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Group 1 - Canadian Pacific Kansas City Limited (CPKC) held its Fourth Quarter and Full Year 2024 Conference Call on January 29, 2025 [1] - The call featured key company participants including the President and CEO, EVP and COO, and EVP and CFO [1][2] - The presentation included forward-looking information and non-GAAP measures, with actual results potentially differing from projections [3][4] Group 2 - Supplemental Q4 and full-year combined revenue and operating performance data is available for investors [4]

Core Insights - Canadian Pacific Kansas City (CP) reported a revenue of $2.77 billion for Q4 2024, reflecting a slight year-over-year decline of 0.2% but exceeding the Zacks Consensus Estimate by 1.91% [1] - The earnings per share (EPS) for the same quarter was $0.92, up from $0.87 a year ago, representing a surprise of 5.75% over the consensus estimate [1] Financial Performance Metrics - The adjusted operating ratio was reported at 57.1%, better than the average estimate of 57.8% from eight analysts [4] - Total carloads amounted to 1.12 million, slightly below the average estimate of 1.14 million [4] - Revenue ton miles (RTMs) totaled 55.97 billion, surpassing the average estimate of 53.37 billion from four analysts [4] Stock Performance - Over the past month, shares of Canadian Pacific Kansas City have returned +9.4%, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Q4 2024 EARNINGS REVIEW January 29, 2025 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 is not limited to, statements concerning expectations, beliefs, targets, plans, goals, objectives, assumptions and statements about possible future events, conditions, and ...

Group 1 - Canadian Pacific Kansas City (CP) reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.87 per share, and showing an increase from $0.87 per share a year ago, representing an earnings surprise of 5.75% [1] - The company posted revenues of $2.77 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.91%, with year-ago revenues also at $2.77 billion [2] - Canadian Pacific Kansas City shares have increased approximately 9.4% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.77 on revenues of $2.67 billion, and for the current fiscal year, it is $3.53 on revenues of $11.11 billion [7] - The Zacks Industry Rank indicates that the Transportation - Rail sector is currently in the bottom 42% of over 250 Zacks industries, suggesting that the industry's outlook can significantly impact stock performance [8]

Earnings Per Share (EPS) and Growth Expectations - Core adjusted combined diluted EPS growth expected to be 12-18% in 2025, based on Core adjusted combined diluted EPS of $4.25 in 2024[48] - CPKC expects mid single-digit RTM growth in 2025[48] - CPKC's Core adjusted combined diluted EPS is calculated using GAAP-based Diluted EPS adjusted for significant items less KCS purchase accounting[52] Capital Investment and Financial Adjustments - CPKC plans to invest approximately $2.9 billion in capital programs in 2025, driven by a higher expected USD/CAD FX rate[48] - Core adjusted combined operating ratio and Core adjusted combined diluted EPS exclude KCS purchase accounting, which includes amortization of basis differences and fair value adjustments[47] - Core adjusted effective tax rate is a Non-GAAP measure, calculated as the effective tax rate adjusted for significant items and excludes KCS purchase accounting[50] Impact of Acquisition and Tax Adjustments on EPS - Acquisition-related costs of $112 million in 2023 unfavourably impacted Diluted EPS by 9 cents[53] - Deferred income tax recovery of $81 million in 2023 due to changes in tax rates favourably impacted Diluted EPS by 9 cents[53] - Remeasurement loss of KCS of $7,175 million in 2023 unfavourably impacted Diluted EPS by $7.68[53] - Adjustments to provisions and settlements of Mexican taxes of $4 million recovery in 2023 had minimal impact on Diluted EPS[53]

Core Insights - Canadian Pacific Kansas City (CPKC) reported strong fourth-quarter results with revenues of $3.9 billion, a diluted EPS of $1.28, and a core adjusted combined diluted EPS of $1.29, reflecting a solid performance in the rail industry [1][10]. Financial Performance - In Q4 2024, revenues increased by 3% to $3.9 billion from $3.8 billion in Q4 2023 [10]. - The reported operating ratio (OR) improved, decreasing by 210 basis points to 59.7% from 61.8% in Q4 2023 [10]. - Core adjusted combined OR decreased by 160 basis points to 57.1% from 58.7% in Q4 2023 [10]. - Reported diluted EPS rose to $1.28 from $1.10 in Q4 2023, while core adjusted combined diluted EPS increased by 9% to $1.29 from $1.18 [10]. - For the full year 2024, CPKC achieved a net income of $3.713 billion, compared to $3.923 billion in 2023 [15]. Operational Highlights - CPKC led the industry with the lowest Federal Railroad Administration (FRA)-reportable train accident frequency among Class 1 railroads for the second consecutive year, continuing a legacy of 17 years of industry leadership [3]. - The company expects continued strong earnings growth in 2025, consistent with multi-year guidance provided at the 2023 Investor Day [4]. Capital Expenditures and Guidance - CPKC plans capital expenditures of $2.9 billion for 2025, reflecting an increase compared to 2024, driven by a higher expected USD/CAD FX rate [10]. - The company anticipates core adjusted diluted EPS to increase between 12% and 18% compared to 2024 core adjusted combined diluted EPS of $4.25 [10]. Company Overview - CPKC operates a transcontinental freight railway spanning Canada, the U.S., and Mexico, providing rail and intermodal transportation services over a network of approximately 20,000 miles [21][22].

Core Points - Canadian Pacific Kansas City (CPKC) has reached a tentative four-year collective agreement with the Teamsters Canada Rail Conference Maintenance of Way Employees Division (TCRC-MWED) [1][2] - The agreement is aimed at benefiting approximately 2,300 engineering service employees across Canada [2] - Details of the agreement will remain confidential until ratification [3] Company Overview - CPKC is the first and only single-line transnational railway connecting Canada, the United States, and Mexico, with extensive access to major ports [4] - The company operates approximately 20,000 route miles and employs around 20,000 railroaders [4] - CPKC offers a range of freight transportation services, logistics solutions, and supply chain expertise to its North American customers [4]

Core Points - Canadian Pacific Kansas City (CPKC) has reached a tentative four-year collective agreement with Unifor, covering approximately 1,200 employees in Canada [1][2] - The agreement aims to benefit employees and their families while ensuring continued service to customers and supporting the Canadian economy [2] - Details of the agreement are currently not disclosed pending ratification [3] Company Overview - CPKC is the first and only single-line transnational railway connecting Canada, the United States, and Mexico, with access to major ports across North America [4] - The company operates approximately 20,000 route miles and employs around 20,000 railroaders, providing extensive rail service and network reach [4] - CPKC is focused on growth alongside its customers, offering freight transportation services, logistics solutions, and supply chain expertise [4]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Canadian Pacific Kansas City (CP) despite lower revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $0.88 per share, reflecting a +1.2% change year-over-year, while revenues are projected at $2.74 billion, down 1.1% from the previous year [3]. - The consensus EPS estimate has been revised 2.07% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -3.74%, indicating a bearish outlook from analysts [11]. - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3, which increases the likelihood of a positive surprise to nearly 70% [8]. Historical Performance - In the last reported quarter, CP was expected to post earnings of $0.74 per share but delivered $0.73, resulting in a surprise of -1.35% [12]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [13]. Conclusion - Canadian Pacific Kansas City does not appear to be a strong candidate for an earnings beat based on current estimates and rankings, but investors should consider other factors before making investment decisions [16].