in the 30% mark. So it's great. Can we get more? Because we still have a lot more room to grow. Tech was great, but it was running on the track anyway, because it's really going down directional running there. So it didn't really impact our capacity or whatever. But yes, some of these other businesses out there, that's what we're trying to say. We got to either make room for or knock something else off, I'll say, the trains and move it in there right now until we increase the capacity where we can handle everything.

Does this change the way you think about CapEx, where we did 17% of revenue, does that need to change?

No, because remember that the reduction of 20% of revenue to 17%, we did not touch capacity. This was the benefit that we can see now from our automated track inspection cars. Where now all of a sudden we have 10 of these cars that are out there. They're inspecting from a data and scientific standpoint the track, the ties, the rail, where now it allows us to be way more surgical in how we're putting our basic maintenance, CapEx. So that reduction came mostly from that. So I'm very pleased to see that these cars are starting to produce benefit, let alone better safety because now all of a sudden, we're more data-driven than visually going on the track with the pickup truck and inspecting the way we did it. So -- and remember that with these cars, we can inspect the same amount of track up to 20x more often than the way we did it on a manual basis. So that's where the reduction. So again, we assess CapEx. Our capital allocation remains the same. First use of cash will be towards the business, but we did not go and cut capacity. We were able to be more surgical about our basic maintenance.

Just real quick as we're running out of time. TransX, the vessels business, you still think we sell?

Well, we -- the boats, the vessels, we've owned them. They are operated like key Lakes, mostly on a stand-alone basis because of the Jones Act. We went out to test the market, whether we could get a good price for them. We didn't like the offer, so we're going to keep them. They make money. The boats are -- it's accretive, very slightly dilutive to the OR, like very little, but they make money. We never -- and maybe we were confused on the market a little bit on TransX. We never look to sell TransX. We look to potentially partner with somebody that will allow us to get the better access to a bigger market, partnering with somebody getting more synergies and so on. Yes, if we're able to partner with somebody, then we will reorganize it in a way that it removes the noise on the OR. But I want to reassure everyone that TransX is actually making money. It's accretive to earnings. I think, Doug, they're performing best of class in that field, very comparable to TransForce or J.B. Hunt. They're making money, yes, slightly dilutive to the OR, but it makes money. It's earnings growth. And at this point -- and this is something on our adjacencies that Tracy wants to review and understand. So she'll weigh in on that as we continue to look into this.

Last thing, just we're running out of time, I'll ask you one question on the balance sheet. Still the lowest leverage among the rails. You want to grow earnings the fastest. So looking out a few years, are you even more sort of underlevered. Do you want to do anything about that?

This is something that Tracy -- remember, she was the Treasurer of CP years ago. So she understands that full well. She wants to weigh in, but this is a regular discussion and debate that we have with our Board. I think we're very committed to do our entire $5 billion share buyback this year. And then we typically announced our capital allocation in January, so stay tuned. Various people have different opinions on the use of balance sheet. We do have a strong balance sheet, and we will look to have that debate with our Board, and Tracy will weigh in, and we'll get back to the market in due time.

Scott, I just want to clarify one thing real quick.

Quickly. Yes.

The -- you said you're trying to make room in the West by getting customers to call on the East for intermodal. Is it -- if they want to call on Rupert, are you trying to convince them to the call on Halifax? Or are you going to get rid of that business and find new business to backfill it?

No. So I'll say right now, like we're essentially sold out on the overseas stuff coming into Rupert and to Vancouver. So we're running a fixed trains contest every day. It's exactly what we've sold out to the customer base. Customers want to bring in more freight. What we're saying is don't bring it in there. If you want to sell more freight into Canada, bring it into Halifax or Mobile.

We got it out there. Thank you so much, Ghislain and Doug, this is great.

All right. Thank you.