Good morning. My name is Scott MacDonald, Senior Vice President of Operations. At Canadian Pacific, safety is extremely important, and it is my task this morning to inform you of the procedures that we will follow should an emergency situation arise during the annual general meeting. First, in the event of a fire, you will hear a steady electronic tone over the public address system, at which time the chairman or CEO, whoever is at the podium, will suspend the presentation in order to hear the hotel announcement over the public address system that will describe the nature of the emergency. Evacuation, if required, will be clearly announced and would occur by proceeding to the nearest exit and continuing outside and away from the building perimeter. Hotel staff and CP security personnel will be on hand to assist if necessary.
Our emergency exit routes are out through the main ballroom doors, into the foyer, down the stairwells, which are located adjacent to each side of the elevator bank. Take either stairway down two flights of stairs into the main lobby. Leave the hotel by the main doors of the hotel onto Front Street. Our evacuation destination is across the street from the hotel's main entrance in the main foyer inside Union Station. Exit the main doors of the hotel and cross Front Street, and then enter the main entrance to Union Station. We will regroup inside the foyer on the right-hand side and wait for further information. I'll be the last person to exit the room to ensure that everyone has left safely.
Second, in the event of a medical emergency, will the people in the immediate area stand and call out loudly, "Medical emergency." Then move away from the immediate area so that CP security personnel can easily gain access. Our security staff will take charge and call 911, if necessary. Finally, before the meeting begins, I would ask that your cell phones, BlackBerrys, pagers, or any other electronic devices be turned off so as not to disrupt the proceedings. Thank you very much.
Thank you, Scott. Good morning, ladies and gentlemen. My name is Paul Haggis, and I am the Chairman of the Board of Directors of Canadian Pacific. It is my pleasure to welcome you to the annual meeting of the shareholders of CP here in Toronto, and I would like to welcome those listening in the meeting via audio webcast over the internet. With me on the platform today are Hunter Harrison, Chief Executive Officer, Keith Creel, President, Chief Operating Officer, and Paul Guthrie, Chief Legal Officer and Corporate Secretary. I now call the meeting to order. I will act as chairman, and Paul Guthrie will act as secretary. I hereby appoint Mark Thompson and Jamie Basac from Computershare Investor Services to act as scrutineers of the meeting.
The secretary has deposited with me a statutory declaration establishing the sending of notice of time and place of this meeting to each shareholder entitled to vote, to each director, and to its auditors of Canadian Pacific, as required by law. The scrutineers have confirmed that a quorum is present. The scrutineers' final report will be kept with the records of this meeting. I declare that the meeting has been regularly called and properly constituted for the transaction of business. Now, before we commence the formal part of the meeting, I have some remarks. As you are well aware, just over a year ago, there was considerable change in the works at Canadian Pacific. With the proxy contest now behind us, we have made tremendous progress since our last meeting.
It's a testament to what can be accomplished by effective and committed people working at all levels of this great company. We have come through a process that is a stronger and more focused organization. The message from our shareholders was clear and allowed Canadian Pacific to move rapidly towards making the changes our stakeholders wanted and that our company needed. We are very pleased that our customers, employees, and the market have reacted well to this tremendous change, brought in under our new CEO, Hunter Harrison, and his leadership team, many of which are here today. I would be remiss if I do not take the time to thank Steve Tobias, Railroader of the Year, a railway god, as he's widely known, for his work in stepping in as interim CEO upon the election last year on May seventeenth, and managing the company.
His stewardship was wonderful until Hunter was appointed. Thank you, Steve Tobias. The mandate for change encompasses all levels of Canadian Pacific, including your board. Those of us who only last year joined the CP board were immersed ourselves and quickly got up to speed on the business through various director education sessions. This learning process has brought the board members closer together and in a very, very short time frame, and has enhanced our working relationship. The CP board is an effective group and is committed to upholding the good governance of this company. Now, three directors have decided not to stand for re-election or are retiring. It has been our pleasure during this past year to work with Madeleine Paquin, John Manley, and Hartley Richardson.
Madeleine is the President and CEO of Logistec Corporation and has been on the board since 2001, when rail spun out from the ownership under CP Limited. Madeleine has served on many committees, including corporate governance and nominating, as well as safety, operations, and the environment committee. The Honorable John Manley, Manley, who has been on the CP board since 2006, and many of you know John as a very well-known figure, both in governance and in politics. His background in law and his time in government, in portfolios such as finance, Deputy Prime Minister, Foreign Affairs, have been invaluable to us. He served both CP well and all of Canada well.
Hartley Richardson, who is with us today, is the President and CEO of James Richardson & Sons, and has been on the CP board since 2006. He's been welcome and valued member, and the third generation of the Richardson family to sit on the board of Canadian Pacific. He's the kind of guy that gives more than he gets. His public service and philanthropy, his activities, his focus on his company and his family is legendary. We are privileged to have had Hartley Richardson serving with us, and his continued relationship as a valued customer, and his relationship in supporting of CP will last many years after today. Hartley, could you stand and be recognized, please? Hartley Richardson, ladies and gentlemen.
The amazing things that have done by management in the last little while will be well known to you, as well known to the marketplace, and we'll hear from Hunter and Keith later in the program. One thing I want to highlight are two basic things in Hunter's five principles of management, and those two things are operate safely, as testament to Scott's briefing to you this morning, and to develop people. I draw your attention to the Develop People Foundation as it, as our colleagues, employees, who are the base of this entire organization. And without those people, without that focus, this framework would never hold. On top of this, however, is the maxim to operate safely. Canadian Pacific operates through 1,200 communities, and has been part of the fabric of North American life for generations.
We are always mindful of our responsibilities to community, employee safety, and we're serious in our approach to both. Safety is built into all our systems at CP. Employees are trained, systems are built, briefings are conducted, audits are performed, processes continuously improved, and all have a safety component and focus. Railroading is a difficult calling, and it is a calling. I'm always astounded at multi-generations of people that are committed to Canadian Pacific and have worked here and call themselves railroaders. They're called to work in all kinds of weather and conditions, in all kinds of terrain, 24 hours a day, 7 days a week, 365 days a year. Now, despite all of our best efforts and intense focus on safety, it saddens me to tell you that in the past year, we have lost two of our colleagues through accidents.
One in Kenmare, North Dakota, and the other at our regional rail yard in Regina. Robert Glasgow was a conductor who lived in Minot, North Dakota, and Bob was fatally injured in May of 2012. Jamie Jijian was a conductor based in Regina, Saskatchewan. Jamie was fatally injured in January of 2013. Both Bob and Jamie were well-liked members of the CP family. Sadly, each leaves behind their wives and children. Bob and Jamie's deaths are soberly a reminder to us of the preciousness of life, and that nothing is more important than the safety of our people. Would you please join me in a moment of silence as we honor the memory of the Canadian Pacific family members, Conductor Robert Glasgow and Conductor Jamie Jijian? It's not easy.
As we think about Bob and Jamie and all railway men and women who have lost their lives in the company, it is timely to note that this is Rail Safety Week. CP will continue to play an active role in the education and communication of rail safety, and will work to strengthen our safety messages across North America. The safety of our neighbors also informs a large part of our community relations. Another significant portion is our desire to be a constructive and positive addition to community life. To that end, we're involved with several charitable organizations that focus on the support of those neighbors who may occasionally need a helping hand. In a country that has such abundance, it is not right that some of our citizens should still be ill-nourished.
Last evening, CP made a donation of CAD 100,000 to the Breakfast Clubs of Canada. Their mandate is to feed Canadian children through the funding of school breakfast programs. There are currently 20,000 Toronto schoolchildren who use this Breakfast Club program each morning. This donation will not only sustain the current 66 existing programs, but will allow 16 new breakfast programs to open in the Greater Toronto area. So another 3,200 students will be able to start their day with a full tummy, stomach. I would like to ask Don Inouye from the Breakfast Clubs of Canada to stand. Don, are you here? And recognize him for the excellent and meaningful work of your organization. Thank you very much, Don, for coming.
Finally, as chairman of this great company, I would like to emphasize that the board and management believe that good corporate governance practices are the key to effective management of Canadian Pacific and to the protection of the interests of you, our owners, our employees, and our stakeholders. CP is committed to ensuring that our governance principles are of the highest standard and fully compliant with all applicable requirements. The corporate governance principles and guidelines are available on our website and in print to any of you upon request. Thank you. So that concludes my remarks. I thank you for that opportunity to speak to you, and we'll now go on to the formal part of the meeting.
Please note that after the formal business is conducted and the meeting is terminated, Hunter will make a formal address standing here, and then there will be a Q&A and opportunity for you to talk rather more informally with Keith and Hunter. To expedite matters, a number of shareholders or proxy holders have agreed to propose and second motions with respect to the business of the meeting. While this will help speed the matters in handling the formal matters, it should not discourage any shareholder or proxy holder from speaking to any motion after it has been proposed and seconded, or for them to bring up any questions or comments properly within the scope of this meeting. If you do have any such questions or comments at the proper time, please proceed to one of the microphones in the aisles here.
Advise whether you're a shareholder or proxy holder, and give us your name, and then please keep your comments brief and ask one question at a time. Shareholders who do not wish to address the meeting but would like to submit a question or comment in writing, may use the bottom of the agenda, a copy of which has been placed on each of your chairs. Please hand your written questions or comments to one of my CP associates in the room here, upon leaving it, and questions will be responded by, to management or, if appropriate, relating to board or governance, myself, as soon as possible. There are three matters set out in the notice of this meeting to be voted on by shareholders. We will conduct all substantive items of business by way of a single ballot.
If you are a registered shareholder or proxy holder and advise that you wish to vote in person at this meeting, you should have received your ballot when you registered at the meeting. If you have completed and returned your form of proxy or voting instruction form, it is not necessary for you to vote today. However, if you wish to change your mind, you may do so by voting in person at the meeting by submitting a ballot. Anyone wishing to vote at the meeting and who does not have a ballot, please raise your hand, and one will be provided to you. I would request now that the secretary provide instructions in respect to the completing of the ballot.
Thank you, Mr. Chairman. Each shareholder or proxy holder may use the ballot provided to vote on all matters at the meeting. In particular, 1, the appointment of auditors by placing a mark beside either for or withhold in respect of the appointment of auditors. 2, CP's approach to executive compensation by placing a mark beside either for or against in respect to CP's approach to executive compensation. And 3, the election of directors by placing a mark opposite the names of the nominees for whom they wish to vote. The ballot should be clearly signed. If you are a shareholder or proxy holder, and the space for your name has not been pre-completed, please print your name on the ballot. Ballots will be completed late in the meeting, after all matters have been voted on.
The first item of business is the receipt of the consolidated financial statements, as included in the 2012 annual report. A copy of the annual report has been made available to shareholders in either hard copy or electronically. I now place this before the meeting, the consolidated financial statements and report of the auditors thereon of the year ended December 12, 2012. The next item of business is the appointment of auditors. Karen Fleming, may I have a motion?
I move that Deloitte LLP be appointed auditors of Canadian Pacific to hold office till the close of the next annual meeting of shareholders.
Mr. Chairman? May we have a seconder, please. Oh, sorry, Mr. Chairman. My name is Chris Burns, and I second the motion. Is there any discussion on this motion? I declare the polls open and the vote on the appointment of auditors. Next item of business is a non-binding advisory vote on CP's approach to executive compensation, commonly known as say-on-pay. Brianne Fijo, may I have a motion?
I move that on an advisory basis and not to diminish the responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in the corporation's information circular and delivered in advance of the 2013 annual meeting of shareholders.
Mr. Chairman, my name is Maeghan Albiston, and I second the motion.
Is there any discussion on this motion? I declare the polls open for the vote on advisory vote, a vote on the advisory vote on CP's approach to executive compensation. And finally, the final item of business is the election of directors. In accordance with the articles and bylaws of Canadian Pacific, the board of directors has determined that 13 directors are to be elected at this meeting. I now declare the meeting open for nominations.
Mr. Chairman, my name is Mark Seland, and I nominate the following 13 Canadian Pacific director nominees: William Ackman, Gary Colter, Isabelle Courville, Paul Haggis, Hunter Harrison, Paul Hilal, Krystyne Hoeg, Richard Kelly, Rebecca MacDonald, Anthony Melman, Linda Morgan, Andrew Reardon, and Stephen Tobias.
Thank you. Are there any further nominations? As there are no further nominations, I now declare the nominations closed. Mark Seland, may I have a motion?
I move that the persons nominated be elected directors of Canadian Pacific, each to hold office until the close of the next annual meeting of shareholders, or until such person's successor is elected or appointed.
Mr. Chairman, my name is Deryk Gillespie, and I second the motion.
Thank you, Derek. Is there any discussion on this motion? I declare the polls open for the vote on election of directors. As the number of nominees equals the number of board positions, I will declare the polls closed momentarily once the scrutineers have collected all the ballots. Would the scrutineers please proceed and collect the ballots? I think we're done here. So, I hereby declare that the polls have now closed with respect to all items of business, and we'll now take a short recess to allow the scrutineers time to count the ballots. I will call, once we're finished, on the secretary to report on the preliminary results of the votes cast by the ballot. I note that the company will report the detailed voting results following the meeting once the tabulation is complete.
I can report on the vote. Deloitte LLP have been reappointed auditors of Canadian Pacific. The say-on-pay vote has been passed, and each of the 13 nominees has been elected as a director of Canadian Pacific.
I adopt the preliminary report, Mr. Secretary, and the scrutineers, and declare that these thirteen director nominees, duly elected directors of Canadian Pacific. I direct the scrutineers' report to be annexed to the minutes of this meeting. Ladies and gentlemen, it's my pleasure to present to you your duly elected directors. They are as follows: Bill Ackman, chairman and executive officer of Pershing Square. Bill, if we could ask the directors to stand up and face the audience and remain standing, and if you'd hold your, your applause till the end, please. Gary Colter, president of CRS Inc., and formerly a long-standing leader of KPMG and its predecessor, Peat Marwick, having retired from the Canadian firm as Vice Chairman in 2002.
Isabelle Courville, Chair of the Board of Laurentian Bank of Canada, and formerly a top executive of Hydro-Québec and Bell Canada. Myself, Paul Haggis, your Chair, and formerly President and Chief Executive Officer of OMERS and Alberta Treasury Branch. Hunter Harrison, our Chief Executive. Paul Hilal, partner of Pershing Square. Krystyne Hoeg, former President and Chief Executive Officer of Corby Distilleries. Dick Kelly, retired Chairman and Chief Executive Officer of Xcel Energy. Rebecca MacDonald, founder and current Executive Chair of Just Energy Group. Anthony Melman, President and CEO of Acasta Capital, and formerly a Managing Director of Onex Corporation. Linda Morgan, partner at the law firm of Nossaman, Nossaman LLP, and previously Chair of the United States Surface Transportation Board.
Andrew Reardon, most recently a partner at the law firm of Reardon and Chasar, L.P.A., and former Chairman and Chief Executive Officer of TTX Company, the leading railcar leasing company in North America. And finally, Steve Tobias, former Vice Chairman and Chief Operating Officer of Norfolk Southern and a railway god. Thank you. As there are no other business that may be properly brought before the meeting, that concludes the formal business part of the meeting. I wish to thank you all for attending, and I now declare the meeting terminated. Hunter, the stage is yours.
Thank you, Mr. Chairman. Good morning to everyone. It's certainly a pleasure to be here, and I would like to take this opportunity for me to welcome our valued shareholders and customers and members of the board of directors, and maybe more importantly, fellow railroaders. This happens to be my first annual general meeting as your CEO. As I've sat back and reflected this morning, what a difference a year makes. I was not at Calgary last year. I'm happy to be happy that I wasn't there. It was a little different environment, I think, than we're facing this morning.
But I think one of the things that it does is, there's been obviously a lot of change at the board level in this organization as a result of the proxy contest and resignations and retirements, and we have dealt with and lost a lot of very talented people, but at the same time, we've been able to replace that group. And I think it's certainly a reflection of the talented board of directors to be able to turn the page, put this behind us, develop a certain esprit de corps, if you will, chemistry, that we need to take this organization forward and be in position to be able to create what a lot of you are concerned about, which is shareholder value.
We could certainly have not done the things that we have done initially, from an operating standpoint, without the confidence that the directors have shown in this management team. And so from a personal standpoint, with that, thank you very much. We needed that. As I first came aboard with this organization, and I've been in this situation several times before, what was my job? What did I need to do? The first thing I needed to do was really reflect on what the organization needed. I think you were, you, the shareholders of the organization, were, at least in my view, begging for change for whatever reason, and I don't think that's important. We've turned the page and moving forward. But I think there were two things that quickly jumped out at me.
One, there was an urgent need to improve our product, in our case, transportation service. And number two, to get our costs under control. We went about that. I committed to the board that I would work diligently and do it effectively to oversimplify two things: to turn this organization in the right direction, which is difficult to do, effectively an overused term, but really make cultural change internally and develop for the organization some sustainability. Now, the tough part of that equation is change. And how do you create change? And I've been through this a lot in my career, and it's difficult to do.
You know, it's difficult for all of us that have been in this business as long as, for example, I have, 50 years now, to have someone tell us, we need to make a change, that we had it wrong. So my view, how you create change is through, and probably only effective way is through great leadership. And so we really set about, to develop a team, a world-class team, that could put this organization certainly on the, on the right track. We've tried to take layers out of the organization. We were, obviously, in my view, we were very fat at the top of the organization. And so we've gone about making those changes.
And I've said before, and one of the most pleasant parts of this experience has been the ability of CP employees to accept and embrace change and recognize that we had to change to move this organization forward. I think every, you know, organization, if you look back in their history, has to go through periods for whatever reason of cleansing, and so I think this is kind of viewed as a cleansing. So you know, I try to use the term leaders, and I don't like the term managers because I think there's a distinction that you can draw, which we've tried to draw and tried to change in our culture. And it basically says this: managers do things right, but leaders do the right things. And so we're trying to do the right things.
One of the voids we had, and probably one of the most, if not the most significant, change in a positive note that we've made is the recruitment and appointment of my colleague, Keith Creel, as President and Chief Operating Officer. Keith and I have worked together for 25 years +. If I know anything about this business, he's the right man for the job to take this organization forward. There's only two others that were on the list, and that was Tobias and I, and we're both too old. And, so Keith is joining us, and he's hit the ground running. You're gonna see quickly the some of the results that he has brought to the organization.
So I think, I look forward to being here next year and looking and reflecting on some of those, some of those changes. So how are we gonna make these changes with this great leadership? You know, we've got a model that has been referred to as Precision Scheduled Railroading, and I wrote a couple of books about it. And people say: Is that all there is? Is that the only message you've got? You know, it's worked pretty well for about 25 years now in a lot of different cases, and so I think it still has some applications here. Let me just take a brief moment, to tell you the underpinnings of that, of that model.
One, if you can look at it, you can think of that it's built on a foundation that you've heard this morning, of people, people being a real cornerstone of the organization. And I'm gonna talk about four other important values, but I would suggest this to you: If you miss the people part, don't worry about the others, 'cause you're not gonna be successful because you have to have people to execute, dedicated, loyal workers to make this, the model a success. The second thing is our product, our service offering, our transportation service in the railroad business. The second is to control our cost. We do pretty well at that. And this is real, a balancing act. In all of my career, I've been through this balancing act between cost and service and keeping some harmony and balance there.
You know, what is, and we've been challenged this, what is good service? And if you look and reflect upon our tariffs and our contracts, very seldom do you hear the term service used and see it in that writing. So people misunderstand what is, quote, good service. Well, we had a lot of debate about that, a lot of focus groups, a lot of outside help, and we kinda came up with a simple definition. Good service is just doing what you say you're gonna do. So as you reflect with the customers and make certain commitments, just do what you say you're gonna do. The third, after the people foundation, is asset utilization. Very important, left out throughout my career.
I used to say that asset utilization was the missing ingredient in the recipe to success in the rail industry. We didn't measure it, we didn't give it a lot of focus, we didn't give it a lot of attention, and so we got the kind of results that you could certainly expect. And the fourth, and some would argue, the most important, rightfully so, is that I like to say it simply this way: Don't get anybody hurt. Now, we can talk about risk management, loss control, safety processes. We can be very sophisticated, but it's just all about not getting anybody hurt.
So, I think if you learn a little bit about the culture we're trying to shape, if you think about those values, and if you think about what I would say was adding some seasoning to those five values, and the seasoning being integrity and passion, you understand a little bit about what we wanna be. I say to people internally is, "You've got to love what you're doing and love what you do." You know, life's too short. If this is not the business you love and appreciate and enjoy doing every day, we gotta find something else to do. So what have we done? What's been accomplished so far in this short period of 10 months, which sometimes seems like 10 decades?
First thing we did was, we announced, and a lot of these things were simultaneous, we announced we were gonna move into new headquarters in Calgary for several reasons. One, it saves us about CAD 20 million a year. But maybe more importantly, I think it has an impact on changing our culture. I think it's important that we not forget how we got where we got, and we got there through railroading. And it's nice to be able to look out the window, at least in my view, and see a railroad and some locomotives and some cars, and that's what we're all about, rather than looking out from downtown Calgary in a big glass tower, looking out at the business district.
Now, that works for some, but I think we've taken an underused, utilized asset and gonna turn it into a first-class facility. So that was one of the first things. On the service side, the first thing we did, three days into my tenure, we took an hour, took a day, excuse me, out of the transcontinental schedule from an intermodal standpoint. If you look at every one of our operating metrics, the velocity measurements are up, dwell measurements are down. I think you can hear customers testify to better, more consistent service. Is it where it's gonna be? No. Have we got a ways to go? Yes. But clearly, I think it's obvious that we're on the right track.
In fact, just to take you inside a little bit, next week, I think it is, or the following week in Chicago, Keith and I will be conducting with about 20-25 other leaders of the organization, what we call a whiteboard exercise, where we take our ties off, roll our sleeves up, and go to a whiteboard and design the whole railroad from A to Z. Now, I would suggest to you that I've been around this industry a long time, and very seldom do you see the top two officers of an organization sitting down and scheduling trains and movements and industrial movements and that type thing. But that's the commitment and hopefully the dedication that we have to service that reflects that.
On the cost side, we've seen the operating ratio on a run rate basis improve 500 basis points in 10 months. You've read about the closures of the humps. The humps here in Toronto, the hump at Winnipeg, the hump at Calgary and Alyth, several closings of intermodal facilities, all in the interest of getting our costs under control and becoming more competitive. Now, a lot of people misunderstood, for an example, the closures of the humps. You know, why do you put these automatic high technology humps in that were high technology in the late 1950s and early 1960s in? Well, our book of business has changed totally. If you go back to late 1950s or early 1960s, we were still moving grain in 40-foot boxcars.
85%-90% of the cars that we handled needed to be sorted. Today, that's reversed. Today, 80% of our business, if you include intermodal from a unit train standpoint, is bulk, and it doesn't have to be sorted. So these yards became antiquated. And the best analogy I could possibly give you is, is maybe from Henry Ford. I think that if he was gonna build 15 Model As, he would never hit assembly line. But when it got to the point of building three or four, 500 Model As a day, assembly line was very appropriate. In asset utilization, all this has been accomplished with about 450 less locomotives, 7,000 less freight cars on the way to 10,000 by year-end, all the time, while maintaining an intense focus on safety.
So let me just take a moment to, to look at some of the results. They're pretty, pretty staggering, I think, as biased as I might be. First quarter, we set records. EPS was up, earnings per share, excuse me. I criticize people all the time for acronyms here because I don't understand about half of them. Up 51%, operating ratio for the quarter, a tough quarter with winter and a seasonally quarter that's challenging to us always. The operating ratio down 450 basis points with improved service and record deliveries to, to Vancouver in most of our bulk commodities.
Our headcount, which is to some degree misunderstood, is at about 3,700 at this point, on the way to 4,000 by year-end, which is mostly a high percentage of is through, through a natural attrition. So things are going quite well. Thomas Jefferson once said, "I like the dreams of the future better than the history of the past." So I'm guilty of kind of being a dreamer. Hopefully, those dreams can turn into a, a vision and a point. So my dream for CP is that, we're on the way to becoming, again, the best railroad in North America. People are looking in their rearview mirrors, watching us gain on them every day. They've said we're gonna catch them and pass them; it's just a matter of when.
But I think the challenge to this organization and to our shareholders is take this organization from the best railroad in North America to potentially one of the best transportation companies in the world. So I think those are pretty ambitious challenges. I think this road—we've been on quite a road. This has been a bumpy road, but a successful road, and I personally want to thank all of you for the confidence that you've shown in the organization and this team, and what we can hopefully potentially produce for you as shareholders, which is what it's all about. So thank you very much.
Ladies and gentlemen, we're just gonna get some stools up, move this out of the way, and Keith and Hunter will then have a chance to answer your questions and interact with the, with the shareholders in this nature. So just give us two minutes.
I've lost a little control today because I asked them if they would turn the lights down before my remarks, because I like to be able to see the audience and get, get some feedback. That didn't happen. Here they come again, when I stand up. Would somebody dial those lights down and keep them down, please? Questions.
Paul Durien is my name, Mr. Harrison.
Yes, sir.
Yes, okay. You just said that first quarter numbers are up very nicely. Nevertheless, revenues rise, been rising over the last three years, but profit and earnings per share has been falling. If I assume that that is because of one-time restructuring costs, am I fairly accurate on that, or are there other reasons?
The first quarter results? No, I think the first quarter.
No. The last three years is what I'm primarily focusing on.
Well, I don't know that I'm qualified to focus on the last three years. I can tell you this, you know, we need revenue growth, but at the same time, we need that balance of controlling costs. And I don't know of anything in the numbers that indicates behavior in the past will affect what we have been predicting for the future, if that-
Okay. I'm just looking at the popular business media, and they said, in order to accommodate the oil and gas, the new shale development, it said in this article that that requires the company to have some construction and infrastructure on the secondary lines. And now, how much can you quantify what the shale gas transportation will mean to the company? And is there quite a cost for that development? And also, looking out a little bit further, if when Keystone XL comes online, if it does, which is probably two or three years away, is that going to hurt the company in terms of all of a sudden, you, it's not gonna move by rail, it's going into the pipeline. Is that a p otential future problem?
It's an opportunity, but it's something that we have to be, you know, pretty cautious about. It's true that most of the growth, from an energy standpoint, is on the areas that have been described as the secondary branch lines, the north line, that we refer to as from Winnipeg to Edmonton. But we've recognized that, and the board has shown enough confidence that they gave us latitude yesterday to spend some additional capital, if and where required, to bring the infrastructure up to handle the additional tonnage. The growth, certainly in the early years, will be pretty phenomenal. I think we're looking this year for the growth to be more than double what it has been. But at the same time, I'm not sure what's gonna happen with Keystone.
I mean, it's a, it's a, you know, a political nightmare in some quarters right now. So but I think there's enough for a lot of us. I think that this whole issue has brought to people's attention that rail assets, you know, provide some flexibilities that pipeline don't. And so I happen to think that there's enough for both. If the pipeline is built, so be it. The pipeline can very effectively in some markets, very productively, move crude. And we're not against productivity. So if they can move crude like us effectively and safely, more power to them. Final note, though, I would say this: We are proceeding cautiously.
We're not gonna go out and spend capital and build infrastructure that's gonna last 40 or 45 years when we're not so sure about the market for 5 or 6. So that'll. There'll be some caution there.
I think there's one more point that's key to understand. The demand or the capacity, what they're actually consuming in the Gulf, which is where the Keystone is, it's a north-south play. Even if Keystone goes in, it's only a fraction of the demand that's needed there. So there's space for both. It's the tip of the iceberg. It's not gonna satisfy all the demand that's there for us. So there's a play on both sides.
Thank you.
Thank you.
Mr. Haggis, John Decker, I'm a stockholder down in New York. The, speaking of, energy plays and infrastructure improvements, is the DM&E all gone now?
No, the DM&E is not gone. We are, we're still going through, and we had a great dialogue about it yesterday. We're still going through expressions of interest. There have been a lot of people that have expressed interest initially, which is typically what happens. But we've taken a long list and cut it down to a short list. But I can tell you this: If we don't receive the appropriate proceeds for the DM&E, we'll continue to operate it. So it's not. No decision has been made. There are other potential options, but it's just a way to take a look at our whole card and see if there's a way to extract more value.
Thank you.
Yes, sir.
My name is David Reed. I'm sorry. Excuse me.
My name's Gordon Dyer. I have a question. May not make sense, but with you showing such a wonderful first quarter at CP, and CN is showing a decline in the first quarter, would this not be a time to maybe discuss a merger, but with CN and CP under one management group with you at the helm?
Next question. Gosh, I don't know. L et me address that honestly and straightforward. I just don't think right now that you could deal with regulatory approval in Canada. I think the Competition Bureau would be very interested in that transaction. And although I think I can do some great things with railroads, I don't do very well in Ottawa. So, we'll keep that in mind.
Logistically, with two railroads in Canada, CN and CP, under one management group, logistically, it would be incredible because we have one line going west and one line coming east.
You know, I don't disagree with that. We would have to, realistically, if that was ever done, we would have to address some competitive issues, rightfully so, certainly from maybe a term that's used that scares people called open access, where both of us could operate on both franchises. It's not a bad idea. It's just that sometimes good ideas take a long time to come together.
But the question has been made that the government would not approve it, but honestly, we have a lame duck government. U.S. Steel purchased Stelco 6 or 7 years ago and agreed to keep the mills open. As of Sunday, they've locked out 1,000 workers at Nanticoke, so in effect, we don't have a steel mill in Canada. Anyway, the government won't do anything.
Thank you.
Anyway, thanks, Hunter. It was a wonderful-
You taking notes?
I've got it, yeah.
Yes, sir.
Yes. My name is David Reed. I'm a shareholder. With the growth of the energy opportunity for the railway, and we've had a couple of spills, a couple of oil spills, and they've been addressed. But to avoid the issues that the pipelines are having now in terms of their public image, can you just give us some insight as to how we operate those trains that are carrying that oil product that might differ from how we operate other commodities that we ship?
Let me make a couple of comments, and I want Keith to, to weigh in here. Look, I don't think this is a, my view, I don't think this is a safety issue. Pipelines can operate very safely. Railroads can operate very safely. It's the execution. And we've had a couple of, we've had a couple of unfortunate derailments that, you know, on, on scale, were not looked as large or major, but because they had oil on the train and there was some oil that hit the ground, you know, they picked up a lot of, quote, "media coverage." These were, and we've thoroughly investigated, Keith and his team, looked at our policies, are they where they should be?
These were two cases, and Keith will get more in detail, where we had, in one case, a broken rail, which was an internal flaw in the rail, which surfaced when it broke, and the other one was a case of a broken wheel, which shattered and, but, you know, we're extremely sensitive to those issues, hopefully always. But, but particularly in the environment we're in now, and I don't think this is a case of finger-pointing over the safety. I think it's more of an issue of who can do the job in the right markets. And, but, Keith, you weigh in.
Let me add a little emphasis. Number one, safety is and always will be paramount. It's job number one. So when these incidents occur, we certainly, ahead of time, had discussions about this, because inevitably, sometimes things are going to happen that you can't predict. And in these cases, both an internal rail flaw and the steel of the rail, and also a flaw with the steel on the wheel. Sometimes, like I said, you can't predict it, but we invest heavily in technology, process, and people. Those are the three ways you address it, and you approach it. In each of those instances, firstly, went through each one to a very finite detail. From a process standpoint, from a regulatory standpoint, from an inspection standpoint, we were not deficient at all.
But that doesn't mean that you don't have an additional opportunity to improve. So on the training side, we were investing more money training our employees that visually inspect. We're investing more money in technology on the locomotives to detect track irregularities, as this technology develops. The industry overall, through the AAR, there's a place in Pueblo, Colorado, that we all invest in, a technical training center that develops technology. There are solutions there being advanced through science and through engineering to get better at detecting those metallurgical problems or flaws in rail as well as in wheels. So that's something that will continue. And then the other piece: what do you do when it happens? How does the company respond when an accident does occur? And that's an area that we're getting stronger as well.
We've been recognized in the industry with our competitor doing co-pro arrangements. So when this incident happened in White River, I picked the phone up and I called my prior colleagues at the Canadian National. I said: "Listen, we've got a joint opportunity we can look at. We can do a co-production on emergency hazmat response." So we're in the process now of collectively and collaboratively working together to identify resources which are strategically located across the property, so in the event that something does occur, we can respond and mitigate the impact to the environment. So that's something that's, it's an exciting opportunity for us. They're going to be able to improve their response, we'll be able to improve our response, and at the same time, control costs and protect the environment.
Thank you.
Thank you.