Brian Ossenbeck: There is a change in basic time in Canada towards the end of last year, let’s call it $300 million headwind as it appear, just wanted to see how you are thinking about that at your home network year and the next year. And then maybe for John, if you can comment on just the price mix and I guess there was a 200 basis point headwind this quarter. Putting it together, it looks like you might be facing similar trends in the first half of next year just based on the comps and the wins that are coming on the network. But I wanted to see if you give some high-level color in terms of how to think about mix and how that impacts you next year? Thank you.
Keith Creel: I will say a few short words about these new orders in the sick days. I am not thinking in tens of millions of dollars, I am not thinking in hundreds. I am thinking about the practical application of this. Number one, those sick days have to be earned through €˜22 or €˜23. So, really, they don’t come into play until €˜24 full year effect. Number two, our manpower models, and I don’t care if it’s a mechanical group, the running trades group, locomotive group, the lines are very great. We model because employees obviously get sick days already in our manpower models. So, to suggest it’s going to go from zero to whatever to 10, a multiple of 10 would be to me are responsible on my part. Our employees, if I look at running trades, for instance, we have got average sick days in a year, I think the rough number is four or five.
So, that’s already kind of baked into the manpower model. Now, if I have got to payment for those four days or five days, there is some impact. But at the end of the day, it’s not going to be material. I don’t know exactly what it will be, but we won’t have full effect in €˜23. I know that for a fact and when we do, I don’t think it’s going to be material.
John Brooks: Brian, you know what, you are right. I kind of see similar trends evolving as we move in the first half of 2023. Typically, our bulk franchise just by nature, a little lower on an average cents per RTM basis relative to the rest of our book, that will kind of maintain or keep some of the pressures relative to the mix that you described.
Brian Ossenbeck: Okay. Thank you.
Operator: And our next call comes from Ariel Rosa from Credit Suisse.
Ariel Rosa: Hey. Good afternoon. Thanks for taking the question. I just wanted to see if Nadeem or Keith, maybe you could talk about the expectations for the progression of the debt pay-down, kind of how are you seeing that play out over the course of 2023 and maybe into 2024? And what kind of impact might that have on your interest expense? Thanks.
Nadeem Velani: So, yes, we are generating a significant amount of free cash as well as dividend payments from Kansas City Southern. So, we are kind of on pace to continue to de-lever, get back to our 2.5x target leverage. So, we have gone from kind of a little bit above 4, 4.1, 4.2 down to 3.7, 3.8 levels as we speak. I would expect that to get in the high-2s by the end of the year. And so over the course of €˜24, we should be back in target leverage, keep it at that level. And as far as the interest payment, I just follow that €“ follow-up with Maeghan and Chris post call back in the office three days so far. So, you caught me on that one, and so it’s better to connect with them on the interest.
Ariel Rosa: Got it. Fair enough. Thanks everyone.
Nadeem Velani: Thanks Ariel.
Operator: And our next question comes from Amit Mehrotra from Deutsche Bank.
Amit Mehrotra: Thanks operator. Hi everyone. I joined the call a little bit later, so apologies if these questions have been asked. But one, I was wondering if you could talk about non-fuel costs. Obviously, there is inflation, I assume you have some visibility, if you could help us kind of think about the OpEx this year. I guess, follow-up separately, with Kansas City, there used to be a time where they provided US OR and Mexico OR. And I assume that based on where they are today, it may be safe to assume that they are kind of in the 70s now in terms of the U.S. business. I don’t know if you want to comment or talk about that, but just trying to understand gap in terms of where they are in the U.S. business and where CP is?
Nadeem Velani: Sure. Yes, thanks for those questions. You cut out a little bit, so forgive me if I didn’t get €“ I don’t get the full question and respond to you correctly. But I think you mentioned about inflation ex-fuel. We were running close to high-6%, almost 7% in Q4, so significant inflation that we haven’t seen in some time or certainly haven’t seen in my career. The good news is John has been €“ as he updated on the call, we have been pricing above inflation, and we fully expect that. In this uncertain macro environment, we will see what happens with inflation. Certainly, we have seen it kind of slowdown in some areas, some of the latest economic indicators have seen hopefully peak inflation, and we will see that come down through 2023.
But irrespective, we are protected from an operating income point of view. In terms of OR, KCS versus KCSM, yes, not appropriate for me to comment, and I couldn’t even tell you the answer, if I wanted to. So, if I knew it. So, more to come on that and not something that I am going to answer on this call.
Amit Mehrotra: Yes. I thought I would try anyways. Thank you very much. Appreciate it.
Nadeem Velani: Thank you.
Operator: And our next question comes from Justin Long from Stephens.
Justin Long: Thanks and good afternoon. I guess to follow-up on some of the questions about pricing. Can you talk about what percentage of your business is getting re-priced this year? And as you have started to pursue some of the new business opportunities as a result of the KCS merger, are you seeing any of the other rails respond to that with more competitive pricing? And if not, how are you thinking about that risk as you integrate the deal?
John Brooks: So, Justin, we should see roughly 40% of our book rollover in 2023, and that’s pretty typical for us. And the competitive response, I fully expect that they are going to do it. They need to do in areas where we are going to go head to head, again, assuming the STB approves our transaction. That being said, I would also say that a lot of the examples I have provided today, and I have spoken to in the past, are really non-rail moves today. It’s about focusing on these opportunities, I think uniquely can be solved by CP-KCS and are really competing against truck. And as I think about even traffic that we are looking at potentially out of Mexico, up in some markets that’s moving short or other alternatives that aren’t head-to-head versus rail.
So, look, we are going to compete where we compete, and I fully expect the U.S. rail competitors to do what they need to do on that front, and we will do the same. And again, we will try to focus on those growth opportunities that are more maybe non-competitive with those in moving via truck or other modes.
