Canadian Pacific Kansas City : May 2025 CPKC Investor Presentation (CPKC Investor Presentation May 2025 vF)
CP.TO
Published on 05/02/2025 at 16:06
TSX/NYSE: CP
BASIS OF PRESENTATION
Except where noted, all amounts 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-GAAP MEASURES
CPKC presents Non-GAAP measures, including Core adjusted operating ratio, Core adjusted diluted earnings per share ("EPS"), Core adjusted operating income, Core adjusted combined income, Adjusted free cash, Adjusted net debt to adjusted Earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio, Core adjusted effective tax rate and Core adjusted ROIC, to provide additional bases for evaluating underlying earnings and liquidity trends in CPKC's current periods' financial results that can be compared with the results of operations in prior periods and facilitate a multi-period assessment of long-term profitability.
These Non-GAAP measures have no standardized meaning and are not defined by GAAP and, therefore, may not be comparable to similar measures presented by other companies. The presentation of these Non-GAAP measures is not intended to be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with GAAP.
Although CPKC has provided forward-looking Non-GAAP measures (Core adjusted diluted EPS and Core adjusted effective tax rate) management is unable to reconcile, without unreasonable efforts, the forward-looking Core adjusted diluted EPS and Core adjusted effective tax rate to the most comparable GAAP measures (Diluted EPS and effective tax rate), due to unknown variables and uncertainty related to future results. These unknown variables and uncertainty may include unpredictable transactions of significant value. In recent years, the Company has recognized acquisition-related costs, adjustments to provisions and settlements of Mexican taxes, KCS' gain on unwinding of interest rate hedges (net of CP-associated purchase
accounting basis differences and tax), loss on derecognition of CPKC's previously held equity method investment in KCS, discrete tax items, changes in the outside basis tax difference between the carrying amount of the Company's equity investment in KCS and its tax basis of the investment, changes in income tax rates, and changes to an uncertain tax item. Acquisition-related costs include legal, consulting, integration costs including third-party services and system migration, debt exchange transaction costs, community investments, restructuring, employee retention and synergy incentive costs, and transaction and integration costs incurred by KCS. These items may not be non-recurring and may include items that are settled in cash.
Specifically, due to the magnitude of the acquisition, its significant impact to the Company's business and complexity of integrating the acquired business and operations, the Company continues to expect to incur the acquisition-related costs beyond the year of acquisition. These or other similar, large unforeseen transactions affect diluted EPS but may be excluded from CPKC's Core adjusted diluted EPS and Core adjusted ROIC. Additionally, the Canadian-to-U.S. dollar and Mexican peso-to-U.S. dollar exchange rates are unpredictable and can have a significant impact on CPKC's reported results but may be excluded from CPKC's Core adjusted diluted EPS and Core adjusted effective tax rate.
Beginning in the first quarter 2025, Core adjusted operating income, Core adjusted operating ratio, Core adjusted income, Core adjusted diluted earnings per share ("EPS") and Adjusted free cash have been used in continuity of the Non-GAAP measures previously known as Core adjusted combined operating income, Core adjusted combined operating ratio, Core adjusted combined income, Core adjusted combined diluted EPS and Adjusted combined free cash, respectively. No adjustments are required to the previously presented Non-GAAP measures as reported in 2024 to present them on a comparable basis, as Kansas City Southern ("KCS") was consolidated within the Company's results throughout the whole year and therefore, no combination adjustments exist. In addition to the above Non-GAAP performance and liquidity measures, Adjusted net debt to adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio has been used in continuity of the Non-GAAP measure previously known as Adjusted combined net debt to adjusted combined EBITDA ratio. Adjusted combined net debt to adjusted combined EBITDA ratio as previously reported in the first quarter of 2024 included certain combination adjustments for KCS within adjusted combined EBITDA for the period from April 1 to April 13, 2023 when the Company included the results of KCS by the equity method of accounting in its reported results. These combination adjustments were removed from adjusted EBITDA for the twelve months ended March 31, 2024 to present Adjusted net debt to adjusted EBITDA ratio on a comparable basis.
For further information regarding Non-GAAP measures, including reconciliations to the most directly comparable GAAP measures, see the Non-GAAP Measures supplement to the Q1 2025 Earnings Release on our website at investor.cpkcr.com and
CPKC's Q1 2025 MD&A available on SEDAR+ at https://www.sedarplus.ca under CPKC's SEDAR+ profile.
($ in millions of Canadian dollars, except percentages)
2024
2023(1)
Change
Total revenues, as reported
$14,546
$12,555
16%
Combined total revenues(2)
$14,546
$13,909
5%
Operating income, as reported
$5,179
$4,388
18%
Core adjusted combined operating income(2)
$5,623
$5,281
6%
Operating ratio, as reported(3)
64.4%
65.0%
-60bps
Core adjusted combined operating ratio(2)
61.3%
62.0%
-70bps
Net income attributable to controlling shareholders, as reported
$3,718
$3,927
(5)%
Core adjusted combined income(2)
$3,973
$3,582
11%
Diluted earnings per share, as reported
$3.98
$4.21
(5)%
Core adjusted combined diluted earnings per share(2)
$4.25
$3.84
11%
Represents combined financial and operating information to illustrate the estimated effects of the acquisition for the year ended December 31, 2023, as if the acquisition closed on January 1, 2022. For the year ended December 31, 2024, KCS was consolidated. For a full description and reconciliation see
Q4 2024 Unaudited Combined Summary of Supplemental Data on investor.cpkcr.com
These measures are Non-GAAP measures, and have no standardized meanings prescribed by accounting principles generally accepted in the United States ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. These measures are defined and reconciled in Q4 2024 Unaudited Combined Summary of Supplemental Data on our website at investor.cpkcr.com at investor.cpkcr.com.
Operating ratio is defined as operating expenses divided by revenues.
FOUNDED IN PRECISION, BUILT FOR GROWTH,
THE CPKC ADVANTAGE
The CPKC combination has redrawn the North American railroad map and changed the freight rail industry for the better. Guided by our precision railroading model, foundations and core values we continue to deliver industry-leading service. It's a culture of excellence that we adhere to 24/7, 365. Stretching approximately 20,000 route miles across Canada, the United States and Mexico, and employing 20,000 railroaders, CPKC provides our customers unparalleled rail service and network reach to key markets across the continent. While our playing field has grown, our playbook and commitment to delivering safely and sustainably for customers and shareholders remains the same.
Welcome to the CPKC Advantage!
Disclaimer
CPKC - Canadian Pacific Kansas City Limited published this content on May 02, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 02, 2025 at 20:03 UTC.