Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q4 2023 Earnings Presentation
24 slides from Canadian Pacific Kansas City's earnings presentation, Jan 30, 2024
Slide 1: Q4 2023 Earnings Review
Q4 2023 EARNINGS REVIEW January 30, 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. 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: Highlights
HIGHLIGHTS Q4 2023 • Strong Q4 results to cap historic year Revenues Revenues $3.8 billion | +53% $12.6 billion | +42% • New customer solutions driving increased synergies Combined Total Revenues (1) Combined Total Revenues (1) $3.8 billion | +4% $13.9 billion | +5% • Network performing well Operati
Slide 6: Mark Redd, Chief Operating Officer
MARK REDD CHIEF OPERATING OFFICER
Slide 7: Operating Performance – Q4
OPERATING PERFORMANCE – Q4 VS. CPKC COMBINED(1) Q4 2022 Average train speed Fuel efficiency • Finished 2023 with industry-best FRA (miles per hour) (U.S. gallons of locomotive fuel/1,000 Train Accident Frequency GTMs) • Building on CP’s legacy of 17 18.6 17.6 1.042 1.063 consecutive years of industr
Slide 8: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 9: Revenue Highlights – Q4
REVENUE HIGHLIGHTS – Q4 TOTAL REVENUE TOTAL REVENUE +53% VS CP Q4 2022 +4% VS CPKC COMBINED(1) Q4 2022 RTMs: +41% RTMs: +4% $/RTM: +9% $/RTM: -% Carloads: +64% Carloads: +2% $/Carload: -6% $/Carload: +2% (1) Represents combined financial and operating information to illustrate the estimated effects
Slide 10: Revenue Update
REVENUE UPDATE (1) BULK MERCHANDISE INTERMODAL • Lower grain due to weaker harvest in • Growth in refined fuel products and • Lower retail volumes led to a decline in Canada for the ‘23/‘24 crop year, asphalt driven by new business domestic intermodal volumes partially offset by growth in U.S. grain
Slide 11: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 12: Financial Performance – Q4
FINANCIAL PERFORMANCE – Q4 (in millions, except percentages and per share data) 2023 2022 Change FX Adjusted Change (2) Total revenues, as reported $ 3,776 $ 2,462 53% Combined total revenues(1) 3,776 3,639 4% 3% Total operating expenses, as reported 2,334 1,473 58% Combined total operating expenses
Slide 13: Financial Performance – Full Year
FINANCIAL PERFORMANCE – FULL YEAR (in millions, except percentages and per share data) 2023 2022 Change FX Adjusted Change(2) Total revenues, as reported $ 12,555 $ 8,814 42% Combined total revenues(1) 13,909 13,217 5% 2% Total operating expenses, as reported $ 8,167 $ 5,485 49% Combined total opera
Slide 14: Operating Expenses
OPERATING EXPENSES vs CP Reported Q4 / Full Year 2022 Fourth Quarter Full Year (in millions, except percentages) 2023 2022 Change 2023 2022 Change Compensation and benefits $ 637 $ 416 53% $ 2,332 $ 1,570 49% Fuel 528 399 32% 1,681 1,400 20% Materials 86 69 25% 346 260 33% Equipment rents 76 43 77%
Slide 15: Operating Expenses – Q4
OPERATING EXPENSES – Q4 vs CPKC Combined Q4 2022(1) $27 $14 FX Adjusted $2,326 $24 $2,334 (in millions, except percentages) 2023 2022 Change Change (1) $(45) $(2) $(9) $(1) Compensation and benefits(2) $ 637 $ 615 4% 2% Fuel 528 562 (6%) (8%) Materials(3) 86 94 (9%) (9%) Equipment rents 76 77 (1%) (
Slide 16: Below the Line
BELOW THE LINE Fourth Quarter Full Year (in millions) 2023 2022 2023 2022 Operating Income $ 1,442 $ 989 $ 4,388 $ 3,329 Less: Equity earnings of Kansas City Southern — (447) (230) (1,074) Other expense 16 4 52 17 Other components of net periodic benefit recovery (73) (107) (327) (411) Net interest
Slide 17: Adjusted Combined Free Cash
ADJUSTED COMBINED FREE CASH Full Year (in millions) 2023 2022 CPKC Cash provided by operating activities as reported $ 4,137 $ 4,142 • Strong cash flow generation on the CPKC Cash used in investing activities (2,162) (1,496) quarter and year Effect of foreign currency fluctuations on foreign currenc
Slide 18: 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 19: 2024 Outlook
2024 OUTLOOK DOUBLE-DIGIT CORE ADJUSTED COMBINED DILUTED EPS(1) GROWTH Vs. 2023 core adjusted combined diluted EPS of $3.84(1) CAPITAL EXPENDITURES $2.75B Assumptions Other components of net periodic benefit recovery will increase by approximately $23 million, from $327 million in 2023 (2) Core
Slide 20: 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 21: 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 • Established a consolidated target for CPKC to reduce our well-to- wheel locomotive emissions by 36.9% by 2030 , which has been (1) validate
Slide 22: Combined Operating Expenses – Full Year
COMBINED OPERATING EXPENSES – FULL YEAR vs CPKC Combined Full Year 2022(1) $173 $93 $155 $9,152 FX Adjusted $287 $13 $50 (in millions, except percentages) 2023 2022 Change Change(1) $8,635 $(254) Compensation and benefits(2) $ 2,575 $ 2,330 11% 7% Fuel 1,851 2,002 (8%) (12%) Materials(3) 376 351 7%
Slide 23: Operating Performance – Q4
OPERATING PERFORMANCE – Q4 VS. CPKC COMBINED (1) Q4 2022 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 18.6 17.6 7,345 7,573 9,085 8,732 6% Improvement 3% Decline 4% Decline Q4'23 Q4'22 Q4'23 Q4'22 Q4'23 Q4'22 Fuel efficiency FRA personal injuries(2) FR
Slide 24: Combined Operating Performance – Full Year
COMBINED OPERATING PERFORMANCE – FULL YEAR VS. CPKC COMBINED (1) 2022 Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 17.8 18.0 7,609 7,643 8,954 9,102 1% Decline Flat 2% Decline 2023 2022 2023 2022 2023 2022 Fuel efficiency FRA personal injuries FRA trai
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