Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q3 2024 Earnings Presentation
21 slides from Canadian Pacific Kansas City's earnings presentation, Oct 23, 2024
Slide 1: Q3 2024 Earnings Review
Q3 2024 EARNINGS REVIEW October 23, 2024
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 in both the U.S. and Canada. Forward- looking information includes, but
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 (“GAAP”), unless otherwise noted. NON-GAA
Slide 4: Keith Creel, President & Chief Executive Officer
KEITH CREEL PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 5: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS ▪ Strong core performance and results, despite challenges in the quarter ▪ Delivering synergies and driving industry-leading growth ▪ MNBR approval creates a new rail corridor linking Mexico, Texas and the U.S. Southeast ▪ First linehaul hydrogen locomotive test - important
Slide 6: Mark Redd, Chief Operating Officer
MARK REDD CHIEF OPERATING OFFICER
Slide 7: Operating Performance vs. Q3 2023
OPERATING PERFORMANCE VS. Q3 2023 Average train speed Average terminal dwell (miles per hour) (hours) ▪ Strong operational and safety performance throughout the quarter 18.8 17.7 10.3 11.2 ▪ Network demonstrating efficiency and 6% Improvement 8% Improvement resiliency Q3'24 Q3'23 Q3'24 Q3'23 ▪ Conti
Slide 8: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 9: Revenue Highlights
REVENUE HIGHLIGHTS VS. Q3 2023 TOTAL REVENUE FX-ADJUSTED REVENUE VARIANCE(1) +6% VS Q3 2023 Grain Coal 8% 10% Potash 7% Fertilizers & Sulphur -1% RTMs: +4% Forest Products -1% Energy, chemicals, & plastics 10% $/RTM: +2% Metals, minerals & consumer -3% Carloads: -3% Automotive 27% Intermodal -5% $/C
Slide 10: Revenue Update
REVENUE UPDATE VS. Q3 2023 BULK MERCHANDISE INTERMODAL FX-Adj Revenue(1) +8% | RTMs +7% FX-Adj Revenue(1) +7% | RTMs +3% FX-Adj Revenue(1) -5% | RTMs +2% ▪ Growth in U.S. and Canadian Grain from ▪ Diversified growth in ECP from self-help ▪ Domestic Intermodal impacted by lower synergies, export ship
Slide 11: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 12: Financial Performance
FINANCIAL PERFORMANCE Third Quarter FX Adjusted (in millions, except percentages and per share data) 2024 2023 Change Change(1) Total revenues $ 3,549 $ 3,339 6% 6% Total operating expenses 2,346 2,166 8% 8% Operating income as reported $ 1,203 $ 1,173 3% Core adjusted combined operating income(1) 1
Slide 13: Operating Expenses
OPERATING EXPENSES Third Quarter $116 $2,346 FX Adjusted (in millions, except percentages) 2024 2023 Change Change(1) $49 $10 $17 Compensation and benefits(2) $ 644 $ 598 8% 8% $2,166 $2 $(10) $(4) Fuel 419 430 (3%) (2%) Materials(3) 99 90 10% 11% Equipment rents 89 91 (2%) (4%) Depreciation and amo
Slide 14: Below the Line
BELOW THE LINE Third Quarter (in millions, except percentages) 2024 2023 Change Other expense $ 1 $ 13 (92%) Other components of net periodic benefit recovery (89) (85) 5% Net interest expense 192 207 (7%) Income tax expense 262 258 2%
Slide 15: Adjusted Combined Free Cash
ADJUSTED COMBINED FREE CASH Third Quarter (in millions, except percentages and per share data) 2024 2023 Cash provided by operating activities $ 1,272 $ 1,027 Cash used in investing activities (760) (742) Effect of foreign currency fluctuations on foreign currency denominated cash and cash equivalen
Slide 16: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS CHRIS DE BRUYN Vice-President Capital Markets ASHLEY THORNE Assistant Vice-President Investor Relations 403-319-3591 investor@cpkcr.com investor.cpkcr.com
Slide 17: 2024 Outlook
2024 OUTLOOK DOUBLE-DIGIT CORE ADJUSTED COMBINED DILUTED EPS(1) GROWTH Vs. 2023 core adjusted combined diluted EPS of $3.84(1) MID-SINGLE DIGIT RTM GROWTH Vs. 2023 Combined RTMs (in millions) of 204,672(1) CAPITAL EXPENDITURES $2.75B Assumptions (2) ▪ Core adjusted effective tax rate of approximatel
Slide 18: Outlook for Long-Term Growth: 2024 - 2028
OUTLOOK FOR LONG-TERM GROWTH: 2024 - 2028 High single-digit revenue growth Double-digit core adjusted combined EPS(1) growth Key Assumptions Capital expenditures of $2.6 to $2.8 billion per year ▪ Exchange rate of $1.35 CAD/USD ▪ On-Highway Diesel price of Adjusted combined free cash(2) conversion o
Slide 19: CPKC's Sustainability Leadership
CPKC ’S SUSTAINABILITY LEADERSHIP Advancing our commitment to sustainable, long-term growth as a combined company ▪ Published our Commitment to Climate Action (1,2) ▪ Consolidated target to reduce our well-to-wheel locomotive emissions by 36.9% by 2030 , which has been validated by the Science Based
Slide 20: Operating Performance
OPERATING PERFORMANCE VS. Q3 2023 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 18.8 17.7 9,155 8,974 7,821 7,737 6% Improvement 1% Improvement 2% Improvement Q3'24 Q3'23 Q3'24 Q3'23 Q3'24 Q3'23 Fuel Efficiency FRA personal injuries(1) FRA train acciden
Slide 21: Operating Performance vs. CPKC Combined YTD 2023
OPERATING PERFORMANCE (1) VS. CPKC COMBINED YTD 2023 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 7,629 7,708 8,955 9,037 19.1 17.6 9% Improvement 1% Decline 1% Decline 2024 2023 2024 2023 2024 2023 Fuel Efficiency FRA personal injuries(2) FRA train ac
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