Summary of Canadian Pacific Kansas City (CPKC) Conference Call Company Overview - **Company**: Canadian Pacific Kansas City (NYSE: CP) - **Date**: February 18, 2026 - **Speakers**: Keith Creel (CEO), Chris Verone (IR) Key Points Industry and Operational Performance - **Current Operations**: The railroad is performing well with operating metrics at record levels for the first quarter, despite typical winter challenges [6][8] - **Volume Trends**: RTM (Revenue Ton Miles) is expected to show low single-digit positive growth for the quarter, driven by a record grain harvest of 85 million metric tons, which is 20% more than last year [8][9] - **Automotive Sector**: CPKC has outpaced the industry in automotive despite a down market, expecting continued growth in 2026 [11] - **Intermodal and International Growth**: The company is well-positioned in international intermodal and has seen positive developments with partners like Hapag-Lloyd [10] Financial Performance and Growth Projections - **Earnings Growth**: CPKC anticipates double-digit earnings growth driven by single-digit RTM growth, even with macroeconomic challenges [13][14] - **Pricing Strategy**: The company has been able to maintain pricing above 4% due to the value proposition of its network, which is expected to become even more compelling as truck rates rise [23][24] - **Free Cash Flow**: CPKC is shifting capital priorities towards rolling stock, with a sustainable CapEx target of CAD 2.6 billion to CAD 2.7 billion, supporting a strong free cash flow conversion story [50][51] M&A and Regulatory Environment - **Merger Discussions**: CPKC is preparing for a public debate regarding potential mergers, emphasizing its unique position and the complexities involved in large-scale integrations [60][62] - **Regulatory Challenges**: The company acknowledges the potential for regulatory hurdles in merger approvals, citing historical challenges faced by the industry [66][71] - **Concessions for Mergers**: CPKC is focused on ensuring competitive access in overlapping markets and protecting its competitive niche in key areas [80] Future Opportunities and Challenges - **Market Dynamics**: The company is optimistic about growth opportunities in the North American market, particularly in light of trade rebalancing and the need for supply chain diversification [38][39] - **Operational Complexity**: CPKC recognizes the operational challenges that come with mergers and the importance of careful integration to avoid disruptions [75][78] - **Capacity for Growth**: The company has built latent capacity into its network, positioning itself well for future volume increases as market conditions improve [27][28] Miscellaneous Insights - **Deregulation Impact**: CPKC has made progress in efficiency improvements through deregulation, although some opportunities are still pending [44][46] - **Innovative Solutions**: The company is exploring new products and services, such as the Southeast Mexico Express (SMX), to enhance its offerings and capture additional market share [24][25] This summary encapsulates the key insights from the conference call, highlighting CPKC's operational performance, financial outlook, regulatory environment, and future growth opportunities.