Welcome to CN’s Fourth Quarter 2014 Financial Results Conference Call. I would now like to turn the meeting over to Janet Drysdale, Vice President, Investor Relations. Ladies and gentlemen, Ms. Drysdale.

Alright, thank you, Mark and good afternoon everyone. Thanks to all of you for joining us today. I would like to remind you of the comments that have already been made regarding forward-looking statements. With me today is Claude Mongeau, our President and Chief Executive Officer; Luc Jobin, our Executive Vice President and Chief Finance Officer; Jim Vena, our Executive Vice President and Chief Operating Officer; and J.J. Ruest, our Executive Vice President and Chief Marketing Officer. In order to be fair to all participants, I would ask you to please limit your questions to one. It is now my pleasure to turn the call over to CN’s President and Chief Executive Officer, Mr. Claude Mongeau.

Thank you, Janet and thanks to all of you for joining us on this call. I think it’s fair to say we had a great quarter to finish another banner year. During the fourth quarter, we delivered a $1.03 of EPS, that’s up a full 36% over last year. Now, we did have some help from a number of factors that are outside of our control. Luc will help you unpack them, but clearly FX was a tailwind. The lower WTI is helping also the positive lag and our stock-based compensation was helpful in the quarter, but even without that, the results that we delivered were absolutely solid overall. Jim clearly took advantage with his team of the great weather during December. They drove volume at extremely good operating metrics and low incremental costs. I am pleased to report a 60.7% operating ratio to finish the year. J.J. will explain this in more detail, but we clearly outpaced the economy. We continue to do so, solid growth across the Board, particularly proud of our grain performance in the fourth quarter and throughout the whole year. As you know, it was a difficult year with a 100-year crop and a very brutal winter last year, but we finished the year with a record movement of grain more so than we have ever moved in our history by a large margin close to 13%, 14% record in our grain movement. At the end of the year, we only had 1,500 outstanding orders on our waitlist and we are totally in sync with the other participants in the grain supply chain. So, solid performance overall, a banner year and a lot of momentum coming into 2015 and that confidence in our prospect is what gave confidence to our Board to accept our recommendation to increase the dividend by 25% and Luc will explain to you also increase our policy for distribution on a go forward basis. So that’s the highlights, I will turn it over to the team and wrap up at the end. Jim?

Great. Thank you very much Claude. So our agenda has not changed in order to grow faster than the economy, allow our customers to win in their markets we need to continue to build on our foundation of operational excellence and deliver excellent service. Both goals are only achieved if you operate a safe railroad. We are still in the cycle of hiring for attrition and growth and we continue to leverage our two new state-of-the-art training facilities to deliver the latest curriculum and embed our culture on safety operational and service excellence. Productivity improvements are key and we found improvements by driving decision making down to the frontline and to the correct level. We continue to rollout innovative and updated customer initiatives which provide our customers with better notice, better visibility and using iAdvise for example, notification of our service and recovery if required. Nothing changes moving forward. We will continue to mange our business on an end to end approach with an end to end supply chain view from one end to the other. In 2014, we invested $2.3 billion of capital on safety, growth, capacity, productivity and infrastructure. We brought on 60 new locomotives and expect 90 more in 2015. We invested in rail equipment and invested in our plant to allow for both capacity on our main-line corridors and within our yards. Given all that, now why don’t we turn to the metrics to see how we did against our agenda and if you take a look on the next page on the operating highlights in the fourth quarter. As a base if we start with the carloads being up 11% year-over-year, our RTMs up 9% and GTMs which I will also look at for the amount of workload we have was up 12%. So if…

Okay. Thank you, Jim. And for the next few minutes I will go through the fourth quarter revenue as I do usually and then I will conclude with our business outlook. Looking at the quarter the total revenue was $3.2 billion, a 17% increase over last year. And as Jim mentioned we led the industry in carload growth at 11%. The breakdown of the $460 million increase in revenue is as follows. Volume, price and negative mix together produced about 12.5% or $240 million. The strong U.S. dollar did add near to 6% or $150 million and the impact from fuel on our revenue, was negative this time by roughly $30 million or minus 1%. On the same store price measure the price was up 4% sequentially from the prior quarter and our best quarter for the year. For the full year of 2014, we had – we did 3.2% on same store price. So, all-in, solid top line growth and the good pricing. Now, if we go through on some of the variance, I will was only cover the big variance. The big variance in order of absolute dollar ranking and I will do as usual on the FX adjusted basis. The first revenue driver was grain. Our grain business was up 14%. Breakdown is roughly our U.S. grain was up 19%, our Canadian regulated grain was up 9%, and our Canadian commercial grain business was up 15%. The official production tally of major crop harvesting in Western Canada for 2014 is now 61 million metric tons basically back to the 5-year’s average trend line. Second revenue driver for CN in the fourth quarter was our crude business, which was up over 40%. We move a total of 34,000 carloads in the quarter and approximately 128,000 carloads of crude…

Alright. Thanks very much J.J. Starting on Page 12 of the presentation and let me walk you through the key financial highlights of our fourth quarter and full year performance in 2014. Starting with the fourth quarter, revenues were up $462 million or 17% to reach $3.2 billion. Operating income was $1.260 billion, up $293 million or 30% versus last year. As Claude pointed out, our operating ratio in the quarter was 60.7% and this represents a 410 basis points improvement over last year. As we move strong volumes for our customers and in contrast to 2013, we did so at low incremental costs as we benefited from more favorable weather conditions specifically in December. Other income was $13 million, a $2 million – versus a $2 million expense last year as property sales helped to offset some of the real estate and other costs. Net income for the fourth quarter is $844 million, up 33%. And the diluted EPS reached the $1.03, up 36% versus last year. Foreign currency was favorable for $45 million on net income in the quarter. Turning to Page 13, operating expenses were up 10% just over $1.9 billion. Expressed on a constant currency basis this is up 5% or $91 million versus last year. At this point I will refer to the changes in constant currency. Labor and fringe benefit costs were $592 million, a 3% improvement over last year. This was the result of three elements. First, an increase in overall wage costs of 9%, partly the product of wage inflation of 3% and a 7% increase in average headcount versus last year. Now that gave us a 5% labor productivity, since as Jim pointed out we had the 12% GTM growth in the quarter. The second element is a lower stock-based compensation…

Thank you, Luc and Jim. So, clearly, strong fourth quarter results to close in on a banner year and we are maintaining that momentum on a go forward basis. Our agenda of supply chain enabling and operational and service excellence is resonating with our customers and it’s helping us deliver strong results for our shareholders. I am looking at the beginning of the year, it looks like we are having a much easier winter, the winter is not over, but a month of it is almost past. And so far in January, we are maintaining very solid metrics and very fluid service. In fact, the last five days in a row, we had more than 1.3 billion GTMs everyday in our rail network. The growth on a go-forward basis, there is uncertainty out there. You read the news flow, oil prices what’s happening in Europe, some of the uncertainties, job layoffs, particularly in Canada lately, it’s not like there is not uncertainty out there that we have to face up to, but we believe the environment is conducive to continue growth, particularly as we see the impact of lower oil prices on consumer income and the North American economy, the U.S. economy in general that we are leveraged to. The Canadian dollar, as J.J. mentioned, should help us and our Canadian customers who are exporting into the U.S. So, the message here is we have a diverse set of opportunity. Our energy markets are continuing to grow even though perhaps at a slightly lesser pace than the last few quarters, but clearly overall good scope for growth if the economy holds. The key to holding on that pattern of growth both the top line and the bottom line is to innovate and stay ahead of the curve. We are innovating doubling down on service and we are staying ahead of the curve in terms of how we resource our operations and how we invest back into our business. This is what we need to do to continue to help our customers win in their marketplace and deliver solid shareholder value for many, many years to come. With that, I will turn it over to the questions. Mark?

Thank you. We will now take questions from the telephone lines. [Operator Instructions] Our first question is from Brandon Oglenski from Barclays. Please go ahead.

Well, good afternoon everyone and congrats on the quarter.

Thank you, Brandon.

So, Claude I guess I am going to address the question that a lot of your investors are asking now, which pertains to that disclosure that J.J. talked about with frac sand and crude oil representing 200,000 plus carloads, but is there a way to quantify that the derivative impacts of energy markets in Canada and what gives you the confidence of that 75,000 carloads of growth this year. And what are you seeing for projects beyond ‘15 and into ’16 and ’17, is it still the key growth market that you have been talking about the last 2 years?

Let me give you the big picture and then J.J. can fill in with his perspective. There is a lot of investments that are being made by our customers in the energy markets, whether it’s new frac sand plant or whether it’s new infrastructure to allow to move crude and other petroleum products. We believe those investments are made for the long-term. And we believe our customers are producing with a run rate that is there for the long-term. So there will be uncertainties, the price is obviously a key factor. This is why we have reduced our expectation in terms of this market, but the investments are being put in place and the markets will need those services. And we think they will need them not only in 2015, but also for the long time, the general economy and obviously the capital expenditure, the deferral of some big projects that will reduce consumption of other types of products that we move aggregates, pipes, etcetera. And – but that’s part of the broader industrial base of commodities that we move and they are part and parcel of that 3% to 4% industrial production and carload growth that we are guiding to. J.J. you want to add to this?

Yes. And we – basically we are going to be harvesting the momentum of it, major infrastructure from 2014 which are carrying into 2015 major infrastructure in crude production, major infrastructure in crude by rail infrastructure as well. So last week, the CAPP, Canadian Association of Petroleum Producers, came out with their new forecasts of crude production in Canada and they see an increase of 150,000 barrels per day in 2015 versus 2014 meaning that there is this carry forward of major capital investment from the past year, the past 2 or 3 years that is still going to be carrying in 2015. Same thing in sand, on our track there has been major capital investment made on production side. I have mentioned those in my notes. And we also have major capital investment on the receiving side on loop track for us to be able to receive frac sand in Western Canada which will come into place sometime in the spring or during the summer. So these dollars are about to produce a return and it will be put in operation and that’s what will help us to see growth in carload in both frac sand and crude in 2015.

Brandon?

I appreciate the detail. Thank you.

Thank you. Our next question is from Cherilyn Radbourne from TD Securities. Please go ahead.

Thanks very much. Good afternoon. I wanted to ask you about the U.S. West Coast port congestion and how much do you think that benefited Canadian port volumes in 2014, but more importantly to what extent you think it’s been bad enough or long enough that it will help to support demand for further expansion at Prince Rupert?

Cherilyn, definitely last summer in our second quarter results we did see an increase in our volume to the U.S. Midwest from Canadian ports. There was this big rush coming at the end of June that came in that lasted with us in July and August. And then we saw that again ramping up in November and December. And we are still in that right now. The Canadian ports on the West Coast are very busy and CN is benefiting of that because of access to a number of destinations in the U.S. Midwest. So it is positive. And then in the case of Rupert, Rupert as we speak is fluid, it’s busy but it’s fluid. It could actually take more business. We are hoping for a non-slowdown during the Chinese New Year and after that I mean our self and Maher the terminal operator and owner are very committed to make Rupert as good as it can be in the current environment, where capacity is tight and the supply chain in the U.S. West Coast has had some challenge. So it’s an opportunity for us. And then you have the Canadian dollars, so now we can compete in U.S. Midwest even more so today at $0.85 than when we were at par.

Great, thank you. That’s my one.

Thank you, Cherilyn.

Thank you. Our next question is from Chris Wetherbee from Citi. Please go ahead.

Great, thanks. Good afternoon. One, I just had a question on capacity thinking about sort of the outlook for growth and really the tremendous growth you have been able to manage fairly effectively from a service standpoint over the course of 2014 and even 2013, just kind of curious how you think about capacity? Are you getting close to the point where maybe the incremental costs get higher or do you feel like you really can manage particularly as you are forecasting a bit of a step down here into that 3% to 4% range that maybe broadly speaking some color on capacity would be helpful? Thank you.

Yes, I give you again the big picture and then Jim will give you a perspective there. I am very pleased we had a brutal winter last year. It’s – we call it a winter of a lifetime. And obviously, it impacted us, but in actual fact despite being the most exposed railroads, we ended up performing I would argue the best in terms of maintaining our train velocity and maintaining our yard fluidity. We recovered extremely fast right after the winter. We have recovered in April very, very quickly and have been able to maintain very solid metrics throughout the year. What that tells me because we saw our GTMs go very strong in the second quarter and we are seeing them right now continuing at very strong levels. What that tells me is we have much latent capacity and we are continuing to invest ahead of the curve to maintain the latent capacity that’s required. So, I think we have proved to ourselves that when the weather is collaborating the – within normal band of cold temperatures, we have all the capacity we need to grow the business and stay ahead of the curve, but Jim, why don’t you take it from your perspective?

Listen, Claude, the only thing I can add is this capacity, Chris, comes from people, from locomotives and how you handle the equipment through the yards how efficient you are. And then on the road, yes, you always have some pinch points if you are working against your plan for long-term, not short-term. You react and we try to react just before we get there, so we have a chance and I think we have shown the last couple of years if we react fast enough on the capacity, on those pinch points, it opens up more capacity in the other places, because you are more fluid. So, at the end of the day, same structure, I am not worried about the investments that we are making and the capacity that we have for what J.J. is planning to bring on this year and next year. So, I am real comfortable. And then if you take a look at Chicago, I think it’s a good example of what we have done over the long-term. Chicago now is fluid. We are working through January and December. We have used Kirk Yard as a benefit to help out if we have to in other places. So, Chicago was a great investment. It gives us competitive advantage. My feeling is over the long-term and we are very fluid we are operating through there, Chris.

That’s great color. Thanks for the time guys. I appreciate it.

Thank you.

Thank you. Our next question is from Walter Spracklin from RBC. Please go ahead.

Well, thanks very much. Good afternoon, everyone. I just want to come back to pricing and just before I ask my question, J.J., did you mention that it was 4% in the quarter sequentially or year-over-year on pricing just to clarify?

Same-store price in the fourth quarter was 4%, which was sequentially up from prior quarter and for the year we were at 3.2%.

And just year-over-year in the fourth quarter, do you have that number?

Yes, the fourth quarter was 4% year-over-year.

Year-over-year, okay. And so when I look at pricing for 2015, I know you said 3% to 4% which is quite a wide range, but you are 20% above your pre-recession peak. So, clearly your product is very scarce. We know regulated grain is going to be up above 4% this year and from what we are hearing crude carloads are starting to price upwards. So, when I build all that in, are we not pointing more toward the high end of that 3% to 4% or perhaps through 4% if we factor in all those moving parts?

It’s 3% to 4%. It’s a marathon. We are going to be doing this for long time. And we don’t want to be – being passed maybe by somebody else for a quarter is one thing and we are in this for the long run. Just coming back to the comment on the grains, the Canadian cap, it will most likely be negative commodities and it could be a few percent negative. So, I mean, that will be a headwind for whatever that is for the second half, but we are setting a pace and we want to keep with that pace.

I think, Walter you would be better to go and start from the 3.2% for the full year and inch up that would give you a better base to work on. And we manage our book of business with a view for the long-term. As far as strategy it’s worked for us through that 10 to 15 years and we are sticking to it.

And that doesn’t include foreign exchange though, right, the 4% that’s?

That’s the beauty what J.J. tells you, it’s fuel price, same store, the same way every quarter. It does not include anything but fuel price.

We take out fuel, we take out exchange and we look at the 70%, 75% of the book of business which is same store.

Perfect. Okay. Thank you very much.

Thank you. Our next question is from Tom Wadewitz from UBS. Please go ahead.

Yes. Good afternoon, I wanted to ask you a question about currency and how you think the weaker Canadian dollar might benefit what parts of the book. So I guess if you think of it normally I think what Eastern Canada is more manufacturing and maybe more chance to benefit, but could you breakdown maybe what percent of your book is origination and what percent of that origination is in the East, the U.S. and the West, just put in those three buckets. And is it fair to think that a certain region would really be the primary area you benefit from weaker Canadian dollar?

Tom, welcome back Tom. And you have kept your strategy of using that one question very effectively.

Thank you.

Let me answer that question broadly. We originate 85% of our traffic locally on CN. We have 50% of our business which is either in the U.S. or trans-border into the U.S. and out of the U.S. to Canada. I mean it’s a range of commodity. J.J. mentioned lumber, for instance forest product, all the manufacturing base, we see not so much origination, we see the U.S. economy with more discretionary income because of lower fuel prices and already good momentum because of employment trends we see the U.S. economy being a bright light. We see the Canadian economy benefiting for that. And so we are constructive about intermodal and carload in general. It’s not geographically based, it’s not one commodity, it’s the whole book of business in that end markets that we see benefiting into next year. As we discussed we see very strong growth potential albeit at a smaller – at a slower pace in energy markets as well. The only market where we face meaningful headwinds and J.J. gave you the contour of that is really our coal and more generally bulk franchise with Canadian and U.S. grain returning to more normal crops into 2015.

That’s all very helpful, but I guess I am just – is there a frame for currency that you would say maybe it’s not the geographic, maybe it’s not East but are there particular businesses where there would there would be more benefit just so we can kind of think about that currency impact a bit, it’s just been a while since the Canadian dollar has been as weak as it is right now?

Definitely, if you look at what’s produced in Canada and where most of the costs is Canada, so its forest product if you are making a forest product, a lumber you chop the tree here, you trim it, you ship it out, most of your cost is in Canadian funds. So lumber from BC, lumber from Quebec, paper from these pulp will typically not go in the U.S., it will go offshore. Ontario will benefit because that’s typically where the manufacturing base is, so it’s a little more an Eastern story, less of an Alberta story right now because Alberta does not really produce manufacturing product, it produces energy. And for those of you who hopefully are going to buying a house or expanding your house in the U.S. and filling it with furniture these will come from Asia and that’s where Rupert, Vancouver, they come in basically competing for products from Asia, going to the U.S. Midwest.

Thank you, Tom.

Thanks for the time.

Thank you. Our next question is from Fadi Chamoun from BMO Capital Markets. Please go ahead.

Yes. Hi, I want to circle back on the energy question a little bit. So I mean it seems like there is probably strong case that if crude prices stay at these sort of depressed levels for a while, we could see some of that conventional heavy crude production in Canada sort of being cut, so within this free-up some pipeline capacity and potentially create a more competitive environment for this crude by rail business. And are you thinking that the barriers to switching are too high for that to happen? I am just curious if you have any thoughts on that?

I would say that the pipelines that exist today are not meeting the demand. And the demand that we are serving often goes to places where there are no pipelines at all. I think you have to trust these large integrated companies, which are increasingly the large bulk of our customer base to know what they are doing when they are building a supply chain. They are investing in some cases close to $1 billion to create a supply chain that gives them resiliency, redundancy and a competitive product to get to markets. Now, it’s a tough market out there and it’s a little more difficult to predict, but we believe our energy markets are going to be growing and they were going to be growing for the next several years. There is no certainty out there, but that’s our constructive view of the future.

Okay. Is there a percentage of what you are doing right now tied up with take-or-pay in the crude by rail?

What we really do is we don’t invest much capital if any on really our capital rolling stock that we can use for anything else, same thing as a mainline network. So, we are competing with existing infrastructure. If the pipeline exists today, obviously, it’s an option. If the pipeline doesn’t exist today and rail is a better option, rail is a better option and what are you looking at doing new major capital investment in crude by rail or new, new capital investment in pipeline in today’s market, you are probably going to be thinking about it twice, because your cash flow from crude is not what it is today versus what it was 18 months ago. So, anybody is looking for building new major infrastructure, what’s a pipeline or a new $50 million crude terminal. You’ve got to get the backing for that and those decisions today are not as obvious as they were 8 or 6 months ago. But what is they are today almost completed, that’s coming on stream, that’s real, that’s money in the ground. People will want to use that as much as they can.

Okay, thank you and congratulations on the good results as well.

Thank you, Fadi.

Thank you. Our next question is from Ken Hoexter from Merrill Lynch. Please go ahead.

Hey, great. Good afternoon. I echo that congrats on some impressive performance. Claude, maybe some thoughts on your major contract wins over the last year, year and a half from your peer when they were maybe struggling in their terms. And your thoughts on ability, keep some of that versus do you think about losing some of that back as they improve their performance? And how does that contrast with I guess the pricing thought when I look at metals and grain yields both very robust? Were there any numbers shifted in that or is that a mix or is that just that the market itself getting at pricing?

I think you have to be very careful looking at the revenue per cars or you got exchange, you got fuel surcharge, you got mix, you got all sorts of other elements. When J.J. said to you, 3.3%, 3.2% same-store price across our book of business last year, if there – it could be a little bit up from that, it can be a little down, but it’s a good indication of the pricing that we are getting across our entire book of business and it doesn’t vary from simple to double its variations around that mean is how we go to the marketplace. On your market overview, if we – I mean, we have an agenda that we are basically unfolding for the last 5 years, it’s about helping our customers win in the marketplace. It’s about serving them to help them save costs and it’s about providing to them innovation, innovation in the form of supply chain redundancy, end-to-end visibility and that’s our agenda. It’s working, it’s resonating we are winning market share against all modes, whether it’s pipelines, trucks or even shipping in some few instances. Obviously, a little bit about against other railroads, all railroads not just our principal competitor. We are trying to innovate. We are trying to outpace the economy. And we think that’s going to continue to be the case for the next few years. You win some contracts, you lose some contracts, but if your agenda is working quarter-after-quarter and sustainable growth comes with it, I think we have enough of a track record to anchor our positive prospect and confidence that we will continue to be able outpace next year and into the future.

Just from that revenue per carload is not a measure of yield. Revenue per carload is a measure of revenue per carload, it’s all it is. You got exchange, you got mix, you got fuel surcharge, you got everything that basically is equal noise. What really is a measure of yield is revenue to cost ratio, contribution per car, round trip RCR.

Wonderful, I appreciate the time. Thanks.

Thank you, Ken.

Thank you. Our next question is from Benoit Poirier from Desjardins Capital Markets. Please go ahead.

Yes. Thank you very much and congratulations for the very good quarter. Just to come back on free cash flow, so $2.2 billion in 2014 so obviously a very strong performance. I was wondering if you could provide more color for the expectation for 2015, but also discuss about the further cash deployment opportunities in the long-term aside the CapEx increase and dividend increase? Thanks.

Yes, Benoit this is Luc. Let me comment on that. So as it relates to 2015, we are not as such providing specific guidance on free cash flow. But what we are – what we have put out there is certainly first and foremost an indication that we were increasing our investments in capital expenditures up to $2.6 billion. I think we feel pretty good about the outlook generally and as you can see from the guidance we provided. So we think that we will continue to generate some strong free cash. And we are maintaining the discipline in terms of reinvesting in the business, that’s job one. Our balance sheet indeed is pretty good, is very strong balance sheet. And we are using that opportunity to return more and more to the shareholders. This year that was $1.5 billion in stock buyback and $800 million plus of dividends. So the dividend increase and we are currently working on a $1.7 billion stock buyback. It all bodes pretty well for our shareholders. So, we are maintaining the discipline and we are not the types to take a drastic view, but progressively as we generate good cash and as we see good prospects for continued sustainable growth in the future, we do feel that it’s important to continue to reward our shareholders. So the 35% target payout ratio is one critical example of that. So over the next few years we will make our way there. And I mean we – the program that we have currently calls for potentially up to 28 million shares to be bought back. Should there be a significant discontinuity in the marketplace that provides an opportunity, sure, I mean we would look at some of these things. But by and large we are pretty disciplined and we would like to look at this as a longer term proposition. So we feel good about being able to support the business and at the same time provide superior return to shareholders.

Okay, very good color Luc. Thanks for the time.

You’re welcome Benoit.

Thank you, Benoit.

Thank you. Your next question is from David Vernon from Bernstein. Please go ahead.

Hi. Thanks for taking the question guys. Could you talk a little bit about the $2.6 billion, the extra spend that we are getting in this coming year, how much of that is going for kind of additional power to either rebuild or stay ahead of volume growth and how much of that is going actually to expansion of the physical plant in the network itself?

Yes. The way we have got it lined up currently is about $1.3 billion is going into what I guess we referred to as the track infrastructure, maintenance of our network to keep it safe, productive and fluid. So that’s about $1.3 billion. As far as equipment is concerned we have got about $500 million allocation and that entails among other things securing 90 brand-new spanking locomotives for Jim and the team to have the proper level of assets to deliver to our customers and keep things moving. And the balance is really a split between opportunities we see for investing in growth and productivity across our business. In some cases, it’s in the form of improvements in yards, different types of things as well as also we have been undergoing certain special projects. The Stinson Hill is one example where we see the opportunity to deal with pinch points, invest a little bit more and give us that additional capacity that Jim was referring to. And it is working beautifully, because if you look at the investments we have made over the last couple of years, we have really stepped it up, but we can see the kind of numbers, the productivity numbers we are pulling together in decent weather are just, I mean, record-breaking all the time. And we are accommodating a lot of that incremental business at low cost. So, we feel pretty good about the CapEx program and I guess that’s where we are.

I would add basically – we are basically done in Chicago proper. We may have one more connection I think Jim to do, but after several years of investment we have built our infrastructure for our Chicago advantage. The focus in terms of capacity, resiliency, productivity where the lion’s share of our business is, is Chicago North and Western Canada to Chicago, that corridor between Edmonton and Chicago. We are also looking at our branch line network. We are seeing a lot of growth in frac sands, a lot of growth in the energy-related product, a lot of growth on a go-forward basis from the resource sector. And we want to make sure that we have a branch line network that supports that growth. So, first call on cash capital investment back in our business and the rest consistent marathon runner type distribution of our excess cash to our shareholders is the name of the game.

Alright. I appreciate the time guys. Thanks.

Thank you.

Thank you. The next question is from Scott Group from Wolfe Research. Please go ahead.

Hey, thanks. Good afternoon. So, I wanted to ask about intermodal and I am curious if you think the changes in the dollar could incent some shippers to start increasingly using Canadian ports instead of U.S. ports, wondering if you think that has an impact? And then on the domestic outlook, what’s changing to go from flat volumes to growth this year? Is there – are you seeing anything changing in the competitive environment with CP or is that more just a view of the market share gains from trucker going to accelerate?

Thank you, Scott. I will start with the first one. Our rate for United States from the Canadian port when you come from a notion container in U.S. funds, so the impact with the Canadian dollar in that case is more about what we can do in terms of some of the new business that we don’t have that we can maybe attract at today’s exchange and the same thing for the terminal operator of the port whose cost is also in Canadian funds. So, it’s more about the things that in the past may not have been possible that today would be possible. On the – my comment regarding you think you were referring to my comment regarding domestic intermodal, I think as you see and as I said our domestic intermodal has been a little more flat and now we are going to start to lapse some of these flat comparable from last year. And over time sometime in the spring or the summer or the fall, we think we will start to pickup a better pace than what we had seen in the third and fourth quarter.

Some of the areas where we are innovating and adding new solutions to the marketplace, for instance is northbound domestic movement using our inbound containers from shipping lines. We have opportunity to use those same containers in our domestic repositioning programs for export that counts. It’s kind of a double win. It helps our shipping line customers reduce their costs, but it helps us grow domestic northbound traffic. Our partnership with wholesale players in the U.S. are exciting and once you get momentum with these largest players and they like what you do from a service standpoint, we have a lot of cross-border opportunity and we have a lot of overall truck markets continued innovation, stay with our customers across our entire book of business in domestic. So, we see reasons like economy-like growth in that segment on a go forward basis.

Okay, thank you guys.

Thank you.

Thank you. The next question is from Turan Quettawala from Scotia Bank. Please go ahead.

Yes, good afternoon. I guess my question is on the expense side. Luc, you did mention that there was about a $200 million headwind here from pension as well as from fuel surcharges I guess. My question is can you talk a little bit about maybe some tailwinds that you might have in the year here? I know the weather has been a little bit more normal here I guess this year. I think that was if I remember correctly about a $15 million expense item in Q1 of last year. So, if you could just talk a little bit about some tailwinds there on the expense side? That would be helpful.

Yes. Turan, I think there were going to be a couple of things. The issue is we are going to be – the timing of some of these things, for example, I mean, I talked about the headwind overall potentially for the fuel issue as being $100 million, but when you look at the first quarter as an example, I mean, this is going to be lumpy. So, it’s going to come in as actually a tailwind in the first quarter and soon to turn as the year unfolds. So, that’s one clearly – yes, I mean, I do expect our costs through the first quarter to be significantly better than last year. And again, well, I think we will be able to show that in terms of the cost structure, in terms of the business if we can accommodate and the overall cost.

Productivity, fuel efficiency.

Fuel efficiency clearly continues to be a good solid point. I mean, we are looking at somewhere between 1% and 1.5% of fuel productivity. We will look to continue with overall absorption of the traffic as much as we can in terms of the yards and in terms of the overall business. So, I think it’s – there is no single major area, but I think in many places, we are leaving no stones unturned and we are looking at what can we do better and how can we give ourselves a little bit more margin. So, I think it’s an ongoing challenge and I think it’s actually more a fundamental way we look at the whole business as opposed to one particular windfall.

Great, thank you. I guess I was just referring more to the one-time from last year. So, apart from that weather impact, I guess that was a big one for the most part?

Yes, that would be. And then the rest is all folds in. There is question that with lower fuel prices, the ability to have reported better margins is working with us. So, we are not – it’s about operational and service excellence and we can chew gum and then walk at the same time. You keep track. We will deliver solid results on both sides.

Great, thank you very much and solid results in 2014 as well.

Thank you.

Thank you. Our last question today will be from Bill Greene from Morgan Stanley. Please go ahead.

Hi, good afternoon. Thanks for taking the question. Claude, last year we had some surprises in Canada out of the government and I am curious if you can talk a little bit about how some of the changes in reciprocal switching have affected the business. But as important, do you see anything on the horizon for ‘15 that we need to keep an eye on whether it’s the transportation review or whatnot just things that we need to keep in mind from a government perspective because what happened last year was a bit of a surprise?

Yes. Like a winter of a lifetime and a 100-year crop in the same year is the recipe for little bit of emotion and coming from the grain sector, unfortunately last year, the government felt like they have to act to protect the interest of Canadian farmers that when you step back at the end of the year, we moved a record amount of grains in Canada. We moved as I said earlier 13% more than at any other time in the history of Canada. We finished the year with effectively an average carryout. So, a 100-year crop, a brutal winter and we finished the year with a normal carryout, I mean, it doesn’t happen without solid service and solid throughput. You got to give credit to Jim and his team. They delivered a bang up job last year despite some of the noise in the advocacy. In this quarter – I am sorry in this new crop year, crop debate from August to now, we are up 16% on last year’s record. We had a strong start throughout. We are moving good through in the month of December and even last week, we did almost 5,000 car spot in Western Canada for the benefit of grain farmers. I mean, we have moved more grain than ever. We have done that with the solid service. We are in sync with the supply chain capacity. I think policymakers are looking backwards and they are realizing now that we did a great job and that the market, the commercial framework works. It’s our challenge now to take that evidence and convince them to reflect with that as opposed to emotion and that’s our opportunity. We think the review panel is led by a very wise man that will look at the facts, will have the right balance and perspective. And I am hopeful he will give good advice to the government when he submits his report. In my view there is nothing like a commercial system and there is nothing like supply chain collaboration to deliver solid results for the benefits of Canadian farmers. It’s a tried-and-true approach and it works.

Okay. Thanks for the time.

Thank you, Bill. And thank you to all for joining us. We are again benefiting from the good trends. We are committed to deliver a solid year. The first quarter should be a good one, because things are lining up good on a year-over-year basis. But we are not running this business for quarters, we are running this business as a marathon for the long-term and we are investing for the future with strong confidence in our ability to continue to deliver value to our customers and our shareholders for many years to come. Thank you and have a safe day.