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The call emphasized strong operational execution, meaningful productivity gains and robust free cash flow, with record grain volumes and multiple operating metrics improving materially. Commercial teams converted ~$100M in incremental revenue and fast‑track initiatives are delivering early savings. However, management called out safety setbacks, elevated incident-related costs, short-term commodity and tariff headwinds, and fuel/FX volatility that compressed adjusted EPS and margins. On balance the positive operational and cash-generation developments outweighed the transitory challenges, though management remains appropriately cautious given macro and commodity uncertainties.
CN maintained its directional 2026 guidance of flattish volumes with earnings expected to grow slightly faster than volumes, and reiterated a focus on free cash flow and returning capital to shareholders while keeping pricing discipline; management updated key assumptions including WTI now assumed roughly $80–$110/bbl and FX at C$0.73/USD, an effective tax rate of 25–26%, and a target leverage of ~2.7x through 2026 before returning to ~2.5x in 2027. In Q1 they reported diluted EPS $1.87 (adjusted $1.80; $1.83 FX‑adjusted), generated ~ $900M of free cash flow (up ≈$275M or 44% YoY), repurchased 6M shares for $870M, saw revenues down 1% (up 2% FX‑adjusted; up 3% adjusted for FX, fuel surcharge and Canadian carbon tax), RTMs +3%, carloads +2%, converted about $100M of incremental revenue from the sales pipeline, and noted fuel and FX were a combined ~$0.07 drag in the quarter (fuel ≈$0.04 and ~80 bps OR headwind in Q1; if sustained could be >200 bps OR headwind in Q2 but a potential ~+$0.15 EPS tailwind in H2).
RTMs increased 3% year-over-year and carloads rose 2%; company set a new first-quarter record for grain movements with April tracking as another record month (7 of the last 8 months all-time records). Grain car cycle times improved 15% versus prior year.
Car velocity up 6%, train speed up 6%, dwell down 4%, local service commitment up 1%, trains ran 2% longer/heavier and GTMs moved 3% more, demonstrating materially improved network performance.
T&E productivity up 12%, T&E labor cost per GTM down 7%, locomotive productivity up 8%, locomotive availability at 91%, and locomotive fuel productivity improved 3% (best-ever Q1 fuel efficiency).
Generated approximately $900 million in free cash flow in Q1, about $275 million (44%) higher than last year; repurchased 6 million shares for $870 million across NCIB programs and increased leverage to ~2.7x, reflecting liberal share returns funded by FCF.
Commercial intensity yielded about $100 million of revenue conversions in Q1 from boots-on-the-ground pipeline, with wins across plastics, asphalt, fertilizers, aggregates, scrap steel, steel billets, plus international intermodal gains (Gemini Prince Rupert) and expanded NGL/export moves.
NGL RTMs rose 16% year-over-year, potash volumes exceeded expectations (aided by easier comps), and intermodal delivered a solid quarter driven by Prince Rupert and domestic service gains.
Cross-functional 'fast-track' terminal review is ~1/3 complete and has already captured $40 million of run-rate savings, aimed at improving terminal productivity and reducing dwell.
Reported diluted EPS $1.87 (up 1% YoY); adjusted diluted EPS $1.80 (down 3% YoY; $1.83 down 1% on exchange-adjusted basis). Management maintained directional guidance (flattish volumes; earnings slightly exceeding volumes) while tightening cost controls.
[Audio Gap] I'll be your operator today. [Operator Instructions] At this time, I would now like to turn the call over to Jamie Lockwood, CN's Vice President of Investor Relations and Special Projects. Ladies and gentlemen, Mr. Lockwood.
Thank you, Christa. [Foreign Language] Welcome, everyone. Thank you for joining us for CN's First Quarter Financial and Operating Results Conference Call. Joining us today on the call are Tracy Robinson, our President and CEO; Pat Whitehead, our Chief Operations Officer; Janet Drysdale, our Chief Commercial Officer; and Ghislain Houle, our Chief Financial Officer. You can turn to Page 2 of the presentation, which includes our forward-looking statements and non-GAAP definitions for your reference. These forward-looking statements reflect our current information and educated assumptions and include estimates, goals and expectations about the future. These involve risks and uncertainties, and actual results may differ from what we expect. As a reminder, forward-looking statements are not guarantees and factors such as economic conditions, competition, fuel prices and regulatory changes could impact actual outcomes.
It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, Tracy Robinson.
Thank you, Jamie. [Foreign Language] Thanks, everyone, for joining our call. I'm pleased to walk you through our first quarter results. This was a solid quarter where we delivered on plan. This is reflective of our continued focus on execution and performance across the entirety of our operations. We're doing exactly what we said...