Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q4 2020 Earnings Presentation
23 slides from Canadian Pacific Kansas City's earnings presentation, Jan 28, 2021
Slide 1: Q4 2020 Earnings Review
Q4 2020 EARNINGS REVIEW JANUARY 27, 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The following investor presentation contains certain forward-looking information within the and operating costs; changes in fuel prices; uncertainties of investigations, proceedings or other meaning of applicable securities laws relating, but not limited to, statements con
Slide 3: Note on Non-GAAP Measures
NOTE ON NON-GAAP MEASURES 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. CP presents Non-GAAP measures in this pr
Slide 4: Keith Creel, President & Chief Executive Officer
KEITH CREEL PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 5: Highlights Q4 2020
HIGHLIGHTS Q4 2020 Revenues Revenues • Strong earnings growth and margin $2.0 billion | -3% $7.7 billion | -1% improvement despite a year of unprecedented uncertainty Operating Income Operating Income $928 million | +4% $3.3 billion | +6% • Record full year operating performance Operating Ratio Oper
Slide 6: Q4 Operating Performance
Q4 OPERATING PERFORMANCE Locomotive productivity Average train length FRA train accident frequency (GTMs/operating horsepower) (feet) (per million train-miles) 207 210 8,207 7,405 0.70 0.44 1% Decline 11% Improvement 59% Increase Q4'20 Q4'19 Q4'20 Q4'19 Q4'20 Q4'19 Fuel Efficiency Average train weig
Slide 7: Full Year Operating Performance
FULL YEAR OPERATING PERFORMANCE Locomotive Productivity Average train length FRA train accident frequency (GTMs/operating horsepower) (feet) (per million train-miles) 1.06 207 202 0.96 7,929 7,388 2% Improvement - RECORD 7% Improvement - RECORD 9% Improvement - RECORD 2020 2019 2020 2019 2020 2019 F
Slide 8: 2021 Outlook
2021 OUTLOOK DOUBLE-DIGIT ADJUSTED DILUTED EPS(1)(2) GROWTH HIGH SINGLE-DIGIT RTM GROWTH CAPITAL EXPENDITURES $1.55B ASSUMPTIONS • Expected effective tax rate of approximately 24.6% • Other components of net periodic benefit recovery to increase by approximately $40 million vs. 2020 (1) For a full d
Slide 9: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 10: Revenue Highlights Q4
REVENUE HIGHLIGHTS Q4 TOTAL REVENUE FX-adjusted revenue variance(1) -3% Grain 8% Coal -8% Potash 10% VS Q4 2019 Fertilizers & sulphur 24% Forest products 14% • RTMs: +2% Energy, chemicals & plastics -25% Metals, minerals & consumer -9% • FX: -1% Automotive 31% • Fuel: -2% Intermodal 3% • Price / Mix
Slide 11: Bulk
BULK Q4 ‘20 VS Q4 ‘19 MARKET DRIVERS & OUTLOOK Freight Revenue (FX-adj.) (1) 6% • Record fourth quarter, full year, and crop RTMs 15% in Canadian grain Freight Revenue • 8500’ model will enable continued per RTM (FX-adj.) (1) -8% growth in 2021 • U.S. grain volumes increased >30%; 2020 REVENUE BREAK
Slide 12: Merchandise
MERCHANDISE Q4 ‘20 VS Q4 ‘19 MARKET DRIVERS & OUTLOOK Freight Revenue -12% (FX-adj.) (1) • Refined fuel markets normalizing from RTMs -16% pandemic lows Freight Revenue per RTM (FX-adj.) (1) 4% • Diluent recovery unit coming online in second half of 2021 2020 REVENUE BREAKDOWN • Market fundamentals,
Slide 13: Intermodal
INTERMODAL Q4 ‘20 VS Q4 ‘19 MARKET DRIVERS & OUTLOOK Freight Revenue (FX-adj.) (1) 3% • Record Q4 2020 and fourth consecutive RTMs -1% year for domestic intermodal Freight Revenue • Expect domestic retail volume to per RTM (FX-adj.) (1) 4% continue to outperform • Hapag-Lloyd Port of Saint John volu
Slide 14: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 15: Financial Performance - Q4
FINANCIAL PERFORMANCE - Q4 Fourth Quarter FX Adjusted (in millions, except percentages and per Change%( share data) 2020 2019 Change % 1) • Compensation and benefits increase Total revenues $ 2,012 $ 2,069 (3)% (2)% Compensation and benefits 433 396 9% 10% driven by stock based compensation, Fuel 16
Slide 16: Financial Performance - Full Year
FINANCIAL PERFORMANCE - FULL YEAR Full Year FX (in millions, except percentages and per Adjusted share data) 2020 2019 Change % Change%(1) • Record full year operating ratio driven by Total revenues $ 7,710 $ 7,792 (1)% (1)% Compensation and benefits 1,560 1,540 1% 1% operating efficiencies, reduced
Slide 17: Free Cash
FREE CASH For the year ended December 31 (in millions, except percentages and per share data) 2020 2019 Cash provided by operating activities $ 2,802 $ 2,990 • Continued capital allocation discipline as Capital expenditures (1,671) (1,647) Investment in Central Maine & Quebec Railway 19 (174) eviden
Slide 18: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS CHRIS DE BRUYN Managing Director REBECCA STEPHEN Senior Manager 403-319-3591 investor@cpr.ca investor.cpr.ca
Slide 19: Appendix
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Slide 20: CP's East Coast Advantage
CP’S EAST COAST ADVANTAGE Port of Saint John CP’s First Intermodal train to Saint John in 25 Years • In December, CP announced Hapag-Lloyd will begin regularly calling on the Port of Saint John starting in 2021 • Early proof point of the value of the CMQ acquisition; further opportunities for growth
Slide 21: Technology Spotlight – Enhancing Safety and Efficiency
TECHNOLOGY SPOTLIGHT – ENHANCING SAFETY AND EFFICIENCY Inspection Portal Cold Wheel Broken Rail Detection • Recently received exemption from • Leveraging hotbox detectors to • CP-developed technology that Transport Canada identify brakes that may be allows us to identify broken rail in improperly ap
Slide 22: Commitment to ESG & Sustainability Reporting
COMMITMENT TO ESG & SUSTAINABILITY REPORTING CP has a strong history of ESG disclosures and leading sustainability practices Began sustainability reporting in 2001 Annual CDP reporting since ~2006, 2020 rating of A- Member of the Dow Jones Sustainability Index North America Industry-leading
Slide 23: Operating Responsibly
OPERATING RESPONSIBLY CASE STUDY: OGDEN YARD TRANSFORMATION • In 2011, CP’s Ogden yard located in Calgary, AB was an inefficient industrial yard powered by half century-old natural gas fired boilers and a three-quarter century old steam tunnel system that supplied heating throughout all the building
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