Canadian Pacific Kansas City Ltd. (CP) Q1 2012 Earnings Report, Transcript and Summary

Janet Weiss - Assistant Vice-President of Investor Relations Frederic J. Green - Chief Executive Officer, President, Director and Member of Safety, Operations & Environment Committee J. Michael Franczak - Chief Operations Officer and Executive Vice President of Operations Jane A. O’Hagan - Executive Vice President and Chief Marketing Officer Kathryn B. McQuade - Chief Financial Officer and Executive Vice President

Walter Spracklin - RBC Capital Markets, LLC, Research Division Cherilyn Radbourne - TD Securities Equity Research Michael Weinz - JP Morgan Chase & Co, Research Division Ken Hoexter - BofA Merrill Lynch, Research Division Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division Scott H. Group - Wolfe Trahan & Co. Christian Wetherbee - Citigroup Inc, Research Division David Tyerman - Canaccord Genuity, Research Division Brandon R. Oglenski - Barclays Capital, Research Division Benoit Poirier - Desjardins Securities Inc., Research Division Allison Landry - Crédit Suisse AG, Research Division Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division

Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to Canadian Pacific's First Quarter 2012 Conference Call. [Operator Instructions] Thank you. Ms. Weiss, you may begin your conference.

Thank you, Melissa. Good morning, and thanks for joining us. The presenters today will be Fred Green, our President and CEO; Mike Franczak, our EVP and Chief Operations Officer; Jane O'Hagan, EVP and Chief Marketing Officer; Kathryn McQuade, our EVP and Chief Financial Officer. Also joining us on the call today is Brian Grassby, our Senior VP, Finance and Controller. The slides accompanying today's teleconference are available on our website. Before we get started, let me remind you that this presentation contains forward-looking information. Actual results may differ materially. The risk, uncertainties and other factors that could influence actual results are described on Slide 2 and 3 in the press release and in the MD&A filed with Canadian and U.S. securities regulators. Please read carefully as these assumptions could change throughout the year. All dollars quoted in the presentation are Canadian unless otherwise stated. This presentation also contains non-GAAP measures. Please read Slide 4. Finally, when we do go to Q&A, I'd like to remind you that the primary purpose of today's call is to discuss our financial results, market performance trends and progress towards our multiyear goals and not Pershing Square or proxy-related issues. [Operator Instructions] In fairness to all participants, I'd again tell you that we're going to be running about 1 hour, 1.25 hours so be thoughtful, and we'll answer as many questions as we can in the time provided, and we'll circle back with any unanswered questions after the call. Here then is our President and CEO, Fred Green.

Good morning, everyone. This morning, Canadian Pacific reported a strong start to 2012, with EPS of $0.82 and an operating ratio of 80.1%. This represents an operating ratio improvement of 1,050 basis points over last year and an improvement of 220 basis points over Q1 of 2010. We're executing on our plans and delivering record operating metrics. Importantly, the records we're setting are not just for the first quarter. We're setting all-time operating records for any quarter, evidence that these are sustained improvements, not just easy comparisons. The programs we have underway are resulting in new, unparalleled level of performance. We have clear accountabilities to ensure the consistent execution of the integrated operating plan, we're realizing real market growth, we're delivering on our pricing targets and we're providing a superior service to our customers. These results are being produced by the right team, executing safely and responsibly on the right plan. Our Multi-Year Plan is delivering sustainable improvements that can be directly linked to the improved financial results. Now let me discuss some of the highlights for CP's first quarter. Our velocity was a record 208.4 miles per car day, a 51% improvement over Q1 2011 and a 40% improvement over Q1 2010. This is the first time in CP's history that we've reported a velocity figure in excess of 200 car miles per day. This places us in line with the industry leader, and we're seeing this trend continue in April. In fact, the 7-day average this morning is 215 car miles per day. We reported a Q1 record in terminal dwell of 17.3 hours, beating our previous Q1 record by 19%. It's a step function improvement off our record best and reflects the fundamental changes we've made. We've also set new Q1 performance records in active cars online and network speed. We did this while running a very safe railroad, setting a new Q1 personal safety record. The specific plans driving these improvements were set in motion back in 2010, and with the continued execution of our Multi-Year Plan, there's still much more to come. The foundations for sustained performance are in place. The team is focused on running an efficient railroad, and our shareholders and customers are the key beneficiaries. On the market side, we're winning in major growth markets, most notably energy. During the quarter, we announced significant agreements with U.S. Development for a major crude-by-rail transload facility and Unimin for a major new frac sand production facility. These 2 announcements, coupled with several other new market developments, will take us more than halfway to our 5-year goal of an incremental $400 million per year in energy-related growth. Another example of how we're delivering on the detailed plan we set out in 2010 is coal. Through our investment in long sightings, by Q4 of this year, we plan to move up to 80% of Teck's volumes in long trains versus roughly 5% just 1 year ago. You'll recall that the long trains provide 18% efficiency, and the benefits accrue to the CP shareholders. So our confidence in top line growth is well-founded, and we are profitably growing the business. Finally, our financial results. As I noted earlier, we're beginning to see our operational improvements translate into improved financial results. Our results are more than favorable weather conditions. Our strong Q1 was anchored on fundamental improvements in our operations, fuel efficiency, employee productivity, equipment rents and purchase services, all moved in the right direction. We are accountable, and we are executing on our Multi-Year Plan, creating value for our shareholders. Kathryn will get into further detail shortly. I'm now going to turn it over to Mike, Jane and Kathryn, who will provide additional color on our successful first quarter. Mike, over to you.

Thanks, Fred, and good morning, everyone. Operationally, our first quarter was solid. We hit a number of new operational records, continuing the successive month-over-month improvement trend we began in mid-2011. This is a different railroad. We have a capable, experienced team driving results through the disciplined execution of our multiyear programs and the Integrated Operating Plan. Our results this quarter show that the needle is moving, and I expect further improvement as we build off the momentum we've created and deliver the next phase of our multiyear programs. Let's turn to the next slide. While we did experience a generally milder winter than last year, the improvements we are delivering are a result of fundamental changes in our operation. First, we have a solid Integrated Operating Plan, which is delivering results by a team that is fully aligned around and focused on its execution. Second, the multiyear programs we spoke to at our Investor Days in 2010 and 2011, which enhanced the IOP, are kicking in and driving results. Third, our new streamlined operations organization put in place in late 2010 is now battle-hardened and delivering results. Finally, our approach to targets, accountabilities and continuous improvement has changed. As I've said many times, targets are fleeting, and paradigms are meant to be broken. I'm pushing the team harder than ever, not only to sustain, but drive further improvements in our operations as targets are met. Next slide. Our results engine is the Integrated Operating Plan. We've had an IOP for many years. It drives all of the activities on the railroad. We continue to enhance and upgrade it with our multiyear programs and are executing it more successfully than ever before. As I've noted, everyone is focused on the disciplined execution of the IOP and supporting multiyear programs to deliver results. With that, let's begin reviewing Q1 with safety on Slide 14. During the quarter, personal safety improved 30%, setting, by far, a new Q1 record. In addition, our industry-leading train operation safety performance also improved by 30%. Safety is good business and a core belief. It enables good service, drives efficiencies, protects our people, the environment and the communities we operate through. Service, safety, productivity and efficiency are mutually inclusive. We intend to remain a leader in this area. Turn to Slide 15, please. Our long train strategy is paying dividends. Train weight set a new full year record in 2011, with the greatest gains seen in our bulk trains where we increased weights by 1%. While lengths and weights were down slightly in Q1, we are well positioned to resume last year's momentum, improving train weights by 1% to 2% for the year as increasing Intermodal demand is handled on existing trains and potash volumes increase, bringing a higher number of heavier bulk trains to the network. Let's turn to Slide 16. We saw an 11% improvement in locomotive productivity during the quarter. In Q1, we transitioned 30 new locomotives into the fleet and parked and off-leased 45 older, less efficient and higher-cost locomotives, effectively allowing us to move 11% more gross ton miles with 3% fewer active locomotives. This improved fleet mix, combined with the noted increases in potash and Intermodal traffic, will position us to beat record locomotive productivity levels in the coming months. Despite the impact of repatriating 70 employees from our Ogden locomotive maintenance facility and the onboarding of Running Trades employees for growth, winter and expected attrition, employee productivity improved 5%. This ties our Q1 record achieved in 2010. For 2012, we're expecting to realize a year-over-year improvement of 2% to 3%. Please turn to Slide 17. We've had continuous momentum coming out of mid-2011 and are now realizing record performance on most of our key efficiency metrics while moving significantly higher volumes. Train speed improved 27% year-over-year and 10% compared to 2010 through disciplined execution of our IOP and the benefits of our ongoing capacity investments. Going forward, we're targeting a 20% improvement for 2012. Terminal dwell improved by 27% year-over-year and 28% versus 2010. Implementation of the next phase of our First Mile-Last Mile program and our aggressive storage in off-leasing of surplus railcars will help drive further improvement over the next 3 quarters. Also, with the removal of nearly 20,000 active cars and an 11% increase in workload, car miles per car day hit 208.4, an improvement of 51% relative to 2011 and 40% relative to 2010. This remains a key measure of asset utilization, and I expect to break this record in Q2. Finally, fuel performance tied our previous Q1 record of 2010. Despite the headwinds created by traffic mix and the transitioning of the old and new fleets, our strong performance was achieved due to the disciplined execution of our IOP, resulting in velocity improvements, and our multiyear fuel efficiency programs. This result provides clear evidence that our strategy is delivering results. Fuel efficiency remains a priority, and I expect further improvements in the range of 3% to 4% for the year as we execute our plans. Moving on to Slide 18. Our strong performance trends continue into the second quarter as we sustain and improve on our Q1 numbers and further extend the improvement trend that began in mid-2011. For example, April to date performance, as shown in the shaded areas, indicates that train speed improved by 32%, active cars online improved by 31%, terminal dwell improved by 25% and weekly car velocity by 52%. These results are sustained, and I am expecting further improvement. Please turn to Slide 19. To sum up, operationally, our first quarter was solid. We hit a number of new operational records, continuing the success of month-over-month improvement trend we began in mid-2011. This is a different railroad. We have a capable, experienced team driving results through the disciplined execution of our multiyear programs and the IOP. Our results this quarter show that the needle is moving, and I expect further improvement as we build off the momentum we've created and deliver the next phase of our multiyear programs. Thank you, and Jane, over to you to cover off the markets. Jane A. O’Hagan: Thank you, Mike, and good morning, everyone. As evidenced by our Q1 results, our Multi-Year Plan is on track, and we are delivering growth now in 2012. Our outstanding results this quarter are supported by the work Mike and his team are doing to provide a first-class service to our customers. We have received strong customer support for our progress, and we expect further growth as we continue to deliver strong carloads and service executions. Our excellent service offering and diversified mix of business will continue to deliver growth and create value for shareholders. Our scheduled grain product has led CP moving record carloads of Canadian grain crop year to date. We accelerated our long train strategy in coal, and we'll be close to having up to 80% of the fleet at our target length of 152 cars by the end of the year. Intermodal volumes are growing as we demonstrate consistent and reliable service. Merchandise delivered double-digit revenue growth for the third consecutive quarter. This is a record sustained rate of growth for merchandise, and there's more to come. Now I'll move to the Q1 highlights, followed by a review of our markets and expectations for 2012. I'll start on Slide 22 with an overview of revenue performance in Q1. Our Q1 revenues were up 18%. Revenue ton miles were up 11%, and carloads grew 8%. There was a minimal FX impact of 1% in the quarter. Breaking down the revenues a bit further, on a currency adjusted basis, revenues grew 17%. Almost 4% of that gain was a result of fuel surcharge, 8% was volume growth with positive price and mix having just over 5% impact. Renewals are again in the 3% to 4% range, tracking in line with our previously stated targets. We plan to deliver inflation plus pricing throughout 2012. For the remainder of my comments, I'll speak to currency adjusted revenues. So now moving to bulk. CP's North American grain franchise delivered 23% revenue growth and 10% carload growth in Q1 2012 versus the previous year. In Canadian grain, our performance continues to set records. For the 2011, 2012 crop year to date, our car loadings are 10% above our previous record crop year and 16% better than our 5-year average. We continue to maintain over 50% market share in Canadian grain. Looking ahead, CP is modeling softness in the May, June time frame as we draw down on Canadian grain stocks. In the U.S., we continue to experience softness in export demand caused by large world feed grain supplies. In addition, domestic spring wheat shipments are being negatively impacted by reduced demand and poor flood-related production in CP's origin territory in 2011. We expect continued softness through Q2. Looking forward, we expect total grain carloads in Q2 2012 to be in line with 2011 carloads. It's too early to call grain volumes for the second half of 2012, but reported planting intentions for Canada and the U.S. are calling for increased acres versus 2011, which should result in average to increased production for both our Canadian and our U.S. franchises. Moving to sulfur and fertilizer markets on Slide 24. In Q1, there was year-over-year growth in fertilizers and sulfur, other than potash. As we said last quarter, we saw uncertainty in the timing of potash shipments in the first half of 2012. Q1 carloads were impacted by ongoing borrower negotiations in international potash sales contracts, resulting in deferred purchases in both international and domestic markets. In total, the combined potash, fertilizer and sulfur portfolio was down 3% in revenues and down 14% on carloads compared to Q1 2011. We are still modeling full year 2012 fertilizer and sulfur volumes in line with 2011. This outlook is supported by the recent Canpotex sales to Sinofert in China and ongoing discussions with India. Domestic producers are anticipating a strong North American spring season. For our coal franchise, Q1 coal revenues and carloads increased 29% and 30%, respectively. CP's coal revenue growth was driven primarily by our metallurgical coal franchise with solid Teck production. As anticipated, there was both RTK and cents per RTM movement on the quarter as a result of higher volumes of metallurgical coal combined with strong thermal coal exports and softer U.S. domestic demand. This noise may continue throughout 2012 depending on the volatility of the thermal coal markets. While there continues to be uncertainty around the export markets for met coal, we are modeling to Teck's forecast for 2012, and their outlook remains strong for production. Turning to our thermal program, we are back on pace. Ridley Terminal returned to normal operating conditions late in Q1. The weakness in the domestic thermal market continues to support the export of thermal coal to offshore markets. Looking forward, our coal franchise, we expect Q2 to be on par or stronger than last year. Turning to Slide 26. Intermodal revenue grew 7% on 3% volume growth versus Q1 2011. We have 100% of our shipping lines and all their lanes back. Mike's team continues to deliver a strong and competitive service. We are making progress, seeing continuous volume improvement, and all segments of the container markets we serve grew in Q1. We saw growth in every one of our core markets. Our numbers are up last year at Port Metro Vancouver and Port of Montréal. In domestic Intermodal, all of our markets, including our core Canadian long haul, cross border and U.S. lanes have delivered growth over last year. It is important to remember that each Intermodal franchise is different, and again, we are up over 2011 in all of the markets we serve. Intermodal is not where we need it to be yet, but we continue to deliver on our strategic initiatives. We have new distribution center development collocated with our Eastern and Western Canadian terminals. And our new Regina terminal development is on pace and will open this fall. We plan to deliver GD plus volume growth in Q2 and the rest of the year. As I mentioned earlier, merchandise delivered a third consecutive quarter of double-digit revenue growth on record Q1 carloads. The team has done an excellent job driving growth in our energy and industrial product segments. And in the first quarter of 2012, CP delivered year-over-year revenue growth of 27% on carload growth of 15%. In the energy space in Q1, we announced further expansion of our crude business, with the opening in North Dakota of a unit train rail-loading facility; the opening in Lloydminster, Saskatchewan of CP's new heavy crude transload; and an expansion of a destination terminal in Albany, New York. We continue to strengthen our movements of crude oil in both pipeline and nonpipeline-served markets, and we are expanding it -- our network of both origin and destination markets. As we told you, we expect to grow the crude-by-rail market to 70,000 carloads by 2014 from last year's level of 13,000 carloads. We remain on pace for this goal, with Q1 volumes at an annualized pace of 30,000 to 35,000 carloads. Growth in this area does not rely on crude rail alone. We are seeing expansion in energy inputs. Our franchise is well positioned for the movement of inbound frac sand, pipe and construction materials to the shale regions. We are seeing continued growth in this area and are well positioned for future expansion. This quarter, we announced Unimin's new frac sand facility, now under construction on CP's network at Tunnel City, Wisconsin, and there's more to come. So moving to Slide 28, automotive revenues were up 30% on carload growth of 17% versus Q1 2011, driven by strong industry sales and a return to normal mix for our franchise. The import volumes have stabilized, and this portfolio has returned to normal levels. There is also new multiyear growth for autos. In March, Toyota announced their Woodstock facility on CP will increase route 4 production by 50,000 units or 33%, which could translate into as much as 5,000 railcars in 2013. Our 2012 growth in merchandise is based on the following drivers: in automotive, we're modeling against an increased industry auto sales forecast of 14.1 million units in sales, roughly a 10% increase over 2011 industry sales; in forest products, we expect volumes to be flat with industry fundamentals; and in industrial products and energy, we expect to continue double-digit growth. Overall in merchandise, we plan to deliver 2 to 3x GDP growth for the full year 2012. Q1 has demonstrated that we are on track with our customers and in our markets. Our strong results are testament to the fact that our core business is stable, we're growing with our customers in existing markets and we're delivering on our strategic initiatives to drive new growth. We are doing this by selling into the IOP and leveraging our service for price, efficiency and value. I'll look forward to sharing further achievements with you in Q2, and now I'll turn it over to Kathryn to walk you through the financials.

Thank you, Jane, and good morning, everyone. The disciplined execution of our IOP and our multiyear programs is delivering excellent operating metrics and improved service reliability. Operating metrics are a leading indicator of financial performance, so I'm pleased to have a chance to walk you through how our record operating metrics are now delivering improved financial results. In Q1 last year, we attributed $43 million in additional cost due to extreme weather-related events. So I will speak to variances off that base, clearly demonstrating that these improvements are not just the result of easy repairs -- compares. Let's dig into the numbers, beginning with earnings on Slide 31. This was a solid first quarter. Revenues were up 18%, reflecting higher volumes, positive price and fuel surcharge revenues, which Jane has already walked you through. Productivity gains capped our operating expense increase to only 5%, while supporting a gross ton-mile increase of 11%, and over half of this expense increase is due to higher fuel prices. Operating income of $274 million was up 151% versus first quarter 2011. Our operating ratio improved to 80.1%, an improvement of 1,050 basis points over first quarter 2011. Other changes were higher by $14 million as a result of advisory-related cost. Interest expense was up $5 million or 8%. Income tax expense increased principally on higher earnings with an effective tax rate of 26%, in line with guidance and consistent with last year. And finally, within the range provided in our press release, diluted earnings per share was $0.82 this quarter, up 310% from 2011. Please turn to the next slide. Much has been made of easy compares versus 2011, so let me provide a few benchmarks by comparing against 2010 results. Operating income is up 32% versus first quarter 2010, a reflection of stronger business levels and improved operating efficiencies, more than offsetting 2 years of inflation as well as higher training-related expenses and significant upgrades to our IT systems, both substantial investments that will drive efficiencies over the Multi-Year Plan. Operating ratio has improved 220 basis points over first quarter 2010, with significantly higher fuel prices in 2012 adding a 178-basis-point headwind over that time frame. Diluted earnings per share was up 37% versus 2010. Now let's go through each of our expense line items, starting with compensation and benefits on Slide 33, which was higher by $27 million or 7% versus first quarter 2011. Last year, we identified $13 million in additional expenses due to the extreme weather, so from a variance perspective, this acts as a tailwind. Higher volumes and FTEs resulted in a $13 million variance over last year. Our average active expense employee came in at just under 15,000, and we exited the quarter around the same number, an increase of 7%. We expect expense employees to stay essentially flat throughout the year, as we drive further productivity improvements and handle higher volumes. Training expenses were higher by $9 million as we continue to bring on new employees to offset attrition. Also in the first half of the year, we will complete certain regulatory training requirements in both the U.S. and Canada. We expect training costs to decline in the second half of the year as these requirements are fulfilled. Stock compensation increased $7 million, due in part to a higher share price. Going forward, a good rule of thumb is, for every $1 change in stock price, compensation expense will change between $1.1 million and $1.3 million. Incentive compensation was higher by $4 million when compared to first quarter 2011. As a reminder, no incentive compensation award was made on 2011's performance, so we should see higher accruals as corporate performance is tracking corporate targets. There was some accrual for incentive compensation in Q1 2011 that was reversed later in the year. So depending on corporate performance, this variance should increase as the year unfolds. Wage and benefit inflation was $5 million, and crew guarantees totaled $2 million. These guarantees were predominantly paid to road crews, hired to handle anticipated potash volumes that we did not move in the quarter. Further efficiency gains of $2 million, over and above those attributed to the winter conditions, were driven by lower overtime and recrews, and pension expense will be a $2 million tailwind each quarter this year. FX and other was unfavorable by $4 million. Turning to Slide 34, fuel expense was up $43 million or 19% on higher volumes and price. Weather-related expenses in 2011 provided an $11 million tailwind this quarter. Higher fuel expense increased this line by $27 million, as our all-in cost was USD $3.50 per gallon, up from USD $3.12 a year ago. This 12% increase in price, while recovered through fuel surcharges, increases the OR by roughly 60 basis points since this is just a cost recovery with no margin. Total consumption was up $26 million due to higher volumes, and as Mike noted, fuel efficiencies tied the previous Q1 record set in 2010. Turning now to equipment rents on Slide 35. Under equipment rents, 2011 weather-related costs were identified as $3 million. Improvements in asset velocity in both locomotives and freight cars drove further efficiency benefits of $4 million. Offsetting this benefit were increased leasing costs of $6 million, driven by higher renewal rates and fixed term leases entered into in mid-2011. As I mentioned, last quarter with record-setting car miles per car day, you can expect we will continue to reevaluate the need for our fixed-term leased assets as leases expire. To date, CP has provided notification of an intent to return over 2,100 leased cars so far this year. And as a result of these lease return notifications, we have accrued $2 million in Q1 in lease turnback costs, which are included in the purchase services line. So let's turn to purchase services on Slide 36. Purchase services and other was down $18 million or 8%. In Q1 2011, we identified $7 million in onetime weather-related cost. So again, a tailwind in the year-over-year compares. This year, we recovered a $12 million insurance claim related to the significant mainline outage we experienced in 2010 due to flooding. Other casualty costs were down $4 million as a result of fewer incidents. Shop and relocation expenses were favorable by $7 million. As you recall, we incurred higher relocation costs of $4 million in 2011 as operations realign their organization and consolidated the number of operating territories at the end of 2010. In addition, we saw the benefits of the locomotive shop consolidation strategy of $3 million. The LRCs are delivering lower shop expenses and higher quality work reflected in locomotive reliability. These favorable variances were offset by $7 million in costs related to higher volumes. Other contains many puts and takes, including higher equipment maintenance and lease turnback costs I just mentioned, IT and other support costs. Finally, first quarter land sales were higher by $4 million. Turning to the remaining operating expenses on Slide 37. Materials were identified to be higher in 2011 by $9 million due to winter conditions. After consideration of this tailwind, materials were essentially flat with efficiencies offsetting inflation. Depreciation was up $5 million on the quarter, which is consistent with our accelerated capital program. Turning to Slide 38. Like OR, we tend to see seasonality in our free cash flows with strength building throughout the year. Cash from operations was $201 million, up $66 million this quarter, and that includes a negative change in working capital. This year, we saw higher fuel inventory and materials in preparation for our 2012 capital program, plus other puts and takes, such as invoice timing, offset by improved DSOs for our accounts receivable. Higher cash from operations was more than offset by capital expenditures of $233 million, up $100 million due in part to the purchase of our new 30 locomotives, all delivered in Q1. With strong business levels, improved operations, stable pension contributions, lower cash tax payments and no debt refinancing requirements, CP is set to fund our accelerated capital program, pay a competitive dividend and continue to strengthen our balance sheet with positive free cash flow for the year. So in conclusion, we are aggressively delivering on our targets and ensuring that the financial flexibility is in place to deliver on our multiyear programs and drive shareholder value. This is a team that knows the franchise. It developed the Multi-Year Plan and is now accountable for executing and delivering the results. We are clearly making progress and remain committed to our operating targets of 68.5% to 70.5% for 2016. And with that, I will turn it back to Fred.

Thanks, Kathryn. Well, our Q1 results demonstrate that we're successfully and aggressively executing on our Multi-Year Plan, which is based on 3 key elements: profitable growth, improved operational efficiency and cost containment. These 3 elements are critical to achieving our targeted OR of 68.5% to 70.5% for 2016, and our Multi-Year Plan serves as a detailed roadmap on how to get there. Our approach includes growing our top line and becoming an even lower cost railroad, and we have the plans in place to achieve these goals. Our team has developed substantial opportunities for profitable growth and is successfully executing on them. We continue to see improvements to efficiency and service through the execution of our IOP, and our accelerated capital plan for low-cost growth, increased efficiency and network resiliency is already delivering improvements in productivity. Our plan maximizes the potential of this franchise, and the right team's in place to make it happen. Jane knows her markets and how to make new markets. Our recent successes in energy demonstrate that very well. Mike knows the property. His people know what is expected of them, and they are delivering. We're shattering operating records. And Kathryn's work on the balance sheet and pension files have set the stage for sustained investment for productivity and growth. We're making smart investments, and they're paying off. We've put together the right team and the right plan, and we're delivering results. We're confident we will continue to improve, deliver to our Multi-Year Plan OR targets and drive shareholder value. So with that, we'll turn it over to the operator, and Melissa, over to you for some questions.

[Operator Instructions] And your first question comes from the line of Walter Spracklin from RBC.

So I think, given that we're given only one question here, I think one of the most important thing that investors are looking at is your ability to appropriately price your product, and I think that looking at the 5% and higher that we saw in the first quarter is certainly a good rate. I was wondering, though, if you could -- what's important here is really segregating price and -- real price and the mix effect. And I'm wondering if you could separate the 2 for us and then talk a little bit about what, if any, opportunities you have to grow pricing, perhaps even beyond the renewal rate that you were suggesting on the 3% to 4% side. Jane A. O’Hagan: Okay, Walter, it's Jane. I will tell you that as you indicated, our price and mix was over 5%, and what I will say is that the majority of that 5% plus is, in fact, price. I would say to you as well that we've been very clear that our targets are to deliver inflation plus pricing for 2012, but as we approach each opportunity, clearly, what we do is we price for value, and we look at each of those markets and with improvement and with the sustained levels of service that we are providing in the marketplace, we are using that as our main mechanism for working to increase the quality of our pricing.

Your next question comes from the line of Cherilyn Radbourne from TD Securities.

You've talked several times about operating metrics being a leading indicator of financial performance. So I just wondered if you could comment on where your resource levels ended the quarter versus the average during the quarter. And just comment on whether there's more resources that can come out based on the productivity that you achieved in the quarter.

So, Cherilyn, it's Fred. Mike might want to complement this, but the way Kathryn tried to identify it on one of her slides with regard to FTEs, using that as part of our resources, we've pretty well hit the level of resourcing that we thought we would want for the balance of the year, but we have growth built in for the balance of the year. So we knew that we had to anticipate an upside, and I think as everybody has witnessed, the potash did not materialize in Q1 but has now materialized based on the Canpotex signing and is moving very strongly as we speak. The U.S. grain business did not materialize -- in fact, it materialized at a lesser rate. We knew it would be soft, but we didn't think it would be this soft. So we certainly built the resources to deal with those 2 upside opportunities and to deal with a potentially very severe winter, which was what people first anticipated. So we built the resource level to the level it's at today from an FTE perspective, but there is -- although there's attrition, replacement as we go through the year, we will now move the increased volumes we anticipate in Q2 and Q3, which we know are busy, busy periods for us with the same level of FTEs. I think from a locomotive perspective, those are largely in place now. If anything, Mike will move locomotives in and out of short-term storage if we find ourself in a bit of a lull, say in the middle of the summertime, but we've got a big fall plan, and obviously, we'll need those locomotives going full-tilt at the utilization levels that we've had. Maybe, Mike, over to you.

Yes, Cherilyn, I mean, if I look at it from the perspective of where we're driving the operating metrics, things like speed, miles per car day, train weights, crew train ratio, all of those metrics were, as I alluded to, are moving in and improving -- are sustained in an improving direction. As we start moving those further, we're already planning to size resources accordingly, so as we see crew train ratios, train speeds improve, train weights, we've already made adjustments on a forward basis, for example, on our labor requirements for train crews. So again, you're seeing that, and I noted the 2% to 3% improvement in labor productivity that we're seeing, and that's a result of those things. In the locomotive world, as we continue to see improvements in yard dwell and first-last mile performance, miles per car day, again, we've already started making adjustments in our yard locomotive fleets. In terms of things like fuel, again, I noted the improvement we're anticipating this year. That will come as a result of things like speed, train weights, the improved locomotive fleet, and so we've made adjustments in the fuel budget, and on cars, I think Kathryn spoke to it, with the anticipated improvements in miles per car day driven by some of the key initiatives and the execution of plan. We've already targeted further reductions in the car fleet, and I would also note as well that it's more than just the equipment rents costs that are coming out of the equation. It's all the other associated costs related to handling of a car fleet: things like maintenance costs, materials, purchase services, even handing costs in yards and terminals, which are driving the improvements in our yard productivity. So lots more to come.

Your next question comes from the line of Tom Wadewitz from JPMorgan. Michael Weinz - JP Morgan Chase & Co, Research Division: It's Michael Weinz in for Tom this morning. I guess, a question for Jane. Looking at the Intermodal volume trends, I understand you got all of your international lanes back. But it looks like volumes are still somewhat soft if you look at how comps come into play for the rest of the year. How should we think about that because to make up the volume loss last year, by my numbers, it looks like you'd have to have volume growth of 7.5%, and that's well above GDP. But is that appropriate? Is that possible? Jane A. O’Hagan: Well, first off, what I would say to you is that we need to come back to the point that every franchise is different, and as I said, we are growing all of our markets. We haven't lost any contracts, and as I told you before, the return on this service-sensitive business doesn't happen in days. Rather, it happens in months. And when we look at the kinds of growth, where you might be looking at the AAR loadings, we have to be careful as using that as kind of a proxy for market share because market share's really calculated on the markets that we serve. And as I said, we're back in all of those markets, so we have to look at this in terms of our own game plan. So our volumes are up in all of our segments. We're growing our volumes on the international side through Vancouver and Montréal. Our domestic Intermodal and particularly our long haul and our cross border and our U.S. are back, and we're going to continue to deliver this growth on a month-to-month basis.

So, Michael, it's Fred. Maybe I'll just jump in and make sure we're clear that the loss in our volumes last year occurred -- they kind of put up with a difficult first quarter. But the second quarter, when the floods arrived, became a very difficult period, and so the volumes actually disappeared in April last year more so than in the first quarter. So I think you should anticipate some differences on volume in the second quarter as we will now move 100% of the lanes, 100% of the volumes, and you will see a good, strong second quarter with regard to growth. Michael Weinz - JP Morgan Chase & Co, Research Division: So you actually could make up the headwinds that you faced in the future quarters?

Yes, again, we're not going to give specific guidance to a number like your 7%, but let's just say that we suffered the losses in the second quarter, and if they're all back now, so the run rates are going to be good in the second quarter compared to second quarter last year.

Your next question comes from the line of Ken Hoexter from Merrill Lynch.

Fred, when you think about where you are with all that you've implemented with long trains and things like that with the OR, I understand it's the first quarter so there's seasonality, but where do the gains come from to get to that kind of 70% OR in terms of -- we had a really warm winter weather, so what incrementally has to happen to get that next -- you did 10 points now. What gets the next 10 points?

Well, I think I'll turn it over to Kathryn in a minute. Ken, I think in the document that we've used as we visit with the investor community, which is the Waterfall, we illustrate that the benefits will come from both volume growth and, of course, price. And I think the number's about 600 basis points of OR improvement over the course of the Multi-Year Plan due to operating expense reduction, and Mike has outlined pretty clearly those initiatives. So maybe I'll just throw it over to Kathryn and see if we can put a bit more color for Ken on this.

Look, Ken, again, I think I clearly demonstrated in the Waterfalls, in the compares that I did, this was not just an easy winter compare. If you think about what we did last year in the $43 million, we essentially attributed all degradation from 2010. 2010 was considered a good year for us. So these are improvements over and above the 2010, and what you see it -- is railroads are complex. Costs are very sticky, and costs are also related to each other. So what you tend to find is the efficiencies starting to drive through sustained metrics, and those will come through in every one of our lines that we have, so you'll see it through car rents, materials, productivity, which we've already spoke to. We did resource up for higher potash volumes and winter conditions, and we are anticipating taking all of our increase during the year and handling it with the existing FTEs. We have certain headwinds such as our IT investments, and they are expenses, but they're investments for the long term, which will deliver productivity improvements in the future. We've got training because of our high attrition rates in our demographics, that, again, are investments in the future. Accounting rules say you do it -- that you do it for the current period, but they are investments in the future. So overall, we have -- and I gave, I think, some pretty clear guidance at our Investor Day on where we see those cost per GTMs coming down over the Multi-Year Plan. We still have the 2013 headwind from pension expense, so it's not going to be a straight line. But clearly, every line item is showing improvement, and in fact, even the depreciation increase that we will experience over the Multi-Year Plan, as a result of our capital programs, will become even more efficient on a GTM basis. So overall we see improvements in every one of the lines, and we will continue to drive for continuous improvement as the operating metrics sustain.

Can I just get a clarification on one thing there? You mentioned the productivity on the employees. Why did we see the expense employees jump up 7%?

Well, some of it was the crews that were for the volumes, some of the volumes that did not materialize, which was the potash and the U.S. grain that both Fred and Mike spoke to. We also have some movement of people between capital and expense that happened as a result of our capital programs in engineering. So we had some late movement of people in that area. We also, again, are having some in-sourcing, so we're increasing FTEs as a result of the in-sourcing that Mike spoke to. Again, that is reducing our purchase services, so overall, it is a benefit to us. And I'll be honest: We're going to probably do more in-sourcing in the future over the Multi-Year Plan because we are seeing that to be a real lift in terms of efficiency as well. So there's a lot of moving pieces associated with all the FTEs, but some of it was winter contingency planning, and some of it is hiring ahead of attrition. We've got huge amounts of attrition out there, and we will become efficient as those people retire out this year. So I don't know if anybody wants to...

I think -- Kathryn, from my perspective, I think you hit it. We did repatriate a number of outsourced jobs in the mechanical world, and a lot of those hit the books this first quarter. We did size up for winter and in anticipation of planned volumes. And as you noted, we did do some front-end loading in the Running Trades side of things for volume and attrition in winter, and we expect to see those rates normalize through the year.

Your next question comes from the line of Jason Seidl from Dahlman Rose. Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division: I guess my one question's going to focus a little bit on your crude to rail and some of the unconventional drilling markets. A couple of things here. One, could you talk about the different lines that you're utilizing to move over? I believe you are using a little bit of the Delaware & Hudson and I think the DM&E to access some of the stuff because I know you've come under fire for some of those investments in the past. And could you also talk a little bit about the equipment availability, especially on the tank car side? And is that going to inhibit growth at least maybe for the next quarter or 2 until we see more come online?

So, Jason, it's Fred, I'll maybe hit the broader discussion and then ask Jane to address the specifics of crude-by-rail. You are correct that the value of the 2 U.S. franchises that we acquired over time, the Delaware & Hudson in New York, Pennsylvania, New Jersey area and the DM&E that we acquired a couple of years ago are really proving to be significant for us. What it's enabling us to do, and we use the Bakken example, is that rather than hand that off on a short haul, we're able to handle that either all the way to Kansas City, leveraging that DM&E investment or rather than hand it off at Chicago, we are handling that all the way to the U.S. Northeast and planting it in Albany and other areas as far as destinations go. So it gives us the transcontinental haul of those originated products. That applies to crude, but it also applies to the ethanol business, which of course, is originated off the DM&E. And I think we've been clear, although maybe I'll just take a minute and say that those volumes grew from 385 million gallons when we acquired it to over 1 billion -- I think it was 1.1 billion, 1.2 billion gallons now, and they're being hauled -- the majority of that being hauled all the way across the continent to New York as well. So you're right. Those assets are very valuable. We're delighted with their performance, and the DM&E EBITDA will double between 2006 and 2012, ahead of the pace that we said it would happen. So we're delighted with that, and maybe, Jane, can you fill in Jason on the crude-by-rail? Jane A. O’Hagan: Yes, I think your question on the tank car is a really interesting question because of the fact that when you look at the development of this marketplace, the idea of proving the concept of the movement of the supply chain in crude-by-rail is over. As we've developed this market and as we gain more and more insights, there's various components that are addressed as the markets develop and as they scale up. So one of the first areas that we saw was obviously destination sites looking for customers who are going to invest in capacity. The second area that we saw, obviously, was the tank cars. And again, because this is a market where we invest with customers who are interested in investing to grow the business, these are shipper-owned assets. And what you're seeing this year is really record development or growth in terms of a number of providers who are building tanks. And because people had been making and developing plans on their tank car supply, there have been a number of options that had been put in place for people to take delivery of those cars. So you're seeing a little bit of switch there. We're also seeing on the tank market as well is that there's such a demand for cars that our agricultural customers are being contacted, looking for opportunities to develop and to find ways to sublease those cars on a conventional basis. And obviously, the other area because we're in the heavy oil side is we're seeing some development, certainly in the coil, the heated version of those tank cars. So again, as this market continues to develop, we're going to see different parts of it being addressed at different points in time. So clearly, the tank car market, it does have, certainly, the potential at this point in time, where we're lined up with producers and people who have destination, origin capability as well with cars. And we're also seeing those other players getting the orders in place to purchase those assets, which for us, again, demonstrates the sustainability of the supply chain in its totality.

Your next question comes from the line of Scott Group from Wolfe Trahan. Scott H. Group - Wolfe Trahan & Co.: So, Kathryn, just wanted to follow up on the lease termination costs. And I don't know if I missed it, but did you talk about the magnitude of savings that we will be getting on a go-forward basis and what the timing for that is? And then -- and with that, how does this affect the capital plan going forward? Are you shifting some from lease to owned equipment? Or is it maybe the opposite even, that improving utilization should also lead to lower capital over time?

Well, good questions there, Scott. I did not give any direct guidance in terms of the equipment rents lines. What I did say was that we've already notified on 2,100 cars. And, of course, as our fixed term leases, and we do, I believe, and Mike, I’ll look at you, about 5,000 over the next couple of quarters, we will continue -- 4,000 to 5,000 of cars that will continue to come due over and above that 2,100. We will continue to evaluate the need, but it will depend on the commodity, and it will depend on the growth rates within those and, of course, what we're seeing on the longer term. We certainly are also evaluating our own fleet in each one of those categories, and my hope and desire will be that we will continue to push that down as well. And so it's always a constant resizing of the fleet in each one of the car categories. That has to happen as you see new business coming on, as you see cycle times sustaining and delivering the efficiencies. So what we do see is that these lower-cycle times, netted off against growth, will continue to deliver efficiencies in this line as well. But you also have to realize that your per diem change as a result as well. So as Jane talked about the growth in the auto industry, that's TTX cars. So you have to look at the equipment line on a commodity-by-commodity basis and manage through where we're seeing growth and where we'll see continued efficiencies. But you will see us drive to lower owned cars, as well as less fewer and less fixed-term leased cars. Scott H. Group - Wolfe Trahan & Co.: That's helpful. But the 2,100 cars, what's the base of leased cars in that equipment rent line?

About 1/3.

About 1/3 of our cars are leased, and about 1/3 are privates, and about 1/3 are owned. And -- but that varies by car type.

Your next question comes from the line of Chris Wetherbee from Citi.

Maybe a quick question on some of the productivity measures. Just looking at train weights and lengths, specifically -- I know there was a mix impact. But could you give us a sense of what kind of the mix adjusted numbers were there? And then, I guess, as it relates to train lengths, specific to the Teck comment that you made about growing the train lengths towards the end of the year here, where are we? I think you gave us last year's kind of number and where we should be at the end of the year. Kind of where are you in that process of going to those long trains and how should we layer that in over the coming couple of quarters?

So there's a few questions in there. It's Mike. Why don't I take the last one first and then we can just circle back to the broader question? On coal specifically, I'd tell you right now today, we're probably about 40%, 45% running at the design length of 152 cars. There are a couple of things yet to take place this year that will enable us to push that higher. One involves some of our customer and third party. Elkview mine, for example, will be completing some expansion work this year that will allow them to handle the big trains, and we have work that I believe is being completed in July at Neptune. Don't hold me to that date, but it will be this summer sometime, that will allow them to handle the longer trains. We also have a couple of other expansions going in, in our coal corridor. And as I said, I'm pretty confident -- not pretty, I am confident with those items and the infrastructure we're adding. We're going to be easily able to push through to that 70% to 80% mark in terms of running at 152. In fact, I'm pushing the guys to go a little beyond that. In terms of the -- if I were to step back and try to factor out mix, I would tell you again with respect to coal, if you looked at -- really, what you need to do is look at the individual train series to kind of determine whether you're making headway. And I don't have all of my numbers in front of me, but I would tell you again, using coal as an example, that we're in that 40%, 50% range in terms of the long trains. Virtually all of our potash now running to Vancouver is at that 170 car model. So again, while we weren't running as many of them, which is part of the mix impact, those that we did run were at 170 to Vancouver and 142 to the Union Pacific. That's the design for that. Intermodal traffic, again, affected a little bit by mix, but the key trains that I look at, things like train 114 out of Delta Port, for example, or 110 out of Vancouver, do operate at their upper limits at the 12,000 range. So when I try to factor out the overall mix and look at specific train series, we continue to do very well in hitting our design objectives.

But no specific commodities where you're seeing underperformance that would be caused by anything other than mix, so Intermodal has picked back up to the levels that you'd like to see?

Absolutely. In fact I'd tell you, I've been very pleased. If I was factoring out the bulk mix for the first quarter, the impact of not having enough big heavy potash trains, for example, our scheduled freight trains, our Intermodal and Manifest trains performed very well in the first quarter and really kept us afloat and helped offset a little bit the bulk impact, the mix impact.

Your next question comes from the line of David Tyerman from Canaccord Genuity.

So just on the volume growth, I think your 2010 to 2016 guidance is 4.5% to 5.5% volume growth, which is well above the, let's say, 2% to 3% for GDP plus. I was wondering if you could put in buckets roughly where you see the extra gains coming from. It sounds like potash, coal and oil are 3 of them. I don't know if there are other areas that we should be expecting to see those kind of higher numbers coming from. Jane A. O’Hagan: This is Jane. So I just thought I would tell you that really what we talked about before was that we have 3 areas where we intend to grow our business. Obviously, growing and stabilizing the core is the first then growing with our customer and existing markets where the organic growth is like 1% to 2% over the GDP and then delivering on our strategic initiatives. And as I talked about before, we have a $1 billion pipeline of opportunities that we work every day, and again, what we do is we work these by probability. We risk adjust them for when they're going to come into place. We work them through concept to conclusion. But for the purposes of how you want to model and what you're asking me specifically, I would say that if we look at initiative growth over that period, half of it is the merchandise weighted towards the energy sector. And as I said in energy, it's crude-by-rail and, obviously, the other energy inputs like frac and steel, et cetera, so it's not just one item. And then I would say the other half is roughly bulk and Intermodal. And again, you hit on the points that I would touch on, which is the stated growth that the potash producers have, obviously, improving and working on the quality of our greenfield elevator development, and we would also include in the Potash One, the BHP volumes. And again, the other area we talk about and Teck has been specific on is their development on the coal front in terms of coal volumes.

So, David, just for clarity, on BHP, we don't have anything in the plan. Jane's reference to BHP is that this is part of her $1 billion pipeline that she can draw upon to go even further beyond that.

Your next question comes from the line of Brandon Oglenski from Barclays.

I just want to focus a question on coal pricing in the quarter. It was flat year-on-year, and I know, Jane, that you mentioned there was a mix impact there. But when I look at RTMs per carload, those were actually higher, and I would think, if it's more of your met export mix, that's going to be mix positive. So can you talk through maybe what the volume levels that you're moving with Teck? Are they hitting some sort of incentive level that is beneficial for both of you right here? Jane A. O’Hagan: Well, what I would say is I think you've picked up on the issues that RTK and the cents per RTM are a little bit slightly negative versus Q4 2011. But I would point you to the fact that as I told you previously, we thought we would see some noise in RTK, and what we're seeing with the Q1 RTK and cents per RTM, it's really due to mix. It's as a result of stronger met coal volumes with stronger thermal coal exports, and really, that combination with softer U.S. domestic demand. Again, in this particular case, this is just the kind of noise that I've pointed to that we were going to see before.

But just if I can clarify, that is longer-haul movement for you, right, relative to the U.S. traffic? Jane A. O’Hagan: Yes, and I would say that when you see this noise, it was really exacerbated more so on a recovery in the volumes on a lower RTK movement with a U.S. customer that took an outage last year, and that was really the major impact that we saw on the mix side.

Your next question comes from the line of Benoit Poirier from Desjardins Capital.

So my question is about the car velocity, and especially when we look at your active cars online in terms of percentage of total cars, I just noticed that the number is down to about 44% in Q1 versus 58% in the same period last year. And if we go back to 2007, 2008, it was close to 70%. So is there any reason why the ratio has changed so much? And is there any opportunity to reduce the number of total cars online?

So, Benoit, it's a very good question. The -- from our perspective, the first step in the process is to sustain and prove to the shipper community and ourselves these levels of performance, so they go from active cars to inactive cars. The next step in the process is with the confidence that we have sustained performance, which we clearly have and the shippers are quickly getting there, the inactive cars will now be contracted. Numbers will shrink, just as you suggest they should. The challenge we have here is that we don't control them all directly, so there's a portion of those cars that are shipper cars, a big portion of the cars are shipper cars, and we are working very diligently with them to say, "Okay, now you've got several quarters of sustained performance. Your confidence should be high. It's time for you to diminish those fleets." They're paying for those cars on our lines, but we would rather not have them, just as you suggest, and that will happen as the next phase, and the confidence grows, collapsing or shrinking of the inactive car fleet will occur, and in our case, that will be what do we want to go to attrition or to scrapping? What do we want to turn off lease, as Mike and Kathryn spoke to? And what might we sell if we don't see future demand for that car type because -- or for that order of magnitude of cars in those fleets based on our performance?

Your next question comes from the line of Chris Ceraso from Crédit Suisse. Allison Landry - Crédit Suisse AG, Research Division: This is Allison Landry in for Chris. I actually have a question on incremental margins and specifically what your assumptions are in order to achieve the targeted OR of 70% to 72% by 2014. Thinking beyond the easy compares in 2012, it seems like you'd have to see incrementals of at least 50%, maybe a little bit higher, in both 2013 and 2014 to get to that range. So I wanted to gauge what you guys are assuming for that and how attainable that you think that this is.

Well, this is Kathryn, and I will say we do believe it is attainable or we wouldn't have put the targets out there. So we have clear line of sight in terms of our multiyear programs in order to deliver on that. And I don't have the 2014 numbers at my fingertips, but Janet definitely does. We had it in our 2011 Investor Day. And we actually gave pretty good insight into where we saw that productivity in terms of the cost per GTM, et cetera, and where that would put us in terms of that range. So I -- we'll be happy to take this one off-line and talk to you about those assumptions around, number one, our 2014 targets, as well as our 2016 targets.

It's Janet. I know our call is running long, so we'll take one more question, and I'll be pleased to follow up with anyone after the call on any unanswered questions.

Your last question then is from the line of Jeff Kauffman from Sterne Agee. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: Fred, Kathryn, let me just ask you -- there's going to be a big meeting next month. If I look at the consensus estimates, none of the analysts are anywhere near your projections. The sell side community seems to think you're going to do a 74% OR in 2014, and they've got a lower growth rate than you're forecasting by about 150 basis points. I guess, here's my question. At the end of the day, you had a fantastic first quarter. Where do you think the analyst community, when you talk to your shareholders, when you talk to analysts, is missing your plan? What element of your plan do you believe the Street disbelieves the most? Is it in terms of the efficiency? Is it in terms of the way you can reduce expenses? Because it looks like the Street's about 300 basis points off on your OR in terms of where you're going. So where do you think people disbelieve it the most? And what's the easiest part of that for you to prove right?

So, Jeff, I have no idea if it’s disbelief. What I do believe is that they see maybe the economy different than we do. If you do look, I think you hit on one of the things is they have different growth levels. Jane clearly has shown that she can deliver on her pipeline. She gave that pipeline in 2010. She's already delivered on a number of those initiatives and has already filled the pipeline back up to over $1 billion. So I think if there's anything, there could be some difference in terms of where they're seeing the economy versus where we are, but the good thing about our growth is it's not really based upon the North American economy in order to deliver on these initiatives that Jane is doing. So we have confidence in our plan. We have clear line of sight, and anyone that's not with Mike and the team know that they have very specific programs, very clear lines of sight in terms of where they're going to deliver on the efficiencies. We are not just making a promise. Fred and I go through this stuff in great detail, and we can't make a promise that we don't know how we see a line of sight to deliver. Other people can, but we can't. So we have to know that we can deliver on it. And clearly, the sustainability of our plan has been showing the improvements. And unfortunately, we got hit with weather in the first half of 2011. It -- we've said many times, it's masked the fundamental changes that we put in place starting in 2010. These are not new plans. These are not changes. We have been delivering on this, and we, unfortunately, had some weather that masked all the good things that the operating team was putting in place. So I feel very confident in our plan. We -- our Board of Directors supports our plan. Our Board of Directors believes in our plan. We review it in depth with our Board of Directors, and we feel that we are going to deliver to what we said we were.

So, Jeff, it's Fred. I'll just wrap up and say, just step back in time and take yourself to January of 2011. Every single analyst had us between $72 and $74 based on our performance, and we went through a difficult 2 quarters with extreme events. That's the story, and interestingly enough, that's where our share price is today. So we feel comfortable that people are seeing the underlying fundamentals, the same ones they saw 12 months ago and that now that the last several quarters have showed improving performance, people are starting to realize the original plan, interrupted by 2 bad quarters of unique weather, is now right back on track and delivering exactly what they thought it would at the time. Okay, folks, thank you very much for spending time with us today. As Janet says, any unanswered questions, feel free, she'll get to you, or you'll get to her. And I look forward to talking to you next time. Bye now.

This concludes today's conference call. You may now disconnect.