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Canadian National Railway Co  (NYSE:CNI)
Q1 2019 Earnings Call
April 29, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the CN First Quarter 2019 Financial Results Conference Call. I would now like to turn the meeting over to Paul Butcher, Vice President, Investor Relations. Ladies and gentlemen, Mr. Butcher.

Paul Butcher -- Vice President, Investor Relations

Thank you, Olivier. Good afternoon, everyone and thank you for joining us for CN's first quarter 2019 earnings call. I would like to remind you about the comments already made regarding forward looking statements.

With me today is, JJ Ruest, our President and Chief Executive Officer; Mike Cory, our Executive Vice President and Chief Operating Officer; and Ghislain Houle, our Executive Vice President and Chief Financial Officer. Also joining us on the call today for the Q&A session is Keith Reardon, our Senior Vice President, Consumer Product Supply Chain and James Cairns, who was just recently appointed Senior Vice President, Rail Centric Supply Chain.

Once again, I do want to remind you to please limit yourself to one question, so that everyone has the opportunity to participate in the Q&A session. The IR team will be available after the call for any follow-up questions.

It is now my pleasure to turn the call over to CN's President and Chief Executive Officer, JJ Ruest.

Jean-Jacques Ruest -- President and Chief Executive Officer

Well, thank you, Paul, and good afternoon, everyone and welcome to our earnings conference call.

After a very, very cold bitter winter, we delivered good results and have a positive outlook to report. In the first quarter, we produced adjusted EPS growth of 17%, revenue growth of CAD350 million and the adjusted operating ratio was 67.2%. Our volume and cost was impacted by extreme and prolonged cold weather, down to minus 35, minus 40 degrees Celsius, which impacted train costs and restricted revenue ton mile volume growth of 3%.

Our CapEx and winter operating plan, which include our air -- railcars produce good results at temperature as low as minus 25 degrees Celsius, which we call the Tier 1 train restriction. But when temperature dropped to Tier 3 and Tier 4, which is at minus 35 Celsius, minus 40 Fahrenheit for about seven weeks, we were losing significant train capacity and in some instance, we could not operate during part of the Tier 4 nights.

In order to protect customer service and to manage regulatory risk as we know them, we had decided to operate this winter with some additional resource in term of locomotive, railcars, and train crews. Given the extreme weather condition that we experienced, that was the right decision. As we do after every winter, we are now taking the opportunity to right-size our asset base, including the return of leased locomotive and putting railcars into storage.

In addition, we also take into account the current softness of crude by rail, following government imposed crude production cutback.

Now a quick review of the topline for the first quarter. We have a best ever first quarter of over CAD3.5 billion of revenue or CAD350 million of topline growth. During Q1 CN's carload were up 1.5%, the best Class I performer. Intermodal revenue was up 4%, automotive revenue was up 7%, coal revenue grew by 15%, Canadian grain revenue was up 8%, CN Canadian grain export tonnage is now up 1.9 million metric ton, ahead of the last year to date crop. Our CN railroaders are really getting the job done for the grain industry. US grain revenue was also up 14% in the quarter.

On crude, we move on average 250,000 barrel per day back in December, but demand took a nosedive in February to less than 100,000 barrel per day after a reduction in production was imposed by the province of Alberta. But CN has the capacity to move more crude. It is a national priority to get our natural resource to market. So as to protect the country economy GDP and create jobs, our CN railroads are ensuring that we have the infrastructure to move any and all natural resource to world markets.

Looking to the balance of the year, we have a diverse pipeline of growth opportunities ahead of us. For example, short term during Q2, this dial-up of the Coalspur, Vista project a coal mine -- a coal export mine in Alberta is to start up soon. We also have the start-up of the AltaGas propane export terminal in Rupert and the introduction of the new container service by Zim line in Rupert.

We also have immediate capacity to move more crude. In April, we are running at 145,000 barrel per day. But we do have the capacity to quickly ramp up to 300,000 barrel per day. Mid-term, we have some other coal business, Alberta chemical business and automotive business coming our way. At the upcoming June Investor Day, we will give you an update on our growth opportunities for the next three years. In the meantime, we are reaffirming our guidance for the year.

With that, I will turn it over to my team for them to give you an update on the winter operations and the financial detail. Over to you, Mike.

Mike Cory -- Executive Vice President and Chief Operating Officer

Thank you. Thank you very much, JJ. And first as always and especially after the challenging weather conditions they tackled day in and day out, I want to sincerely thank all the railroaders of CN for their efforts. From my perspective, the operating challenges that they face were nothing short of some of the toughest that I've seen over my career, but their overall efforts allowed us to fight through and continue to provide service to our supply chain.

So, with the tough weather conditions, GTMs were up 3% versus volumes in Q1 2018. And looking specifically at Q1 operating highlights, our network train speed was down 8% versus Q4, but essentially flat versus Q1 of 2018. Our car velocity was down 15% versus Q4, but up 8% versus Q1 2018, and our through-to-all was up 15% versus Q4, but down 12% versus Q1 2018.

The extreme weather started to really affect our operation initially in our Winnipeg to Toronto corridor. When I say inclement, I'm referring to consecutive nights at minus 40 to minus 50 degrees Celsius, which as you know at 40 degrees below zero Celsius, it's the same as Fahrenheit.

This type of weather then started to set hold in our Winnipeg to Wisconsin corridor, and by the last week of January, our Western Canadian franchise began to feel the same effects right through to the beginning of March. Under Tier 1 restriction at around 25 degrees Celsius or minus 13 degrees Fahrenheit, our operating performance was much like in Q4 as evidenced by our velocity, train speed and productivity. Under those harsh conditions, the capacity improvements we made in our network and in our equipment such as increasing our fleet of AC locomotives and air cars really paid off.

When temperatures dropped below minus 30 to minus 35 and even colder minus 40, we deployed more air cars and deep locomotives per train. However, we could not keep up with the demand as the freezing temperatures did not subside and the customer demand remained strong. As well when temperatures dropped to minus 40 and colder, we ceased operations some nights until the temperatures warmed in the morning, something closer to minus 25 to minus 30.

So to give you an example of the effect of the most severe weather, at minus 25, we effectively ran our trains at our normal run rate with one air car and our DP configuration with the air sources between 4,000 to 5,000 feet apart. At minus 35 and colder, our train length was almost cut in half. This results in the need for an additional air source in order to maintain train length as the between length was reduced down to as low as 1,500 to 2,000 feet.

Even with this inclement weather, our overall service to our customers was less impactful than the year before. While (inaudible) at times, overall we were able to work with our partners to ensure fluidity was maintained. And our grain movement has been -- has seen record volume year to date, with the addition of center beams and boxcar fleet, we we're able to stay relatively current with our forest product customers through the worst periods of cold, as well, our Alberta petrochemical customers stayed fluid.

And now this was purely a result of our overall investment strategy, specifically more resiliency in key areas in Western Canada sourcing of cruise, mainline capacity and the investment in equipment I spoke to before. To effectively shut down over some of the nights in very dense volume corridors as we did and recover each day as quick as we did could only have come through -- come about through these investments.

By mid-March, the recovery started and right now, all of our supply chains are very current. Our operating metrics for Q2 have come back into line and our volume is at a record pace. With good weather, we're seeing the payoff of our track capacity projects and we're very, very active in right-sizing our asset base as we're looking to drive velocity, productivity through the short-term reduction of cars, locomotive and people.

With record volumes in April and normalized weather, we see a significant opportunity to gear up for the demand for the year ahead and improve our overall productivity. As JJ spoke to our growth opportunities, we're commencing another round of capacity improvements. In-all our engineering team will be delivering another big program in 2019. 22 projects are planned, including segments of double track, new sidings and siding extensions and yard investments.

Two projects were already have already been completed and put in service in Q1. And for 2019 to be specific, we're looking at nine projects between Winnipeg and Edmonton; five projects between Edmonton and Vancouver; four projects between Toronto, which you would know as Jasper and Prince Rupert; two projects between Winnipeg and Chicago; one project south of Chicago; a project east of Winnipeg; the rest of the remaining 140 locomotives will come on line and we're building new air cars and also installing equipment inspection portals.

What's also going to help us is a further rollout of our scheduled locomotive maintenance program where we start to already experienced more availability and reliability of our locomotive fleet. As these projects are completed, we'll continue to move on more of our customers' business at low incremental cost.

Finally, we struggled with our safety performance in the last quarter specifically in the latter part of January as temperatures started to decrease dramatically. However, while our FRA actions and injury ratios decreased in the quarter, our significant injuries and accidents were well within our five-year average. We continue to focus on the value we place on safety is being instrumental to our success as we move forward in our journey of being the best-in-class transportation provider.

With that over to you, Houle

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Thanks, Mike. Starting on Page 9 of the presentation, I will summarize the key financial highlights of our first quarter performance. As JJ previously pointed out, revenues for the quarter were up 11% versus last year at over CAD3.5 billion. Fuel lag on a year-over-year basis represented a tailwind of CAD27 million or CAD0.03 of EPS, driven by a favorable lag this quarter of CAD17 million versus an unfavorable lag of CAD10 million for the same period last year.

Operating income came in close to CAD1.1 billion; up CAD50 million or 5% versus last year. Our operating ratio came in at 69.5% or 170 basis point higher than last year. During the quarter, we booked a charge of CAD84 million in depreciation and amortization related to the replacement of our Positive Train Control PTC back office system. Excluding this item, our operating income was CAD1.164 billion, with an adjusted operating ratio of 67.2%, 60 basis point lower than last year.

Net income stood at CAD786 million or CAD45 million higher than last year, with reported diluted earnings per share of a CAD1.08 versus a CAD1.00 in 2018, up by 8%. Excluding the expense related to the replacement of the PTC back office system, our adjusted diluted EPS was up a solid 17% versus last year. The impact of foreign currency was favorable by CAD30 million on net income or CAD0,04 of EPS in the quarter.

Turning to expenses on Page 10. Our operating expenses were up 14% versus last year at CAD2.464 billion. Expressed on a constant currency basis, this represented an 11% increase. At this point, I will refer to the variances in constant currency. Labor and fringe benefit expenses were CAD798 million, 10% higher than last year. This was mostly the result of higher wages, driven by increased headcount and higher stock-based compensation expense.

I would also highlight that the sequential increase in headcount is mainly attributable to the on-boarding of slightly over 1,300 TransX employees in March. Purchased services and material expenses were CAD558 million, 14% higher than last year. This was mostly the result of higher outsourced services and repair and maintenance expenses, including higher snow clearing costs mostly due to the difficult winter conditions.

Fuel expense came in at CAD398 million or 4% lower than last year. Lower fuel prices accounted for CAD30 million of the reduction, while higher volumes were a CAD9 million unfavorable variance versus 2018. Fuel productivity was unfavorable by 1.6% or CAD6 million in the quarter versus last year. Depreciation stood at CAD440 million, 33% higher than last year. This increase was mostly driven by a charge of CAD84 million for the replacement of our PTC back office system and net asset additions. Equipment rents were 3% lower than last year.

Casualty and other costs were CAD156 million, which was 8% higher than last year, mostly due to higher incident costs, which was driven by a crude oil train derailment, partly offset by lower legal provisions.

Now moving to cash on Page 11. Free cash flow was CAD286 million, excluding net cash from the acquisition of TransX. This is CAD36 million lower than in 2018 and mostly the result of higher capital expenditures, driven by the upfront deliveries of new locomotives, partly offset by higher net cash from operating activities.

Finally, let me turn to our 2019 financial outlook on Page 12. Although there are signs of slower growth in certain markets and volatility in crude by rail, we continue to see a broadly positive economic backdrop in North America and consumer spending remains healthy. We have seen specific opportunities that will drive further growth such as the new coal mine from Coalspur and the new propane terminal in Prince Rupert that will start shipping in the second quarter. This environment should continue to translate into high-single-digit volume growth in terms of RTMs for the full year versus 2018 in a favorable pricing environment.

As JJ mentioned, we are taking the opportunity to right-size our resource base and we remain confident in achieving our EPS guidance of low-double-digit growth versus 2018 adjusted double digit EPS of CAD5.50. On the capital front, as winter subsides, we are focused on delivering on our large capacity track expansion programs. We have received so far 63 new locomotives that helped us during the winter and we expect another 52 to be delivered before the end of Q2.

Furthermore, we continue to reward our shareholders with consistent dividend returns and we are on track with our current share buyback program of CAD1.7 billion, having repurchased 2.4 million shares for an amount of around CAD280 million since the end of January.

In closing, we remain committed to our agenda of operational and service excellence with our supply chain focus as we continue to manage the business to deliver sustainable value for today and for the long term.

On this note, back to you JJ.

Jean-Jacques Ruest -- President and Chief Executive Officer

Well, thank you, Ghislain. We are positioned to deliver solid results going forward. We're investing for the long term for growth, for efficiencies and resiliency when there is harsh railroading condition. We are actively working to feed our network with growth. Example our TransX efforts on Canadian ports, efforts on export of natural resource. We have a proven ability to address short-term costs, for short term demand fluctuation for the crews, locomotive or cars. And we are committed to protect our core natural resource customers like the prairie grain, the Alberta oil, B.C. and Quebec lumber and Canadian and US coal exporter. Our approach to operating ratio and return on invested capital, which stood at 15.7% in 2018 is also balanced and long term focused.

On this note, Olivier, operator I would like to turn it over to question, which both James Cairns and Keith Reardon will also join us.

Questions and Answers:

Operator

Thank you. We will now take questions from the telephone lines. (Operator Instructions) The first question is from Chris Wetherbee of Citigroup. Please go ahead.

Chris Wetherbee -- Citi Investment Research -- Analyst

Hey, thanks. Thanks for taking the question. I guess I wanted to talk a little bit about the network and the OR potential of the business and compare this year maybe to last year. So last year this time you're coming out of some challenges, you had some congestion in the fall leading into a very challenging winter. I guess another challenging winter again this year. You've added a significant amount of capital. Can you give us a sense of sort of what the OR potential of the business can be as you get out of the weather, start to get some of that volume and is it as recoverable or is it more recoverable today than it was, I guess, a year ago?

Jean-Jacques Ruest -- President and Chief Executive Officer

Okay. So, Chris, it's JJ. Thanks for the question. Just give you a few element of colors without getting into guidance for quarterly operating ratio. Last year -- this year the winter has been -- actually been tougher than last year because of the deep cold for about seven weeks. And also last year when we ended the first quarter, we had backlog of business. You would remember that, there was quite a few customers, especially in the world of natural resource, who were waiting for us to get caught up. This year, we actually -- because the resource that we had, we actually did better. We actually were able to grow versus last year and we did not finish the first quarter with a backlog of grain or potash or lumber.

We are fluid and we are coming at least at the CN side, this is how we ended the winter. So therefore, right now, the focus is on putting down resource, stocking locomotive cars and crews, fill demand, pickup in line the capacity that we have and one of the factors that we're awaiting to see where things will go is crude by rail. So crude by rail this month ran at 145,000 barrel, which is better than what it was in March. But we do have capacity to ramp it up within a few weeks only to 300,000 barrel. So I think that will also be an element as to how good operating ratio would be in the second quarter, it would be on how much we can use the resource that we actually now have available for our natural resource customer.

Chris Wetherbee -- Citi Investment Research -- Analyst

Okay. I'll leave it at one. Thanks.

Jean-Jacques Ruest -- President and Chief Executive Officer

Okay. Thank you.

Operator

Thank you. The next question is from Steve Hansen of Raymond James. Please go ahead.

Steve Hansen -- Raymond James -- Analyst

Yeah, good afternoon, guys. Look on the growth opportunity side, I'm sure you'll hear a bunch more about it at the upcoming Investor Day, but I was hoping that you could perhaps give us a little bit of a color here on how the TransX acquisition is going thus far? And as a sort of a secondary part of that question is just how do you view the internal opportunities for capital versus the external opportunities for capital? And how you're weighing those going forward? Thanks.

Jean-Jacques Ruest -- President and Chief Executive Officer

Keith will do the TransX part.

Keith Reardon -- Senior Vice President, Consumer Product Supply Chain Growth

So, on the TransX piece, we have been integrating for the -- since the close. We see a lot of opportunities on the commercial side. We see a lot of opportunities on the synergies with regard to cost takeout on both sides. But we also -- one of the main reasons and we've talked about this is the talent and the entrepreneurialship that TransX brings. We've already had several examples where we needed to find a solution to something and within hours of talking to them and sitting down, we were able to come up with those solutions. So we're very, very pleased with how it's going.

We've actually seen some growth come back to the railroad through TransX. As Mike and his team are improving the service that's also going to happen in the traditional domestic part of our business as well as bringing it back to TransX. So we're very, pleased.

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Yeah, maybe quickly, Steve, just lay on the capital side, I think, I mean we're just following our plan. I mean we told the market this year our plan was for CAD3.9 billion, so we are following this. We're receiving locomotives. We'll receive 140, as I said in my remarks we received 63 in the first quarter, will receive another 52 in the second quarter. Mike talked a little bit about the capacity projects that are out there. So, we're well geared. I think we've learnt a little bit of how to deploy and how to execute on this capacity investments this year from last year. So I think we're very optimistic and we're just following our plan of what we told everybody.

Jean-Jacques Ruest -- President and Chief Executive Officer

And we continue to look for inorganic growth opportunity as well as they may come up.

Steve Hansen -- Raymond James -- Analyst

Very good. Thanks.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Ravi Shanker of Morgan Stanley. Please go ahead.

Ravi Shanker -- Morgan Stanley & Co -- Analyst

Thank you. Good evening, everyone. So pretty impressive that you were able to maintain your high-single-digit RTM guidance despite a tough 1Q. Can you help isolate maybe one or two drivers of kind of what drives the ramp to get there in the back half. I'm certain you guys aren't counting on significant rail volumes until that actually shows up. So what exactly driving that? And maybe on a related note, can you give us an update on the Port of Halifax and kind of how that process going? And are you guys counting on additional volumes since some of the new projects to be able to hit that guidance? Thanks.

Jean-Jacques Ruest -- President and Chief Executive Officer

This is JJ, Ravi. Thanks for the question. So definitely, as usual, it will be a combination of a number of factors. We always want to be working every aspect of our portfolio. So crude by rail is an opportunity that we expect at this point will produce growth in the second half. We also expect that our focus on that model, whether it's domestic overseas, will also produce some volume growth.

For the second quarter, automotive, even though the North American market is all soft, should be a growth area for CN because the OEM that works with us still has some product on the ground that is left over from the slow North American network on the TPX fleet. Frac sand will see what kind of drilling activities we have. On the potash product, you may have noticed that even though they've announced some shutdown of sawmill in DC, the price of lumber went up, which means that there's still good demand out there. So there's a number of factor.

And also what's happening here in the second quarter. So this Coalspur will start up. They're actually shipping, I think, next week, (inaudible) the train. We hope that at least at the beginning, they'll be able to run -- hit the 3 million ton a year run rate and that's from the zero what it was and then also the first few cars of propane to the AltaGas export terminal in Rupert also were started to flow in. So there's been a bit of slow delay versus an expectation on these propane exports as well as the Vista project, but now they're finally gearing up. In the case of the second half, hopefully, they should be in good position. I think that's more or less -- more or less of kind of what we expect.

On the Port of Halifax, so the Port of Halifax looked like it will be changing into a new owner, a company we can't share exactly who that is, but it's a company that we know very well and assuming it's those folks that eventually take over the terminal, they are excellent world-class operator and more to come on that, but we are actually optimistic on how we over the next few years and hopefully if the transaction will proceed, how we can work with these people to make much better use of our East Coast port to serve the central part of the continent. So more to come on that.

Ravi Shanker -- Morgan Stanley & Co -- Analyst

So just to confirm that, you are so confident in the opportunity there with the whoever is winning this bid.

Jean-Jacques Ruest -- President and Chief Executive Officer

Yes. So the -- it doesn't necessarily mean that we have to be a financial partners. I mean there's different scenarios, but what's important here is, they have now selected who they want to sell the terminal to. We know these people. We're actually going to be having discussion with them and at this point, I would leave it at that as to what our financial role will be. But one thing for sure is, we see opportunity to grow the rail business out of Halifax into the hinterland, which is really the point of what we call feeding the beast using Rupert port of these.

Ravi Shanker -- Morgan Stanley & Co -- Analyst

Very good. Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

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

Cherilyn Radbourne -- TD Securities -- Analyst

Thanks very much. Good afternoon. I thought I'd use my one to ask JJ about the recent management restructuring you undertook, which was then followed up with some pretty broad changes to the management team particularly in the operating department. I'm just wondering if you could elaborate a bit in your thinking there.

Jean-Jacques Ruest -- President and Chief Executive Officer

Okay. Thank you, Cherilyn. And if you go on the deck that we have for this call, the last page in the Appendix, Page 22 is where we highlight the most important fact of this management change that took place in the last two months. So some involved in our operating department. We did promote -- we have very solid scheduled railroading operator People have been doing this all their life even though they may be only in their 40s and 50s, namely, James Thompson, is now heading the West, Derek Taylor, heading the South. We've asked Doug Ryhorchuk to become the godfather, if you wish of the operation by leading the network center. And we've also asked Doug MacDonald. Doug MacDonald has a very strong career on the commercial side. And I've asked Doug to -- myself and the board have asked Doug to lead the East and learn operation by the same time, Doug has always been very close to the operating team.

So we are really giving a chance to those, who are the next generation of scheduled railroaders to take these very senior job. By doing that, then also we were giving the chance to promote some people on the commercial side, people who are very good topline hunters with strong track record like James Cairns, Allen Foster and our friend, Buck Rogers and we've also beefed up the Department of Technology.

So we're increasing the number of people who are either coming from outside to help us redefine the -- possible in the rail industry and we're giving the chance to our people who been -- worked very hard, producing very solid results the last 15, 20 years to be given opportunities of raising new level or an area which are new to them for them to kind of finish their overall learning as to how to become some of the best of the best.

Cherilyn Radbourne -- TD Securities -- Analyst

Thank you for the time.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you. We do have a strong bench and we're developing it.

Operator

Thank you. The next question is from Turan Quettawala of Scotiabank. Please go ahead.

Turan Quettawala -- Scotia Capital -- Analyst

Yes, hi good afternoon and thank you for taking my question. I guess I was wondering if you could talk a little bit about CapEx. This year, obviously another big year with regard to CapEx going into the summer and with the winter being so tough, just maybe talk a little bit about the level of preparedness here with regard to the CapEx program going into the summer?

Mike Cory -- Executive Vice President and Chief Operating Officer

Hey, Turan. It's Mike. Turning to the preparedness. And first, I'd just like to go back, if you look at the results we produced in December and through the first couple of weeks of January that was a direct result of the capacity, especially through Western Canada and especially the yards in Edmonton and Winnipeg. And so, we are, as Ghislain mentioned earlier, we've learned how to better than logisticate, I would say, between our materials procurement and materials delivery. In fact our engineering department has become one of our big customers for transportation and whether straight communication with the developed tools, so that we can refine the process, get more done with less. And with that capacity we've added, it allows us to get a better unit cost.

You remember in if you go back to '16 and '17 when volumes were lighter, we had the capacity. We produced a lot more in terms of what we got done in the hours we had. It was very difficult the last year and a half, doing not just the special capital, but the basic capital under such stress of traffic, while we're able now, we've already got some good results from the first month or so. It's a big gang that we have out there on all three regions. We're starting to get unit costs back in line. So we are prepared. We learned from last year. We've developed better communication, better tools, but really we're going to stretch that dollar as far as we can.

Turan Quettawala -- Scotia Capital -- Analyst

Great. Thank you very much. Thanks, Mike.

Mike Cory -- Executive Vice President and Chief Operating Officer

Okay, Turan.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Allison Landry of Credit Suisse. Please go ahead.

Allison Landry -- Credit Suisse Securities -- Analyst

Thanks. So I just wanted to gauge our confidence in hitting the high-single-digit RTM growth this year, and whether it has changed at all given the combination of the slow start to the year and softer crude volume and if it hasn't changed. If you could maybe speak to whether the Q2 RTM growth will accelerate from what you're seeing now or if you think the full year hinges more on a step up to maybe 9% or 10% growth in the back half of the year? Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you, Allison. Maybe I can start. So I mean we would rather had an easier winter with just the kind of demand that we had back in December and early January when the railroad was running really well. There was some business out there, but it is what it is. So we're starting with a bit of a slow start, but yes at 3% revenue ton mile growth. I think we're one of the leaders in the industry from a volume growth. I think we are the leader in the industry in volume growth. And at this point, we're very current, but we're also very fluid and we will have some assets that we're parking, which is our good assets and good qualified people that we can easily bring back into as things pick up.

So it will partly be what's happening to natural resource, what's happening with consumer product, what's happening with intermodal and I think we're only in the fourth quarter -- fourth month of a 12-month season and there's still lot of time left to go in their clock just like last year the same situation. So I think we are -- we're looking at the future at this point in very good position and if we have little help from the demand side, we will do it.

I know if you want to add something James on what you see in the natural resource or in the manufacturing side.

James Cairns -- Senior Vice President, Rail Centric Supply Chain

Yeah. I think certainly JJ, we're coming off a kind of a tough first quarter weather-wise in February, but even if you draw back the crude by rail, you look at how we came out of December. We handled 250,000 barrels a day of crude by rail. Clearly line of sight leaving December to move about 300,000 barrels a day. The only thing that stopped us was government curtailment. And if you look at some of the positive things going on, moving forward here in the province of Alberta, whether it's crude by rail and what might happen with curtailment in the future or some of these new plants coming on board, we really are very optimistic about how we are going to finish up this year.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Next question is from Benoit Poirier of Desjardins Capital. Please go ahead.

Benoit Poirier -- Desjardins Capital -- Analyst

Yeah. Thank you very much. Could you please comment about the what you see in terms of pricing environment. I know that you don't disclose any precise number, but if you could comment overall in light of the current market environment. Thank you.

James Cairns -- Senior Vice President, Rail Centric Supply Chain

Yeah. We continue to see opportunities ahead of railway cost inflation. Our customers have come to expect that from US. We need to be able to price ahead of railway cost inflation, so we can invest back in our networks. So we can invest in hiring people, buying locomotive, invest in rail infrastructure, so we can handle our customers goods to market in a very expeditious manner. Our goal is to be there to grow in lockstep with our customers and pricing is a key component of that.

Benoit Poirier -- Desjardins Capital -- Analyst

That's my one. Thank you very much. Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you, Benoit.

Operator

Thank you. The next question is from Ken Hoexter of Bank of America Merrill Lynch. Please go ahead.

Ken Hoexter -- BofA Merrill Lynch -- Analyst

Great. Thank you. Good afternoon. JJ, pretty solid job and I've been in Western Canada from one of those minus 42 degrees. So I hear you there. Mike, but just some thoughts on the projects. Maybe dig into this a little bit. Are we talking about capacity expansion on the network or is it equipment? I guess I want to understand -- are you at full network capacity, so you could see squeezing, if volumes start popping up in certain areas and maybe talk about how you target those projects after the 22 last year. How do you figure where you're going to need that growth target?

Mike Cory -- Executive Vice President and Chief Operating Officer

Okay, Ken. Essentially Ken it's in the same, I would say almost the same locations as last year. We still when you look at our at our -- I always call it the breadbasket between -- and I'll go as far as Jasper Alberta to Chicago or just take Edmonton to Winnipeg for that matter, that 800 miles we started a couple of years ago, we had 15% of it only double track. Now first tranche we did brought us up to maybe 25%. We don't have the luxury of having 800 miles of straight double track like others do. So a lot of the infrastructure is going to go in that corridor. At the same time, we know we have growth to the West Coast, especially the Vancouver and especially with Coalspur starting up. So from west of Edmonton toward Vancouver, we see pinch points that will take place as the volumes grow. Grain will continue to be strong. Keeps intermodal as very strong going to both Rupert and Vancouver. Around going to Rupert, we have more capacity in there and then we still have that area that from Winnipeg to Chicago that accrued, I get more and more commodities that are going in that direction, but really it's not a lot different than last year. The locomotive, it's a big year for us this year. As mentioned, 140 of another 80 to come. We spoke about that last year and really other than that, we're talking technology and that's where the rest of our capital is going. But really similar to last year, same areas we're still -- we still got work to do in that Winnipeg to Edmonton corridor.

Ken Hoexter -- BofA Merrill Lynch -- Analyst

Great. Appreciate the thoughts. Thanks Mike.

Mike Cory -- Executive Vice President and Chief Operating Officer

Okay.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you, Ken.

Operator

Thank you. The next question is from Jason Seidl of Cowen and Company. Please go ahead.

Adam Kramer -- Cowen Securities -- Analyst

Yeah. Hi guys. This is Adam on for Jason. I want to follow-up on the TransX acquisition, and potential future M&A and just ask if there are other types of non-traditional rail or non-rail companies that you guys could potentially look at. What types of companies and how could you see these types of companies maybe fitting into your network or fitting into your business or in a broader sense?

Jean-Jacques Ruest -- President and Chief Executive Officer

Hi Adam, it's JJ. So it's basically businesses that would bring about more carloads on our network. So you look at our rail line, our mainline rail line and you look at businesses who would contribute to increase the amount of carload of container on that rail line. So it's something that would feed the beast. So in the case of TransX, it's a national (ph) company, they move containers, they also move also freight over the road. We're looking for them to help us grow the container business at a high pace and also looking for them to help us convert more customers from the road through to the railroad. We talked about the port business, the example earlier, of Halifax. It's the same thing. When we use a port very, very well like in Rupert, I think it's a proven recipe that it does create a lot of volume in the railroad when port and railroad work together in a very connected way. So these are two example of things, which are good long term for rail franchise.

Adam Kramer -- Cowen Securities -- Analyst

Got it. Thank you guys for the time.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Fadi Chamoun of BMO. Please go ahead.

Fadi Chamoun -- BMO Capital Markets -- Analyst

Yes. Good afternoon and thanks for taking my question. So you are -- I wanted to ask you when you look at your network, is this at this point resourced fully for the ramp up in volume that you're expecting in the second half of the year. And really I'm trying to understand that you know you're guiding for strong volume, I guess, as we go into the second half, but the operating leverage implied in the guidance is a little bit more muted. How should we think about that it kind of H2 outlook?

Jean-Jacques Ruest -- President and Chief Executive Officer

Yeah. So, maybe I'll start it and anybody else who wants to complete my answer, but in the Western network, our network in the last few years have been under stress on the capacity resiliency point of view, especially when we hit harsh condition and we want to invest for the long term, just not for the quarter or the year, we want to be sure that we can handle growth when growth come in the West. We want to be sure that we can run efficiently, so we can produce good KPI from a schedule railroading point of view. We also want to network that when tough times come in that we can show resiliency to our customers and that for the country into a hard time.

And then with 3% revenue ton mile growth in the first quarter, which most of it was in the West would proven that we were there for the National Resource customers.

So in the East, we've got lots of capacity on the network, which is underutilized that's why we're interested as to what we can do in domestic capital in the East. When I say the East, I mean Chicago to Halifax and also what we could do with any of the eastern port. So looking forward, we just need to be mindful of keeping a balance between capacity as in railcars and locomotives and crews, and demand which is fluctuating. And right now, the biggest aspect of fluctuation was crude, which went up 250,000 barrels. We were basically ready to do 300,000 at the time. We went down to over 9,000 barrels per day and now slowly coming back, it went from 90 to 125 (ph). And we hope that we can help Alberta remove the curtailment of production and getting back up to what it was expected to be a few months back.

Fadi Chamoun -- BMO Capital Markets -- Analyst

Okay. Thank you.

Operator

Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

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

Scott Group -- Wolfe Research -- Analyst

Hey, thanks, afternoon guys. So can you give us maybe just some revenue and operating reshare numbers to think about for TransX. And then just bigger picture with the guidance, so if RTMs end up mid-single-digits instead of high-single, are we still confident we can do double-digit earnings growth? I know we did in the first quarter. Or do you think given the amount that we're spending here that we sort of need the volume growth to come in where we want it to be to get to double-digit earnings growth for the year?

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Yes, Scott this is Ghislain. Obviously, we're not going to start splitting the OR of TransX versus the OR of CN. I mean, we're not offering segmented information and the financial data of now and results of the TransX, it will be embedded into CN and that's what it is. I think on the guidance side, I think we're comfortable, very comfortable and we looked, and as we do every quarter we look, we do a detailed bottom-up, top-down with the team and we did reaffirm the guidance today. And as JJ mentioned, there's -- it was a tough quarter. And frankly, it was a tough February and March, because January was pretty solid actually. And I think we have another nine months to go and stay tuned. But we're comfortable with our high-single-digit volume growth and our double-digit -- our low-double-digit EPS growth and that's our guidance and we're comfortable with it.

Jean-Jacques Ruest -- President and Chief Executive Officer

Yes, we're going to work the lever of the cost, lever of volume and lever of price as we always do, we adapt.

Scott Group -- Wolfe Research -- Analyst

I understood you don't want to give a OR on TransX, that's fine. Can you at least give us a revenue sense, because -- so we know how to model the other revenue line, going forward?

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Yeah, I mean this was -- before we bought TransX, if you go onto their website, it was 400 give or take revenue company. So that's what it was. And I know now Keith is working, he is working with Mike Jones, who was their COO there closely. And those revenue was going to be embedded into the intermodal revenue numbers on our financial statement. So -- and stay tuned, but I think, Keith, as you mentioned, you are pretty optimistic about some of the opportunities and some of the learnings that on both sides that we will get from TransX.

Keith Reardon -- Senior Vice President, Consumer Product Supply Chain Growth

Yes, we are. I mean, we were going to work as a team to help them be able to drive more revenue, more profitable revenue at TransX. And they in turn are teaching us to be a little bit more entrepreneurial and be able to get things done a little bit quicker, a little bit more nimble.

Scott Group -- Wolfe Research -- Analyst

All right. Thank you, guys.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Justin Long of Stephens. Please go ahead.

David Vernon -- Bernstein Research -- Analyst

Thanks and good afternoon. So maybe to follow-up on TransX as well. Just curious if you have any thoughts around the revenue growth for that business, going forward even if it's kind of longer-term over the next three to five years. And then for the model, also wanted to see if you had any updated thoughts around headcount, I guess, excluding the TransX adds and then the tax rate as well, any of your assumption or range on that front has changed at all? Thanks

Jean-Jacques Ruest -- President and Chief Executive Officer

Maybe I can start with your last one, because that's what we'll remember -- that's what I remember, because there were three questions in one. But on the tax side, again, if you look in the quarter the effective tax rate came in about 24% and some of this is due to some of the higher excess tax benefit that is resulting from the settlement of equity settled awards in this quarter. But when you look at the tax, if you remember, Justin, we at the beginning of the year gave a guidance of 26% to 27%. And as we look forward, we think we're going to be more in the range of 26% going forward on our tax rate this year. So that's on the tax side. Keith, you want to touch upon the revenue for TransX?

Keith Reardon -- Senior Vice President, Consumer Product Supply Chain Growth

Well, we're going to be looking at all opportunities. They have quite a large book of business already, a lot of customers that we don't have in our book of business. And then we have some customers that we deal with that they don't. So there is a lot of opportunity to help each other out there. As well as they are in the cold supply chain and they do a very good job there. And as you know, we've been working on investment in the coal supply chain, whether it's exports overseas or domestically. So we will be working together with them and our other wholesalers in the business to be aggressive and grow that business. There is a lot of opportunity in the coal supply chain as food safety becomes more of an emphasis in North America. We want to be right there, because it is a differentiator for us in the marketplace.

Ghislain Houle -- Executive Vice President and Chief Financial Officer

And then, Justin, I think the last piece on headcount. I think as JJ mentioned, we are right-sizing our resources. And the volatility of crude right now is such that we are reducing somewhat our headcount on a short-term basis. We're hopeful that the crude, as James mentioned, will come back and then we'll get these people back, but the catch up on headcount and on hiring has been done. We're normalizing and we're now right-sizing our resources in light of the business that's coming at us. And so -- again, if you look at headcount, at the end of the year, first quarter versus the fourth quarter of last year if you exclude TransX then we were flat essentially.

Justin Long -- Stephens Inc. -- Analyst

Okay great. All very helpful. Thanks for the time.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Walter Spracklin of RBC Capital Markets. Please go ahead.

Walter Spracklin -- RBC Capital Markets -- Analyst

Thanks very much. Good afternoon, everyone. So JJ, just on some of your growth aspects, coal is coming on pretty fast here, and as you pointed out in Alberta. But I know that the terminal in Prince Rupert, there Ridley is having some trouble having gone through a couple unexpected shutdowns or pretty significant, I think there's certainly more to come. Does that interrupt your opportunity in coal? Is there other avenues for that coal to find its way into the market, and how sustainable is that fix if there is one there?

Jean-Jacques Ruest -- President and Chief Executive Officer

Yeah, thank you for the question Walter. There is other avenue for that coal to get to market, if Rupert, Ridley can't get it done. We're not getting into confidential information of how these different contracts work between a terminal operator and its customers. If they can't perform some of that indefinitely go a little more south to the other coal terminal and still go-to-market. So I think from that point of view, we as a railroad have the capacity and the corridor and the crews in the two different corridor, to get the new mines to be able to serviced and shipped to -- ship overseas.

And just talking about the Vancouver, I know you wrote a piece back in the days on the CTA. It was almost head-hooping, Walter. You'd asked me a question of that. We want to be sure that people understand that we disagree to this, this is run by the CTA. Regarding Vancouver, we will be appealing the decision. In our view, we did a great job of moving 10% volume growth during the month that they were talking about. We moved 1.9 million more metric ton of grain this year versus last year. This is solid performance.

And as I said, we will appeal the decision. However, looking at long term, Vancouver is a very busy place. There's not that much industrial land left in the city. And as you could from our Page 17 in the Appendix, we have significant capital plan to serve both the south shore and the north shore Vancouver for the next three years. And we want to be part of the solution and we will be part of solution for the export terminal in Vancouver.

Walter Spracklin -- RBC Capital Markets -- Analyst

Okay, I guess. Thanks for the two questions. Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

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

David Vernon -- Bernstein Research -- Analyst

Hey guys. Thanks for the question. I would like to know if you can tell us kind of what impact weather had on the cost lines. Obviously, the constant currency variance on labor and purchased services, I'm -- surely weather had a big impact on that. But is there any way you can dimension how the first quarter sort of margins, if the margins were negatively impacted by weather?

Mike Cory -- Executive Vice President and Chief Operating Officer

Yeah, David, definitely the weather had an impact on cost, definitely had an impact on revenue as well. It had an impact on volumes. I mean if you have to shorten your trains or in some cases can't even move, because it's minus 40 and it's not safe to move then obviously there is impact on revenue and there is impact on cost. You'll have more recrews, you'll have more deadheads, your trains are shorter, therefore, you need more locomotives, you need more cars and then there's snow clearance. I mean, if you look at my remarks, I said there were more expenses related to snow clearing related to repairs and maintenance and the likes.

We're not going to give a specific estimate of the winter per se, because at the end of the day, it is what it is. And obviously when it's very cold and you consume more fuel and therefore, from a fuel standpoint, it's more expensive, so -- but I mean you can have the bits and pieces of our costs that are higher due to winter. And I'll let you do the , but these are the big pieces.

David Vernon -- Bernstein Research -- Analyst

And then maybe just as a quick follow-up, if we think for the full year ex-PTC depreciation add back, depreciation is up about 10%. Is that a good run rate for the full year?

Mike Cory -- Executive Vice President and Chief Operating Officer

Yeah. All right.

David Vernon -- Bernstein Research -- Analyst

Thank you.

Mike Cory -- Executive Vice President and Chief Operating Officer

Thank you.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Seldon Clarke of Deutsche Bank. Please go ahead.

Seldon Clarke -- Deutsche Bank -- Analyst

Hey thanks for the question. Just getting back to the margins for a second with everything going on across the industry in regards to PSR. So if you like the floor for OR has been lowered at all from the high 50 level -- high 50s level you guys have previously talked about. And if so, do you think CN can return to sort of being the industry leader there?

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Well, where's the floor, it all depends how much risk you want to take the business. So one can have a lower floor and then take the risk of not being able to meet demand or not being able to respond the pressure when demand and harsh conditions come in. So we have a blend and we want to be a cost leader. But a cost leader that also takes things in balance from how we serve our customers and move the economy, but also be a leader that's also looking at the return on invested capital as much as EPS growth, as much as operating ratio.

So now the one trick pony of operating ratio only does not necessarily give you the best EPS growth. And when we have investment that can generate a good return on investment capital, taking to our cost of capital, we are inclined to do these things as opposed to sit on the sideline and shave off one more point of OR. So this is where we saw it evolving from what we were doing the last 15 years. And we're looking at cost efficiencies, organic growth, some acquisition strong focus on returning invested capital, but also strong focus on operating ratio. So what you'll see -- what you're seeing from CN is a more balanced scorecard than strictly pure PSR.

Seldon Clarke -- Deutsche Bank -- Analyst

So that's still at the high-50s level. Is it the right way to think about it longer term?

Jean-Jacques Ruest -- President and Chief Executive Officer

We don't guide on the -- we're not going to get drawn in into the PSR discussion and how low can you go on the limbo contest. We'll leave that for others.

David Scott -- Vernon, Sanford C. Bernstein & Co., LLC., -- Analyst

I appreciate it.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Brian Ossenbeck of J.P. Morgan. Please go ahead.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Hey guys, good afternoon.

Jean-Jacques Ruest -- President and Chief Executive Officer

Good afternoon.

Brian Ossenbeck -- J.P. Morgan -- Analyst

JJ, just want to go back to the Vancouver investments you called out in the slide deck. Would you characterize these more improving fluidity and resiliency, or are you actually expecting to get some capacity expansion and growth off of that? And to the point that you mentioned on the CTA, when do you expect a resolution of that appeal? And is this a signal that you might expect a more aggressive and more involved regulator as a result of what just happened early this year?

Jean-Jacques Ruest -- President and Chief Executive Officer

As it relates to the appeal, these things takes time and they'll take whatever time it takes. It does not really -- that's not a concern for us. What's concern for us is that the process is fair and reasonable to all, including the railroad. Regarding the capital investment we're making in Vancouver and also I want to recognize that we're doing this transaction with others. And we have -- in one case, it's about CAD80 million, it's between CN, the Port of Vancouver and the federal government. And it is to serve the expansion on the south shore center or DP world is expanding the content of terminal. So when they're ready sometime in 2020, we will be ready with them as well. And the GCT who owns that is also planning some expansion.

So these things are really in sync with other people and investment on the south shore and same thing on the north shore. On the north shore, it's even more capital money, it's about CAD200 million over three years, again, here with the funding from the Port of Vancouver, CN and the federal government of the 200 or roughly CAD85 million. And that's really is to serve the export of natural resources in the bulk, so you're talking more coal going to the north shore Vancouver, the G3 grain terminal and a number of other items. So the investment on the north shore and the south shore eventually are part of the CN long-term or mid-term growth plan. And we're investing in transaction with others.

But again, as I said earlier, we move 1.9 more million ton of grain this year -- this crop year than last year. And we're not getting a whole lot of noise from the grain industry about performance on last winter even though we had some super cold condition. And back in November and December, which was a period when CN was criticized, we didn't move 10% more volume than the prior year. So from our point of view, these are very reasonable performance and this whole investigation was maybe on call from our own point of view.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Thanks, JJ.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from Brandon Oglenski of Barclays. Please go ahead.

Brandon Oglenski -- Barclays Capital -- Analyst

Hey good afternoon everyone and thanks for taking my question. JJ or maybe Mike, you guys have historically spent more than maybe some of your North American peers, but you've also gotten more growth out of it. So I mean, I know there has been a lot of questions on capital this call, but -- and I don't want to steal a thunder from your Investor Day either. But can you just talk through where you still see the pinch points in the network. And if the outlook for 2020 was to be high-single-digit RTM growth. Would we have to be spending at a similar level, or is it really some upfront tech investments that have made the past couple years so much higher and that should come down looking forward?

Mike Cory -- Executive Vice President and Chief Operating Officer

It's Mike here Brandon. Let's just go back to -- I think Ken asked the question and I didn't mention it. If you look at the corridor that we're the capacity into, Western Canada handles 50% of our volume. If you stretch that out through Wisconsin through the route to Chicago, you're not talking 65% to 70% and those are big growth lanes for us. So we're in CAD0.01. We're picking up volume, but we're catching up to just different capacity we need to be efficient and reliable. There is a technology jump over the last few years at PTC. We've spent a good amount and that's starting to come down.

And then the other technology that we're really looking for effective capacity with that, so whether it's the train inspection portals, some of the things we're doing from equipping our crews with handheld devices, whether they're car mechanics or conductors and then autonomous track inspection, those are things that to really take advantage of the capacity, the hard capacity we're building in the ground. I see that's catching up this year with this next round. Again, it's all dependent on future volume growth, but we've really hit hard the area that's the toughest. And JJ said whether it's the winter conditions across the prairie. I would just remind you that we're still only at 35% double track capacity there, and that's not resilient as we need it to be.

Jean-Jacques Ruest -- President and Chief Executive Officer

And maybe Brandon to go to your question on CapEx for 2020. As we said previously, I mean the big capacity, big CapEx program we said was for two years 2018-2019. We are now in our second year of our CapEx to catch-up. 2020, we said we were going to go back, hit the range of historical levels. But obviously, we will look at the growth that comes at us. And again, I want to remind everybody that our use of cash policy has never changed. The first use of cash is toward the business. And that's what we've done, and when you look at our ROIC that has delivered in space in the range of 15% to 16%. So we're continuing to do what we said we're going to do. And next year, we've said that we will go back to historical levels, but obviously, we'll look at the growth that comes at us and we'll assess as that growth and as we have a better visibility to go back to growth.

Brandon Oglenski -- Barclays Capital -- Analyst

Thanks.

Mike Cory -- Executive Vice President and Chief Operating Officer

Thank you, Brandon

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

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

Tom Wadewitz -- UBS -- Analyst

Good afternoon. I know you touched on this topic quite a bit, so maybe I am just not understanding what's implied within the comments. But you clearly identified the capacity on crude and you've reiterated the high-single digit RTM guidance for the year. Are you assuming in that RTM guidance that you see the ramp-up toward that 300,000 barrels a day capacity in crude? Or are you assuming that you stay at the current level and you can get there other ways. Or how do we think about linking those two together?

Jean-Jacques Ruest -- President and Chief Executive Officer

James, you want to talk about the -- maybe how some of the middle ground we have on crude.

James Cairns -- Senior Vice President, Rail Centric Supply Chain

Yeah. So if you kind of think about how we're thinking about crude is, we built the capacity for our customers. We are very hopeful and they're going to be using it from the second half of the year. We have some solid contracts that kick in starting in July, but that's not built in that the core guidance that we have. If you look at our core run rate, I think that's kind of the bottom end of what we're going to achieve. I think when we talk about having capacity of 300,000 barrels a day, that kind of gets us to that next level, I would say. And quite frankly, if you would step back and you just look at the supply demand for crude, whether it comes in July of this year or January of next year, it will be there.

Tom Wadewitz -- UBS -- Analyst

Right. Okay, so -- but you get to the high-single digits without a ramp in crude?

James Cairns -- Senior Vice President, Rail Centric Supply Chain

That's correct, Tom.

Tom Wadewitz -- UBS -- Analyst

Okay. Thanks for the clarification. Thanks for the time.

Jean-Jacques Ruest -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We have no further questions registered at this time. I would now like to turn the meeting back over to Jean-Jacques Ruest.

Jean-Jacques Ruest -- President and Chief Executive Officer

Well, thank you for joining us on the call. I'm hoping that many of you, if not most of you, could join us on our Investor Day on June 3rd and the 4th. On the afternoon of the 3rd, you'll have a chance to meet our team of railroaders, as well as the different item and technology that we are deploying. And on the 4th, we will do the usual presentation and give you our outlook for the next two years. So thank you very much. Thanks for joining us. See you back in early June. Operator, we turn it back to you.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time. And thank you for your participation.

Duration: 63 minutes

Call participants:

Paul Butcher -- Vice President, Investor Relations

Jean-Jacques Ruest -- President and Chief Executive Officer

Mike Cory -- Executive Vice President and Chief Operating Officer

Ghislain Houle -- Executive Vice President and Chief Financial Officer

Chris Wetherbee -- Citi Investment Research -- Analyst

Steve Hansen -- Raymond James -- Analyst

Keith Reardon -- Senior Vice President, Consumer Product Supply Chain Growth

Ravi Shanker -- Morgan Stanley & Co -- Analyst

Cherilyn Radbourne -- TD Securities -- Analyst

Turan Quettawala -- Scotia Capital -- Analyst

Allison Landry -- Credit Suisse Securities -- Analyst

James Cairns -- Senior Vice President, Rail Centric Supply Chain

Benoit Poirier -- Desjardins Capital -- Analyst

Ken Hoexter -- BofA Merrill Lynch -- Analyst

Adam Kramer -- Cowen Securities -- Analyst

Fadi Chamoun -- BMO Capital Markets -- Analyst

Scott Group -- Wolfe Research -- Analyst

David Vernon -- Bernstein Research -- Analyst

Justin Long -- Stephens Inc. -- Analyst

Walter Spracklin -- RBC Capital Markets -- Analyst

Seldon Clarke -- Deutsche Bank -- Analyst

David Scott -- Vernon, Sanford C. Bernstein & Co., LLC., -- Analyst

Brian Ossenbeck -- J.P. Morgan -- Analyst

Brandon Oglenski -- Barclays Capital -- Analyst

Tom Wadewitz -- UBS -- Analyst

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