Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q2 2023 Earnings Presentation
22 slides from Canadian Pacific Kansas City's earnings presentation, Jul 27, 2023
Slide 1: Q2 2023 Earnings Review
Q2 2023 EARNINGS REVIEW July 27, 2023
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This investor presentation may contain certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information includes, but is not limited to, statements
Slide 3: Basis of Presentation & Non-GAAP Measures
BASIS OF PRESENTATION & NON-GAAP MEASURES BASIS OF PRESENTATION Except where noted, all figures are in millions of Canadian dollars. Financial information is prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), unless otherwise noted. Fi
Slide 4: Keith Creel, President & Chief Executive Officer
KEITH CREEL PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 5: CPKC Highlights
CPKC HIGHLIGHTS • Seamless operating transition FRA Train Revenue Workforce Accidents • Several key customer wins – Early momentum on synergies $3.2B 20,726 0.79 • Partnership with CSX to expand hydrogen locomotive program Days in Transit • Launch of flagship MMX 180/181 cross- San Luis Potosi to Ch
Slide 6: Mark Redd, Chief Operating Officer
MARK REDD CHIEF OPERATING OFFICER
Slide 7: Safety Highlights
SAFETY HIGHLIGHTS VS. CPKC COMBINED(1) 2022 Second Quarter • Strong improvement in train FRA personal injuries FRA train accident frequency accidents vs. prior year (per 200,000 employee-hours) (per million train-miles) 1.25 1.43 1.00 0.79 • Focus on safety alignment and 25% Increase 45% Improvement
Slide 8: Q2 Operating Performance
Q2 OPERATING PERFORMANCE VS. CPKC COMBINED(1) Q2 2022 • Smooth transition to combined CPKC network Locomotive Productivity Average train speed (GTMs / operating horsepower) (miles per hour) 18.2 • Continuing to identify 157 18.0 151 opportunities to enhance 4% Improvement 1% Improvement operations a
Slide 9: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 10: Revenue Highlights – Q2
REVENUE HIGHLIGHTS – Q2 TOTAL REVENUE COMBINED TOTAL REVENUE (1) +44% VS CP Q2 2022 +2% VS CPKC COMBINED Q2 2022 RTMs: +24% RTMs: -5% $/RTM: +16% $/RTM: +6% Carloads: +50% Carloads: -2% $/Carload: -4% $/Carload: +4% (1) Represents combined financial and operating information to illustrate the estima
Slide 11: Combined Revenue Update
COMBINED REVENUE UPDATE (1) BULK MERCHANDISE INTERMODAL • Softer grain volumes due to lower U.S. • Lower crude and plastics volumes due to • Higher inventory levels and market corn shipments to western Canada maintenance outages softening led to a decline in domestic intermodal volumes • Positive 2H
Slide 12: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 13: Financial Performance
FINANCIAL PERFORMANCE Second Quarter (in millions, except percentages and per share data) 2023 2022 Change % FX Adjusted Change %(1) Total revenues, as reported $ 3,174 $ 2,202 44% Combined total revenues(1) 3,338 3,285 2% (3)% Total operating expenses, as reported 2,230 1,334 67% Combined total ope
Slide 14: Reported Operating Expenses
REPORTED OPERATING EXPENSES vs CP Q2 2022 Second Quarter (in millions, except percentages) 2023 2022 Change % Compensation and benefits $ 659 $ 348 89% Fuel 397 370 7% Materials 98 63 56% Equipment rents 80 29 176% Depreciation and amortization 410 211 94% Purchased services and other 586 313 87% To
Slide 15: Combined Operating Expenses
COMBINED OPERATING EXPENSES (1) vs CPKC Combined Q2 2022 Second Quarter $114 $2,353 $141 FX Adjusted (in millions, except percentages) 2023 2022 Change % Change %(1) $22 $21 $93 $13 $(144) Compensation and benefits(2) $ 690 $ 527 31% 26% $2,093 Fuel 418 528 (21)% (26)% Materials 102 86 19% 15% Equip
Slide 16: Below the Line
BELOW THE LINE Second Quarter Year-to-Date (in millions of Canadian dollars) 2023 2022 2023 2022 Operating Income $ 944 $ 868 $ 1,773 $ 1,403 Less: Equity earnings of Kansas City Southern (26) (208) (230) (406) Other expense 21 7 23 6 Other components of net periodic benefit recovery (83) (101) (169
Slide 17: Adjusted Combined Free Cash
ADJUSTED COMBINED FREE CASH Second Quarter Year-to-Date (in millions of Canadian dollars) 2023 2022 2023 2022 CPKC Cash provided by operating activities as reported $ 892 $ 707 $ 1,774 $ 1,320 CPKC Cash used in investing activities (617) (362) (1,019) (568) Effect of foreign currency fluctuations on
Slide 18: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS CHRIS DE BRUYN Assistant Vice-President ASHLEY THORNE Managing Director 403-319-3591 investor@cpkcr.com investor.cpkcr.com
Slide 19: Appendix
“CANADIAN I) © ¢ / Paciric: APPENDIX
Slide 20: Outlook for Long-Term Growth
OUTLOOK FOR LONG-TERM GROWTH 2023 GUIDANCE 2024 – 2028 FINANCIAL OUTLOOK KEY ASSUMPTIONS • Core adjusted combined diluted • High single-digit revenue growth • Exchange rate of $1.35 CAD/USD EPS(1) to grow mid-single digits vs. 2022 • Double-digit core adjusted combined • On-Highway Diesel price of $
Slide 21: Q2 Operating Performance
Q2 OPERATING PERFORMANCE VS. CPKC COMBINED (1) 2022 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 18.2 18.0 8,982 9,202 7,747 7,746 1% Improvement Flat 2% Decline Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Fuel Efficiency FRA personal injuries FRA train accide
Slide 22: YTD Operating Performance
YTD OPERATING PERFORMANCE VS. CPKC COMBINED (1) 2022 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 17.6 18.4 9,069 9,059 7,694 7,599 4% Decline 1% Improvement Flat 2023 2022 2023 2022 2023 2022 Fuel Efficiency FRA personal injuries FRA train accident fr
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