Canadian National Railway Company ($CNR)

Good morning. We had a good outcome in the game last night. So thanks, everybody, who is joining us at the event. And I had to go back to the hotel room because it wasn't working my way until much later in the game. But anyway, with that, we're very pleased to get started with the last day of the conference here, still running strong and very excited to have Canadian National joining us to kick off this morning. So from the company, we have Patrick Whitehead, who's EVP and Chief Operating Officer; and to his right is Janet Drysdale, EVP and Chief Commercial Officer. Good morning, guys. Thanks very much for being here.

Morning.

Good morning.

So, I think probably the best way to start off is what we've been doing with most of the companies that have been presenting so far, which is to just kind of go through a little bit of what you're seeing so far here in the second quarter. So RTMs are trending fairly well, I think, plus 4% or so quarter-to-date, a bit ahead of expectations. I guess how do we feel about the market environment as it stands right now, the volume outlook as we're looking to close off here the quarter?

Yes. I think I'm going to let Pat kick it off first because what he does on the operating side makes the commercial team's job relatively harder or relatively easier. So I'm going to let him kind of start off with how the railroad is running.

Sounds good.

Well, and I would say that our goal is to make sure that we make the job much, much easier for Janet and team. That's our desire. So first of all, Chris, thanks for having us. And for everyone here and that has dialed into the webcast, thank you for joining us. Let me start by talking a bit. It's great to be here in Chicago, first of all. I'm from nearby Indiana, so it's always good to be home. Let me start with operations and explain a little bit about where we stand and how we feel about it. The operation is running very well. I'm very pleased with where we are. But I tell people all the time, my job is to never be satisfied. It's always to be pushing for better performance, improved productivity. And I'll go through a bit of that before I pass it over to Janet to go through the markets. So let me start with the operation. The engine is running well. The railroad is performing very well. I would start with the health of network metrics that we watch. Network train speed is up 2% year-to-date. Car velocity remains above that 200 miles per day, which is a good place for us to be with the velocity of the equipment out there. We feel good about that. Train load, so the weight of our trains is up about 3%. Train length is up about 1%. However, I would say it's the benefit of our disciplined scheduled operating model. Our trains fit within that model that we've built and that we stick to. And we don't build trains that don't fit on our network. That really -- we made that change 4 or 5 years ago. We really leaned into this operating model. And you can see in the health of network metrics and the productivity that we're producing, you can see how that strategy has played out. And I'll talk a bit about that. And as you think about those health of network metrics, really, what matters is what is that doing for our customers. And I'll start there. We have a metric that we watch local service commitment plan or LSCP, and we continue -- that is the measure of our first mile, last mile service to our customers, and that remains above 90% -- we're always going to push to get that higher and higher to ensure that our customers are getting the value from the service that we provide. But pleased with where that is trending. You think about all of that also is translating into meaningful productivity, and I'll go through just a bit of that. The productivity of our locomotive fleet, our locomotive fleet is running the best that it ever has from a reliability and availability standpoint. That is producing a locomotive fleet that is 7% more productive. All in, all employees, so our entire employee base, we are 9% more productive on a GTM per employee basis. And the number for me that really matters is as you look at our train and engine service folks, the folks that are out there moving trains for us, that productivity has increased 13% year-over-year. That is the product of the way we have looked at matching our resourcing to the volumes that we see. And we're seeing meaningful productivity come from that. I would also say, when you think about -- we talked a bit on the Q1 call about our Fast Tracking initiative, really Fast Tracking is all about our continuous improvement mindset, how do we continue in everything that we do to improve. And we look at that through the lens of this is really about setting up the terminals across our network, which see about 80% of the traffic passed through these major terminals. There we outlined and identified 26 of them. So about 80% of our traffic passed through there. About 50% of our staff and the train and engine ranks work in one of those major terminals. And what Fast Tracking is, is we focused on let's set up those big rocks properly so that we feed the traffic into the network when we need to. And we look at it through the lens of we're always matching the resourcing in those terminals to the volume, and it's a continuous cycle. We don't just set it and forget it. We continue to go back and make sure that the plan that we've set up is executable and that it's delivering the output that we want to see. And I would say when you look at the metrics and the way we're performing, that work is producing results. We identified on the Q1 call that we've seen about $40 million in savings from that initiative. We are a little over halfway through those major terminals that we identified that we would go through and do the work with more to come. We are very pleased with the work that we have done thus far in identifying savings opportunity, reducing dwell in terminals, really getting the cars out there, earning more and sitting less. That's really the guiding light of our Fast Tracking initiative. So we are pleased with how that is trending. And then I would finish up with, as you think about capacity, we have built capacity over the last several years. We're towards the end of a pretty heavy investment cycle. And we identified really the bottlenecks of our network being Western Canada, so Edmonton, Alberta, West towards Vancouver and Prince Rupert. We added about 25% capacity in some double track projects. We also did some work between Chicago and Winnipeg with a couple of double track projects there where we improved the fluidity between Chicago and Winnipeg and with that work, removed a crew start. You think about as we all travel and you fly through -- we took a connection out of the flight of a car. So now there's one less crew start between Chicago and Winnipeg. Work that we're very pleased with. It was well done and increased our capacity across the network. So I feel very good about where we are from a capacity standpoint. So when I think about our resourcing and the ability to catch volume as we see an uptick, which we hope to see very soon, we're positioned well. We have about 600 furloughed train and engine service employees. Those are folks we can call back into service when we see the volume return. We have 200 stored locomotives that are serviceable. And again, part of that is the fact that our fleet, our locomotive fleet is running better than it ever has. That gives us the ability to park locomotives, work on them as they're stored and they are in a surge fleet should volume come back. And we've addressed the bottlenecks across our network with the capacity investments we've made over the last 3 or 4 years. So very pleased with where we are. And I'll say it again, I mean the network is running very well. We have all of the resources, assets, capacity to pick up the growth when it shows up. And I think that we are delivering a product that our customers are pleased with. So with that, I'll turn it over to Janet.

All right. Thanks, Pat. From a commercial perspective, we really couldn't be more pleased with the service Pat and his team are providing to our customers. And that matters because when the service is good, it obviously helps us to be able to grow volumes and it helps us in terms of underpinning our pricing. So a few words on pricing. Our pricing strategy remains very, very consistent. We price for the value of our service. We price ahead of our rail cost inflation, and we sell into our capacity. What's really important for me is that when we bring on new business, it's business that we can really service well. And so we stay very closely connected to Pat and his team to make sure that we're putting our customers in the best position to win. And when they win in the marketplace, we win. If we look at volumes, we were about 3% RTM growth in Q1. As you said, we're about 3.5%, 4% or so, so far in the second quarter. We are really pleased with how those volumes are coming in. They are, for sure, a little bit ahead of our expectations, largely driven by grain. So strength in grain Canada, grain U.S., we're talking about some record crops here. So that's been positioning us very well. And the supply chains have been working tremendously well. So the grain is getting delivered to the terminals. The car cycle time is phenomenal in terms of the rail piece, but it's also getting to the waterfront in those terminals. So the end-to-end piece is working really, really well. We also saw some more strength than expected in potash. Energy, really, really strong on the refined products as well as the NGLs. And we're seeing more resilience actually in the Metals segment than what we would have thought given the significant tariffs. So as we look into the second half, the macro is still murky. So we've got a close eye on the trade, on geopolitics, on affordability in the consumer. The energy prices are pretty high. We're seeing some inflation numbers come in this morning. So we're mindful of that in terms of how we're thinking about the second half. We also had all-time record grain months in September, October, November, December, not to mention February, March, April, May. But that means in the second half of this year, we will have some challenging comps to lap that. But I expect the crop to come in a little bit later. So we'll kind of see how that plays out. But we're feeling very, very good about the volumes, and we're feeling very good about the service. And if I kind of look ahead to 2027 and beyond, I think this is where we're most excited just in the context of the energy franchise in particular, you saw recently that we've entered into a long-term deal with Keyera and AltaGas. This is on natural gas liquids. The Montney shale region is one of the most significant deposits in North America. And that is really just getting going. And this was about making sure that LNG had an export capability. And now that, that's kind of underway with LNG Canada, we just see this as a long-term growth play for the liquids. We ship the propane, the butane. We see opportunities around ethane availability feeding into plastics. So we're really excited about that opportunity on a long-term basis. And I think Pat talked already about just how we've kind of invested in our capacity. So CN is built for growth.

That's a great overview to start off. I guess one of the things I wanted to hit on, Pat, right off the bat is that the volume so far has been outperforming, I think, the guidance that you guys laid out for us. I think the first half was supposed to be a little bit slower, the second half a little bit faster. Obviously, you're off to a good start so far. So how is the operations of the business sort of responding to this higher-than-expected volume? And how do you feel about sort of the sustainability of what's been pretty good service over the last several months?

So I feel really good about it. And I would say that we've come out of Q1 with a lot of momentum. Q1, you typically see a lot of disruptions with winter weather. We weathered the storm, no pun intended, very well, came out of Q1 very solid with our operating model, demonstrating the strength, and we've been able to keep up while keeping the resources very tight. Again, 200 locomotives stored. That's probably 3x of where we were in 2025 from a stored locomotive standpoint. It's that speed and velocity that we have built through being very disciplined and sticking to our operating model. We really have several years now of leaning into that model. And you can see it showing up. I look at it this way, speed and velocity produce locomotives, for example, for -- we look at our network and the size and length of our network for every 1 mile per hour that we see an increase in train speed, it produces somewhere around 60 to 70 locomotives of availability. So we really have focused on how do we get the asset base correct with -- to meet the volume with better performance. And we continue to push on that. I feel very good about where we are. The -- as we have to lean into these furloughed employees to come back to work, which has not been that many of them, we were at about 750 furloughed employees in the middle of Q1. So we have called some back and the return rate is very high. So we have a lot of confidence in when we need to call employees back. they are returning at a very high rate, 90-plus percent, which is very high for the railroad. It tells you a lot about how people are feeling about the job market, which we are glad they're returning. And also the locomotives that we've stored are serviceable. These are good locomotives to put back in service as we see the volume. So I feel very good about our ability to handle what we see now and what we see in the future that Janet's team is out there drumming up more business. And we have room to grow into our train package. So as I look at -- while I say train load and train length are up, we are not yet spilling over of that base operating model. We have room to grow into that general merchandise network. As you see more bulk and intermodal, if it's a train load of growth, we still have the ability to take it on. but there's plenty of room to grow into our base train package. We would love to see 1,000, 1,500 more feet of general merchandise traffic show up in our general merchandise plan. That's all upside.

And that would be what drives probably the best incremental margins if you're thinking about volume growth from here.

Absolutely. There's room to grow into the train and absolutely.

So Janet, I guess on that point, you're about 5 months in. We're running at about 4% RTM growth. I guess you guys have talked about being pretty close to flat from a volume perspective this year. I know the back half was supposed to be a little bit easier. So how do we think about the full year? Is there upside to that guide?

Yes. I think, look, we're really pleased with the volumes that have come in so far. And a lot of that upside has been driven on the grain side, as I've said. And really, some of it was related to the resolution in the U.S. with China on soybeans and then resolution in Canada with China as it relates to canola. So a little bit of that coming in ahead of our plan, I would say. As we look to the second half, I think we continue to feel good about the AG franchise. We feel good about energy. I would say we're keeping a close eye, like I said, on the consumer, and the U.S. consumer has been pretty resilient so far, but we are mindful of kind of the inflationary pressures and what that could mean. So I think we're kind of on balance kind of just kind of seeing how things come in, and we'll continue to reassess where things stand. But our job on the commercial side is to stay really close to Pat and his team and make sure that we've got alignment on what we're seeing and when we're seeing it and so that we can continue to handle the business as it comes at low incremental cost.

So let's talk a little bit about the pricing side. So I think you guys have talked about sustainable pricing ahead of cost inflation, which is great. And I guess, as we think about the year, what the opportunity might be, but maybe also more specifically in 2Q. So Other folks have talked about maybe running into -- cents per RTM running into the high singles or maybe even low double digits as we've gone through the second quarter. Fuel is clearly a piece of that. And I think you guys are lapping some of the carbon tax credit dynamics that we saw over the last several quarters. So how are things trending here in 2Q from a yield perspective?

Yes. I think -- look, I think we have to be really careful with these measures and what we think they mean or don't mean. So a dollar per carload or a cents per RTM really says more about mix than it says about pricing. So for sure, all of the rails are going to benefit from the fuel surcharge, and you're going to see that in the cents per RTM and the dollar per carload. The mix of business will also really influence the cents per RTM. If you think about segments like Intermodal and Automotive, railways see a lot of growth in their segments. Those segments, you're going to see the cents per RTM go up because the tonnage is low in those segments. So it's not a pricing indicator. Now I know we don't give you same-store pricing anymore. We used to do that. We stopped doing that in the rail industry because it was not comparable. So some railroads like CN would talk about same-store pricing. And when we measure price internally, that's how we do it, same origin, same customer, same car type, same destination. Did it move last year? Did it move this year? What's the delta price? What's the delta volume? When you do the math that way, what you're really doing is trying to figure out how much dollars am I putting into the bank account. When you talk about pricing on a contract renewal, -- if my salesperson comes to me and says, "Hey, Janet, give me a high-five, I got 6% on a contract renewal". My hand doesn't quite meet their hand because I want to see the volume come in before I give the high-five. If you don't move the volume that goes with the price increase, you don't have dollars to put in the bank account. So comparability matters when we're talking about pricing. So my coaching, I guess, to you would be careful of cents per RTM and dollar per carload. When we talk about pricing ourselves, we're talking about that same-store price measure, and that's where we're trying to drive pricing ahead of our rail cost inflation.

It's fair to say that given all the dynamics there, that is going to be a big, I think, a contributor to some sequential revenue growth acceleration as we think about 2Q.

It will be. Yes. Absolutely.

Okay. That's helpful. Jumping around a little bit, Pat, I wanted to kind of come back to the Fast Track initiative. You talked a little bit about it. Obviously, there's some cost savings opportunities. I think you said you're about halfway through that process. I guess, how big can this be? I guess, as you think about the opportunity in terms of cost savings and some of the yard work that you're doing, the terminal work that you're doing? I mean, can we think beyond the $40 million? How does it play out over time?

Absolutely. There's more to be realized. I would say this, that, of course, we set ourselves up for success on the front end. We put the biggest rocks upfront, like any initiative, you want to see success quickly. So we did go into the largest terminals and start the work there. But -- and this will not -- this is not a set it and forget it. This is a part of our continuous improvement. We will continue to do this work. This is work I've done in the past. The team has done in the past, and we will continue to find the opportunities. And it's wide ranging. It is how do you match the assets to the volume, but it's also go through and look at the rubber tire fleet. We own a lot of vehicles. We have facilities, buildings. There are a lot of things that in that Fast Tracking touches. You don't just go in and look at how many training engine crews, how many locomotives do I have versus the train package that I'm running. It's -- you take a clean sheet of paper and you start from there and say, what would this operation look like if I start it all over again with no predisposition to it must look like it did 10 years ago. It is if I was starting all over, how do I look at this terminal and how do I optimize all of the costs within that. Every department and we go through and look at -- I mean, it's -- the savings comes in many forms. And we will continue to do that work, and we'll continue to do a look back on is it still properly set up.

And maybe, Chris, just if I can jump in, I think I would be lying if I didn't say an operating clean sheeting exercise doesn't make the commercial team a little nervous. But I got to tell you, we're doing this hand-in-hand with Pat and his team. And so it is very much customer-centric. And so when we're looking at the volumes and we're doing this at a very granular level, we're saying really what is the volume that's moving and what is the appropriate level of service or frequency of switching that's required to move that volume. And in fact, in some cases, it's allowing us to have conversations with our customers around, well, look, we -- you just don't have enough volume for necessarily 4 days a week, we're going to move you to 3, and they want to keep 4, bring us more volumes. And so it's really being done hand-in-hand. And so this is actually something that is not hindering us from being able to grow. It's enabling us to grow at low incremental cost.

And I would say that is a critical component of the Fast Tracking. And I would say the way we look at it is we want this to be -- this is being done with and for stakeholders and customers and employees not being done to them. And if not done properly, like Janet talked about, where it's done hand-in-hand, it can be perceived that way. So I think there's been a lot of good work done on making sure that this is a joint effort. And it has produced some opportunities where we can pick up incremental carloads.

So let's talk about how this translates to the operating ratio. Obviously, we're all very focused on that. So I think you guys have said maybe shorter term, 2Q normal seasonality is about 300 basis points of sequential improvement. Fuel is going to be a headwind to that. I can understand that. So maybe think about the performance you're seeing, the Fast Track that you're working on, how do we think about 2Q? And then maybe expanding out a little bit beyond that, what is the opportunity for CN from an OR perspective? Is there any reason to think that you should be materially different from any of the sort of North American peers who are beginning to sort of push down towards that 60% and potentially beyond over time?

Let me start with just a few things, and I'll pass it to Janet. So let me -- I should have covered this before. Let me start with fuel. So to your point, when you think about the quarter, so a couple of facts. CN is the most fuel-efficient railroad in the industry, and we are having our best ever record fuel efficiency year-to-date. We are 3% more efficient from a fuel efficiency standpoint than we were last year, and it's the best that we've ever produced. When you think about that in the sense that we spend billions of dollars on fuel, we are controlling what we can control. And that control is I can control as the operator how much fuel I dispense and consume. So when you store 200 locomotives, they're not being fueled. When you control the person that is operating the throttle of the locomotive through technology and oversight, you also control how much fuel that you burn in the course of the trip. And those are the levers that we're pulling to achieve that record fuel productivity. Now we pointed out before, the fuel price uptick that we saw in the beginning of the quarter and the lag of the fuel surcharge is going to be somewhere around $0.03 to $0.04 of EPS and 200 -- over 200 basis points on the OR. Now set that aside, we are controlling what we can, and we're controlling that lever of how much fuel do we dispense. And I would say this, you've heard a lot of railroad operators say this, the operating ratio is the output of good railroading. I believe in that. And that is exactly why we are -- the strategy that we have deployed, the Fast Tracking, the working on a more reliable locomotive fleet, bringing down our train and engine headcount, all of those levers we're pulling, we believe will help us bring that operating ratio down. I can't guide on where that will be, but we are making the right decisions, and I feel good as an operator about the decisions we're making to bring the cost down to match the volume. And we'll be able to pick it up as we see the volume return.

I would just add, I mean, the fuel, to your point, will provide a bit of a headwind, but the sequential OR improvement pattern is intact for sure. And certainly, for us, the OR is the byproduct of doing everything right. So Pat and I are much more focused on growing earnings and doing the right things from an input perspective, whether that's growing the volumes, getting the pricing or the operational efficiency and clean sheeting that Pat has talked about, all of that will translate into the right OR as we go forward.

So as you think about the opportunities on the revenue side that you've highlighted, and it sounds like '27 has potential to be some pretty interesting from some of the other projects that are going on in the network. I guess there's no reason to think that incremental margins can be good, you can get that sort of OR improvement, which ultimately leads to your point to earnings growth acceleration, I think, from the guidance that you've given this year. Is that a reasonable way to think about it beyond '26?

Again, we haven't guided to '27. So this is your words, not mine, but I think you're thinking about it in a reasonable way, Chris.

Fair enough. I'm trying here. I'm trying. That was good. There's two other topics I want to dig into a little bit. Maybe, Janet, a little bit about USMCA and how we should be thinking about that. I think we chatted a little bit earlier. I don't know that you're seeing much from a shipper perspective in terms of anticipation or planning for any outcomes, but any thoughts there would be great.

Yes. I think our working assumption, and I think we're seeing that from our customer base as well is kind of status quo. Whether it's USMCA or whether it's kind of the current level of tariffs, we're kind of expecting right now that what we have today is what we're going to have tomorrow. What I have been super pleased about, Chris, is just the agility of our customer base and ourselves, our commercial team and our operating team to adapt. And if I look at metals as an example, we're much more optimistic today, and we're tracking really well. We found new movements in the U.S., so U.S. to U.S. We have a new scrap train actually that started up and that kind of is moving in partnership with another railroad, going really, really well. We found more intra-Canada moves. We're seeing the aluminum shipments actually start to return to the U.S. So this is a segment that is proving more resilient than what we anticipated initially. And it's really about being able to adapt to how the market is changing, being agile, being fast. And we're doing that in other segments as well. If we look at, for example, our Petroleum & Chemicals segment, we're being able to capitalize more on spot moves. And it's just about the team being as responsive as possible, knowing where the capacity is and being able to capitalize on, "well, I have an opportunity here for 3 months or this one might go for 4 months." And we're just kind of hitting those home runs. That's a little bit about the boot on the ground that we're talking about is knocking on the doors and just being really efficient and agile in bringing incremental business on wherever we can make the market happen.

And I would just add from my perspective, we plan in a way it's not just the short-term planning. So we -- a lot of folks will ask us about spot moves and volume that we can pick up. We kind of put it into layers. So the first being the forecast we look at for the next 3, 5 years, very rigorous process. We go through, we look at and match the forecast to the assets we need. But then I would say that what Janet brought to the team and what the teams do very well together is there's that forecasting, which allows us to plan capacity, plan for locomotives, plan for all the assets, the people. And then you take that down a level, we have a sync every week that's formalized with the transportation and sales and marketing team to say, all right, here's what we've seen in the past week, here's what's on the horizon and what we can go get as spot moves or opportunities that we see out there, and we can the assets to meet that. And then it's the conversations in between and the connectivity between the teams of, well, I'm not going to wait for the weekly meeting to talk about an opportunity that I see, here it is, can you handle this operations is a question you'll get from the sales and marketing team. And I think we've done a really nice job of being nimble and flexing to pick those up. So there's the long-term planning, which I think is a very well-run process, but then it's the touch points in between and being more nimble to pick up those opportunities.

And I'd be remiss if I didn't get to sort of the big topic that continues to be sort of out there in the space, which is M&A. So you guys have been opposed to the UPNS merger. So I guess maybe any incremental thoughts that you have. Obviously, we're sort of in a bit of a maybe a holding pattern to some degree as we're waiting for incremental information from Union Pacific around the application. But any thoughts that you have that are what you're hearing either from customers or how you guys are thinking about the opportunity or potential headwinds that you might see?

Pat and I flipped a coin on this one, and he lost the coin.

He gets to talk about it.

He didn't mention he thought the coin was a 2-headed coin. It's not with me, so I can't prove otherwise, but he's going to lead off on the answer to that question.

Yes, I'd like to see that coin. I'm still not sure that I lost fair-and-square. So I was going to say there's a merger being discussed. Okay. I don't know. All right, something in the industry. So let me start with, we are not anti-merger. We are pro-competition. And I say that because let me -- I have the utmost confidence and faith in this operating team. I would put this team up against anyone in this industry as you think about how we compete in the marketplace. And I think the strength of our operating model and the strength, more importantly, of our team that operates that scheduled operating model, anywhere that we have access to, I believe we bring competition. So let me start with that. And then I'll say this. I -- so I think back through every merger that I've seen in my time, I've been in this business for 34 years. And I happen to be what I call a Conrail survivor. I started with Conrail in 1993. I lived through, and I use that term very intentionally, the acquisition of Conrail by Norfolk Southern and CSX. And I saw the struggles of implementing a railroad, absorbing a railroad and bringing it into -- it's not just putting the two companies together operationally, it's the IT systems, it's the culture of the two companies. There's a lot of work to be done. I would say this, what we've seen thus far, the application has not met the requirements when you think about the new merger rules of enhancing competition. Our position is that we haven't seen that hurdle met yet, and there's still work to be done there. And so the questions come up several times there are the comments around concessions. And look, every merger in this space in the Class 1 industry, every one of them have produced significant concessions to the other Class 1 carriers. So there will be -- every railroad is, I'm sure, doing the same work of what do the concessions look like for each railroad as you think about if this were to be approved, what would that need to look like from a concession standpoint for the industry to ensure that competition is preserved. And I'm sure everyone is making those lists. And the idea or the thought that there will not be concessions as an output of this, I wouldn't agree with that. So I think it will come down to what does that look like and what does each railroad. I say this, if we can extend our reach, just like everyone else in the industry would be looking into, then we can be competitive in the markets maybe that we don't currently reach. And I would kind of leave it there, Janet, if you have anything.

I think you have said it well, Pat. Thank you.

Any particular markets you're willing to share with those of us?

Markets we don't get to today.

Yes. If you look at our map, the places that we don't get to and the places that we could get to, we can enhance competition, I believe.

Okay. That's helpful. There's two quick things I want to hit on before we wrap up and the shot clock is running down here. But first, Janet, going back to you on grain for a moment. So obviously, it's been quite strong. I think you've had some agreements, international agreements that have been helpful as well. As you think about the duration of the strength and maybe when we could see things slow before the next crop? Any thoughts around that?

Yes. I mean I always hesitate to comment on a crop that hasn't been fully planted yet, and there's a lot of mother nature that comes into play on that. But I think the trend line over time is that yields are improving and kind of the trend line would suggest kind of 1% is kind of -- 1% CAGR growth on crops going forward. I think this crop is getting in a little bit late. So I think we will see a later harvest. So August could be a little weaker and September could be a little bit weaker. But October, November, December typically run flat out. I mean this is when as much grain as possible is trying to get to the market. So again, AG is a good news story for us. And whether it's on the grain side or the fertilizer side, Potash is a growing market. So that pie is growing, and we think we have a great franchise to be able to grow the -- our growing share of that growing pie. So AG is strong going forward. Energy, again, as I said, I'll reiterate, this is a great growth opportunity for us. Our Toronto fuel facility into Phase 2, unit trains are moving. That's refined products. The NGLs, we talked about already. So we're really looking forward to '27. We have some automotive business as well that will kick in, in '27 as we've got a couple of plants that have been retooled and are coming back online. So we're excited about the future.

That's helpful. And then Pat, last one for you. Just safety came up on the first quarter call. Can you just sort of give us an update on how you're thinking about that in 2Q and then the rest of the year maybe?

Yes. So I would say when -- number one, the basis -- the foundation of our operation is safe operations. And we are never pleased with any incident or accident. I subscribe to and have my entire career to a philosophy in this business that every incident, accident, injury can and must be prevented. And we will never be satisfied until we reach that. What we saw in Q1 was not one singular cause. We had a landslide. We had a few engineering-related derailments, mechanical. Was a variety of causes. I will say this, what we do is we take very seriously root cause analysis. We feel very good about double-clicking into each of those accidents, understanding what happened and more importantly, identifying what we do now to prevent that. So we feel good about where we're headed. -- and we'll put Q1 behind us.

Triple zero is right on the dot. That's pretty good. So...

We run a precision railroad.

Pat, Janet, thank you so much for joining us. Really appreciate it.

Thank you.

Thank you.

Thanks, guys.