Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Canadian Pacific — Q4 2019 Earnings Presentation
21 slides from Canadian Pacific Kansas City's earnings presentation, Jan 29, 2020
Slide 1: Q4 2019 Earnings Review
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Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The following investor presentation contains certain forward-looking information within the meaning of applicable securities laws relating, but not limited, to Canadian Pacific’s operations, priorities and plans, anticipated financial and operational performance, including
Slide 3: Note on Non-GAAP Measures; Note on Adoption of Lease Accounting
NOTE ON NON-GAAP MEASURES Except where noted, all figures are in millions of Canadian dollars. Although CP has provided a forward-looking Non-GAAP measure (Adjusted diluted EPS) in this presentation, management is unable to Financial information is prepared in accordance with accounting reconcile, w
Slide 4: Keith Creel, President & Chief Executive Officer
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Slide 5: Highlights
HIGHLIGHTS Q4 2019 • Record fourth quarter and full Revenues Revenues $2.1 billion | +3% $7.8 billion | +7% year results • Continued operating Operating Income Operating Income $890 million | +2% $3.1 billion | +10% excellence and strong safety performance Operating Ratio Operating Ratio 57.0% | +50
Slide 6: Operating Performance
OPERATING PERFORMANCE Average terminal dwell Average train speed FRA train accident frequency (hours) (mph) (per million train-miles) 1.06 1.10 22.4 22.6 22.2 21.5 6.5 6.8 6.4 5.9 0.64 0.44 9% Improvement 6% Improvement 1% Decrease 3% Improvement 31% Improvement 4% Improvement Q4'19 Q4'18 2019 2018
Slide 7: (1) For a full description and reconciliation of Non-GAAP Measures, see CP’s Q4 2019
• • (1) For a full description and reconciliation of Non-GAAP Measures, see CP’s Q4 2019 Earnings Release on investor.cpr.ca
Slide 8: John Brooks
JOHN BROOKS
Slide 9: Revenue Highlights – Q4
REVENUE HIGHLIGHTS – Q4 FX-adjusted revenue variance(1) TOTAL REVENUE +3% Grain 4% Coal -10% Potash -26% VS Q4 2018 Fertilizers & sulphur -11% Forest products 3% Energy, chemicals & plastics 33% • $ per Revenue Ton Mile (“RTM”): +6% Metals, minerals & consumer -14% • Freight Revenue/Carload: +4% Aut
Slide 10: Revenue Highlights – Full Year
REVENUE HIGHLIGHTS – FULL YEAR FX-adjusted revenue variance(1) TOTAL REVENUE +7% Grain 6% Coal 1% Potash -6% VS 2018 Fertilizers & sulphur 1% Forest products 5% Energy, chemicals & plastics 22% • $/RTM: +6% Metals, minerals & consumer -8% • Freight Revenue/Carload: +5% Automotive 7% • RTMs: flat Int
Slide 11: Bulk
BULK Q4’19 VS. Q4’18 MARKET DRIVERS & OUTLOOK Freight Revenue (FX-adj.) (1) • Record tonnage in Canadian grain with -5% strong outlook RTMs -9% • Potash volumes improving but continued Freight Revenue per RTM (FX-adj.) (1) 4% headwinds in Q1; back half weighted growth in 2020 2019 REVENUE BREAKDOWN
Slide 12: Merchandise
MERCHANDISE Q4’19 VS. Q4’18 MARKET DRIVERS & OUTLOOK Freight Revenue (FX-adj.) (1) • Transload strategy driving growth in forest 14% products RTMs 3% • New DRU facility expected to come online Freight Revenue per RTM (FX-adj.) (1) 11% in 2021 • Continued headwinds in frac sand 2019 REVENUE BREAKDOWN
Slide 13: Intermodal
INTERMODAL Q4’19 VS. Q4’18 MARKET DRIVERS & OUTLOOK Freight Revenue (FX-adj.) (1) • Onboarded Yang Ming January 1st; -1% extended HMM a long-term agreement RTMs 4% • Domestic intermodal continues to hit new Freight Revenue per RTM (FX-adj.) (1) -5% highs; record quarter and year • Expect strong perf
Slide 14: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 15: Financial Performance – Q4
FINANCIAL PERFORMANCE – Q4 Fourth Quarter Change FX Adjusted (in millions, except percentages and per share data) 2019 2018 % Change(1) % Total revenues $ 2,069 $ 2,006 3% 3% Compensation and benefits 396 378 5% 5% Fuel 227 247 (8)% (8)% Materials 49 46 7% 7% Equipment rents 35 31 13% 13% Depreciati
Slide 16: Financial Performance – Full Year
FINANCIAL PERFORMANCE – FULL YEAR Full Year Change FX Adjusted (in millions, except percentages and per share data) 2019 2018 % Change(1) % Total revenues $ 7,792 $ 7,316 7% 5% Compensation and benefits 1,540 1,468 5% 4% Fuel 882 918 (4)% (6)% Materials 210 201 4% 4% Equipment rents 137 130 5% 3% De
Slide 17: Free Cash
FREE CASH For the year ended December 31 (in millions) 2019 2018 Cash provided by operating activities $ 2,990 $ 2,712 Capital expenditures (1,647) (1,551) Investment in Central Maine & Québec Railway (174) — Other property and asset sales 26 78 Other (8) 15 Cash used in investing activities (1,803)
Slide 18: Appendix
Slide 19: CMQ Acquisition
CMQ ACQUISITION • Announced on November 20th and closed on December 30th 2019 • Purchase price of US$133 million • 481 miles primarily in Québec and Maine • Extends CP’s reach and enables access into deepwater ports at Searsport and Saint John • CP will be able to offer the shortest and fastest rout
Slide 20: DRU Overview
DRU OVERVIEW • Gibson Energy (“Gibson”) and US Development Status Quo: Dilbit Future: DRUbit™(1) Group (“USD”) reached an agreement to construct 5% diluent and operate a DRU near Hardisty, Alberta 30% diluent (e.g., • The facility has a design capacity of 100,000 condensate) barrels per day; 50% of
Slide 21: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS MAEGHAN ALBISTON Assistant Vice-President CHRIS DE BRUYN Director 403-319-3591 investor@cpr.ca investor.cpr.ca