[Second Quarter 2025 Earnings Release](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Release) [Q2 2025 Highlights and Management Commentary](index=1&type=section&id=Q2%202025%20Highlights%20and%20Management%20Commentary) CPKC reports strong Q2 2025 results with revenue of $3.7 billion and diluted EPS of $1.33, expressing confidence in full-year guidance Q2 2025 Key Financial and Operating Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $3.7 billion | $3.6 billion | +3% | | Reported Diluted EPS | $1.33 | $0.97 | +37% | | Core Adjusted Diluted EPS | $1.12 | $1.05 | +7% | | Reported Operating Ratio (OR) | 63.7% | 64.8% | -110 bps | | Core Adjusted OR | 60.7% | 61.8% | -110 bps | | Revenue Ton-Miles (RTMs) | N/A | N/A | +7% | - CEO Keith Creel stated the team delivered **strong results** by realizing value from the North American network and overcoming integration challenges[1](index=1&type=chunk) - The company remains **confident in its ability to deliver on full-year guidance** and achieve sustainable growth by leveraging its unique three-nation network[3](index=3&type=chunk) [Forward-Looking Information and Company Overview](index=2&type=section&id=Forward-looking%20information) The release outlines forward-looking statements and key risks including competition, regulations, and integration challenges - Forward-looking statements relate to the company's ability to **deliver on 2025 financial guidance** and **realize benefits from the CP-KCS combination**[8](index=8&type=chunk) - Key risks include **economic conditions, competition, regulatory changes, and CP-KCS integration challenges**[10](index=10&type=chunk)[11](index=11&type=chunk) - CPKC operates a **20,000-route-mile transnational railway** linking Canada, the U.S., and Mexico, providing access to major continental ports[13](index=13&type=chunk) [Financial Statements](index=4&type=section&id=FINANCIAL%20STATEMENTS) Financials show revenue growth and higher net income from an asset sale, but a comprehensive loss due to currency effects [Interim Consolidated Statements of Income](index=4&type=section&id=INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Q2 2025 income rose significantly due to a $333 million asset sale gain, boosting net income by 36% and diluted EPS to $1.33 Q2 2025 Income Statement Highlights (vs. Q2 2024) | Metric (in millions CAD) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $3,699 | $3,603 | +2.7% | | Total Operating Expenses | $2,356 | $2,336 | +0.9% | | Operating Income | $1,343 | $1,267 | +6.0% | | Gain on sale of equity investment | $333 | $0 | N/A | | Net Income Attributable to Controlling Shareholders | $1,234 | $905 | +36.4% | | Diluted EPS | $1.33 | $0.97 | +37.1% | [Interim Consolidated Statements of Comprehensive Income](index=5&type=section&id=INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The company recorded a comprehensive loss of $468 million in Q2 2025, driven by a $1.73 billion negative foreign currency translation Q2 2025 Comprehensive Income (vs. Q2 2024) | Metric (in millions CAD) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $1,234 | $903 | | Other Comprehensive (Loss) Income | ($1,756) | $313 | | Comprehensive (Loss) Income Attributable to Controlling Shareholders | ($468) | $1,207 | [Interim Consolidated Balance Sheets](index=6&type=section&id=INTERIM%20CONSOLIDATED%20BALANCE%20SHEETS%20AS%20AT) Total assets decreased to $85.18 billion as of June 30, 2025, primarily due to reductions in Goodwill and Properties Balance Sheet Summary | Metric (in millions CAD) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,525 | $3,384 | | Total Assets | $85,180 | $87,744 | | Total Current Liabilities | $3,778 | $5,661 | | Total Liabilities | $38,033 | $38,854 | | Total Equity | $47,147 | $48,890 | [Interim Consolidated Statements of Cash Flows](index=7&type=section&id=INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) In H1 2025, the company generated $2.51 billion in operating cash flow and used $1.74 billion for share repurchases Six Months Ended June 30 Cash Flow Summary (in millions CAD) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,511 | $2,293 | | Net cash used in investing activities | ($1,021) | ($1,324) | | Net cash used in financing activities | ($1,385) | ($895) | | Net increase in cash and cash equivalents | $60 | $93 | | Cash and cash equivalents at end of period | $799 | $557 | [Notes to Interim Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail a $333 million asset sale gain, significant debt activities, a share buyback program, and positive legal updates [Note 3: Revenues](index=10&type=section&id=Note%203%20Revenues) Q2 2025 freight revenue growth was driven by strong performance in the Grain, Intermodal, and Coal commodity segments Q2 Freight Revenues by Commodity (in millions CAD) | Commodity | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Grain | $743 | $665 | +11.7% | | Energy, chemicals and plastics | $712 | $695 | +2.4% | | Intermodal | $684 | $630 | +8.6% | | Metals, minerals and consumer products | $444 | $464 | -4.3% | | Automotive | $330 | $358 | -7.8% | | Coal | $256 | $236 | +8.5% | | **Total Freight Revenues** | **$3,629** | **$3,534** | **+2.7%** | [Note 4: Gain on sale of equity investment](index=10&type=section&id=Note%204%20Gain%20on%20sale%20of%20equity%20investment) The sale of its 50% stake in the Panama Canal Railway Company generated a pre-tax gain of $333 million (CAD) in Q2 2025 - The company sold its 50% stake in the Panama Canal Railway Company, recognizing a **pre-tax gain of U.S. $232 million ($333 million CAD)**[27](index=27&type=chunk) [Note 9: Debt](index=12&type=section&id=Note%209%20Debt) In H1 2025, the company issued $1.4 billion CAD and U.S. $1.2 billion in new notes while repaying U.S. $642 million of matured debt - In Q2 2025, the company issued **$1.4 billion in CAD-denominated unsecured notes** with various maturities[40](index=40&type=chunk) - In H1 2025, the company also issued **U.S. $1.2 billion in USD-denominated unsecured notes**[41](index=41&type=chunk) - During H1 2025, the company **repaid the remaining U.S. $642 million** on its 2.90% 10-year Notes[39](index=39&type=chunk) [Note 11: Share repurchases](index=14&type=section&id=Note%2011%20Share%20repurchases) The company repurchased nearly 13 million shares for approximately $1.4 billion in Q2 2025 under its current NCIB program Share Repurchase Activity (2025) | Period | Shares Repurchased | Amount (in millions CAD) | | :--- | :--- | :--- | | Q2 2025 | 12,882,454 | $1,398 | | H1 2025 | 16,363,112 | $1,773 | - The company announced an NCIB on February 27, 2025, to purchase up to **37.3 million Common Shares** for cancellation by March 2, 2026[53](index=53&type=chunk) [Note 14: Contingencies](index=15&type=section&id=Note%2014%20Contingencies) The company reports favorable court decisions in the Lac-Mégantic and Remington cases and continues to litigate a Mexican tax assessment - **Lac-Mégantic Litigation:** A Québec Court of Appeal **upheld a trial decision dismissing all claims** against the Company, though plaintiffs are seeking leave to appeal[67](index=67&type=chunk) - **Remington Development Claim:** An appeals court **set aside a trial judgment of approximately $165 million** and ordered a new trial[71](index=71&type=chunk) - **2014 Mexican Tax Assessment:** A court vacated a prior adverse ruling on a **Ps.6,372 million ($451 million) assessment**, and the company is pursuing further appeals[72](index=72&type=chunk)[75](index=75&type=chunk) [Summary of Rail Data](index=19&type=section&id=Summary%20of%20Rail%20Data) Q2 2025 data shows revenue growth from a 7% RTM increase, but operational challenges are noted in terminal dwell and accident frequency [Commodity and Revenue Metrics](index=21&type=section&id=Commodity%20and%20Revenue%20Metrics) Q2 2025 volume growth was led by Intermodal and Grain, but total freight revenue per RTM declined by 4% due to lower rates Q2 2025 vs Q2 2024 Volume Metrics by Commodity | Commodity | RTMs Change | Carloads Change | | :--- | :--- | :--- | | Intermodal | +18% | +14% | | Grain | +13% | +11% | | Automotive | +8% | -6% | | Coal | +5% | +9% | | Energy, chemicals and plastics | -5% | 0% | | **Total** | **+7%** | **+6%** | Q2 2025 vs Q2 2024 Revenue per RTM (cents) | Commodity | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Automotive | 23.31 | 27.41 | -15% | | Intermodal | 6.67 | 7.28 | -8% | | Energy, chemicals and plastics | 7.78 | 7.21 | +8% | | **Total Freight** | **6.54** | **6.78** | **-4%** | [Operations Performance](index=24&type=section&id=Operations%20Performance) Q2 2025 operational metrics show higher GTMs and train weight, but also increased terminal dwell time and a higher train accident rate Q2 2025 vs Q2 2024 Operations Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross ton-miles (millions) | 101,973 | 96,579 | +6% | | Average train weight (tons) | 9,187 | 9,090 | +1% | | Average terminal dwell (hours) | 10.2 | 9.5 | +7% | | Average train speed (mph) | 19.3 | 19.3 | 0% | | FRA personal injury frequency | 0.77 | 0.84 | -8% | | FRA train accident frequency | 0.97 | 0.70 | +39% | [Non-GAAP Measures](index=25&type=section&id=Non-GAAP%20Measures) Management uses non-GAAP measures like Core adjusted EPS and OR to evaluate underlying performance by excluding significant items - The company uses non-GAAP measures to evaluate underlying earnings by **excluding significant items not indicative of future trends**[88](index=88&type=chunk)[92](index=92&type=chunk) - Key adjustments include excluding **acquisition costs, a $333 million asset sale gain, and KCS purchase accounting impacts**[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=29&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Reconciliations show Q2 2025 Core adjusted EPS of $1.12 and a Core adjusted operating ratio of 60.7%, a 110 bps improvement Q2 2025 GAAP vs. Non-GAAP Reconciliation | Metric | GAAP | Core Adjusted | | :--- | :--- | :--- | | Diluted EPS | $1.33 | $1.12 | | Operating Ratio | 63.7% | 60.7% | Reconciliation of Net Income to Core Adjusted Income (Q2 2025, in millions CAD) | Description | Amount | | :--- | :--- | | **Net income attributable to controlling shareholders** | **$1,234** | | Less: Gain on sale of equity investment (pre-tax) | $333 | | Less: Acquisition-related costs (pre-tax) | ($19) | | Less: KCS purchase accounting | ($95) | | Add: Tax effect of adjustments | $21 | | **Core adjusted income** | **$1,036** | Adjusted Net Debt to Adjusted EBITDA Ratio | Metric | As of June 30, 2025 | | :--- | :--- | | Adjusted Net Debt (millions CAD) | $22,485 | | Adjusted EBITDA (LTM, millions CAD) | $7,586 | | **Ratio** | **3.0x** |

CALGARY, AB, July 30, 2025 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) today announced its second-quarter results, including revenues of $3.7 billion, diluted earnings per share (EPS) of $1.33 and core adjusted diluted EPS1 of $1.12. "Our exceptional team of railroaders again delivered strong operating and financial results in the second quarter as we realize more of the value created by this unrivalled North American network," said Keith Creel, CPKC President and Chief Executive ...

Core Viewpoint - Analysts forecast that Canadian Pacific Kansas City (CP) will report quarterly earnings of $0.82 per share, reflecting a year-over-year increase of 6.5%, with revenues expected to reach $2.79 billion, a 5.8% increase compared to the previous year [1]. Earnings Estimates - Over the past 30 days, the consensus EPS estimate has been adjusted upward by 0.4%, indicating a reassessment of projections by covering analysts [2]. - Revisions to earnings estimates are crucial for predicting investor actions regarding the stock, as empirical research shows a strong correlation between earnings estimate trends and short-term stock price performance [3]. Key Metrics Forecast - Analysts project the 'Adjusted Operating Ratio' to be 60.6%, down from 61.8% in the same quarter last year [5]. - 'Carloads - Intermodal' are expected to reach 443.31 thousand, up from 403.50 thousand year-over-year [5]. - 'Carloads - Automotive' are estimated at 67.08 thousand, slightly up from 66.10 thousand year-over-year [5]. - 'Carloads - Grain' should come in at 136.15 thousand, compared to 128.90 thousand last year [6]. - 'Carloads - Metals, Minerals and Consumer Products' are expected to be 129.47 thousand, down from 134.60 thousand in the same quarter last year [6]. - 'Carloads - Potash' are forecasted at 51.05 thousand, up from 49.40 thousand year-over-year [7]. - 'Carloads - Fertilizers and Sulphur' are expected to be 17.18 thousand, slightly up from 17.00 thousand last year [7]. - 'Carloads - Forest Products' are projected at 33.87 thousand, down from 34.60 thousand year-over-year [8]. - 'Carloads - Energy, Chemicals and Plastics' are estimated at 141.97 thousand, down from 142.40 thousand last year [8]. - 'Carloads - Total' are expected to reach 1.13 million, up from 1.09 million year-over-year [9]. - 'Carloads - Coal' are forecasted at 114.56 thousand, up from 108.90 thousand last year [9]. - The consensus estimate for 'Revenue ton miles (RTMs) - Total' stands at 54.54 billion, compared to 52.13 billion year-over-year [9]. Stock Performance - Shares of Canadian Pacific Kansas City have shown a return of -3.6% over the past month, contrasting with the Zacks S&P 500 composite's +4.6% change, indicating a potential underperformance relative to the market [11].

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Core Viewpoint - Canadian Pacific Kansas City (CPKC) will release its second-quarter 2025 financial and operating results on July 30, 2025, after market close [1] Group 1: Financial Results Announcement - CPKC will discuss its financial results in a conference call scheduled for 4:30 p.m. ET on July 30, 2025 [1] - The conference call can be accessed via specific phone numbers for Canada, the U.S., and international callers [2] Group 2: Webcast and Replay Information - Investors are encouraged to access the webcast and presentation materials on CPKC's website [3] - A replay of the conference call will be available until August 6, 2025, through designated phone numbers [3] Group 3: Company Overview - CPKC is the first and only single-line transnational railway connecting Canada, the U.S., and Mexico, with extensive access to major ports [4] - The company operates approximately 20,000 route miles and employs 20,000 railroaders, providing significant rail service and network reach across North America [4] - CPKC is focused on growth alongside its customers, offering various freight transportation services, logistics solutions, and supply chain expertise [4]

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Summary of Key Points from the Conference Call Industry Overview: Global Logistics - **Trade Policy Instability**: The current trade policy landscape is characterized by significant instability, with potential conflicts in the Middle East affecting logistics and transshipment hubs. Multinationals and logistics partners are forced to adapt continuously [1][4] - **Q1 Volume Performance**: Strong Q1 volumes were reported, with ocean volumes increasing by 6% year-over-year (YoY) in April. However, there are concerns about potential risks to trade volumes in the second half of the year [1][3] - **Airfreight Revenue Growth**: The international airfreight industry is experiencing low single-digit revenue growth, with recent data indicating a slight decline in yields due to lower fuel surcharges [1][5] Key Metrics and Trends - **Global Trade Volumes**: Global trade volumes rose by 5.9% YoY in March, primarily driven by a 30% increase in US imports, likely due to demand pull forward ahead of tariff threats [2] - **Spot Rates**: Spot rates for ocean freight have spiked significantly, with the Shanghai Containerized Freight Index (SCFI) up by 41% and the World Container Index (WCI) up by 59% since mid-May [3] - **PMI Indicators**: Recent Purchasing Managers' Index (PMI) data shows a decline in China (-2.1 points to 48.3), while the US stabilized and Europe improved [2] Company-Specific Insights DSV - **Rating**: Outperform, Target Price (TP) DKK 1,650.00 - **Acquisition of DB Schenker**: DSV is expected to become the largest freight forwarder post-acquisition, with anticipated EPS of DKK 100+ by 2028 [9] DHL - **Rating**: Outperform, TP €43.00 - **Earnings Exposure**: Approximately 80% of EBIT is tied to e-commerce and world trade, with a significant portion coming from the Express division [10] Kuehne+Nagel - **Rating**: Market-Perform, TP CHF 190.00 - **Performance Issues**: The company has underperformed peers in volume growth, attributed to deep headcount reductions impacting commercial capabilities [11][12] A.P. Moller - Maersk - **Rating**: Underperform, TP DKK 9,350.00 - **Challenges in Container Shipping**: Spot rates are down approximately 40% year-to-date, with expectations of declining volumes and a challenging supply-demand balance [13] UPS - **Rating**: Outperform, TP $133.00 - **Cost Savings Initiatives**: UPS is targeting $3.5 billion in cost savings through restructuring, which includes significant workforce reductions [24] FedEx - **Rating**: Market-Perform, TP $249.00 - **Network Integration Risks**: The company faces challenges due to policy uncertainty and complex network integration, which may impact earnings [25] Investment Implications - **European Logistics**: DSV and DHL are rated as Outperform, while Kuehne+Nagel and Maersk are rated as Market-Perform and Underperform, respectively [8] - **North American Logistics**: UPS is rated as Outperform, while FedEx is rated as Market-Perform [8] Additional Considerations - **Geopolitical Risks**: Ongoing conflicts in the Middle East may complicate logistics and trade routes, particularly affecting the Strait of Hormuz and key ports like Jebel Ali [4] - **Market Sentiment**: There is a cautious outlook on companies like Kuehne+Nagel and CSX due to execution challenges and macroeconomic uncertainties [12][18] This summary encapsulates the critical insights and metrics from the conference call, highlighting the current state of the global logistics industry and specific company performances.

Company Overview - Canadian Pacific Kansas City Limited (CPKC) is issuing C$500 million of 4.00% Notes due 2032, C$600 million of 4.40% Notes due 2036, and C$300 million of 4.80% Notes due 2055, guaranteed by CPKC [1][2] - The transaction is expected to close on June 13, 2025, subject to customary closing conditions [2] - The net proceeds from the Offering will be used to refinance CPRC's outstanding indebtedness and for general corporate purposes [2] Offering Details - The Offering is made under CPRC's base shelf prospectus dated March 6, 2025, supplemented by the prospectus supplement dated June 11, 2025 [3] - The joint lead agents and joint active book-runners for the Offering include Scotia Capital Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., and RBC Capital Markets [2] Regulatory Information - The securities issued under the Offering have not been registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption [4] - Access to the Prospectus is provided in accordance with securities legislation and is available on SEDAR+ [5] Company Background - CPKC is the first and only single-line transnational railway linking Canada, the United States, and Mexico, with access to major ports from Vancouver to Atlantic Canada and the Gulf Coast [11][12] - The company operates approximately 20,000 route miles and employs 20,000 railroaders, providing unparalleled rail service and network reach across North America [12]