Core Insights - Canadian Pacific Kansas City (CPKC) reported increased quarterly profits, with both volume and revenue rising despite economic uncertainties and trade tensions in North America [1] Financial Performance - Operating income rose by 11% to US$930 million, while revenue increased by 3% to US$2.65 billion [2] - Earnings per share grew by 12% to $0.72 [2] - The operating ratio improved by 2.6 points to 63.5%, with expenses declining by 1% [3] Volume and Revenue Growth - Overall volume increased by 5% when measured by revenue ton-miles and by 4% when measured by carloads and containers [3] - Bulk revenue ton-miles rose by 7%, driven by U.S. grain shipments to Mexico and strong demand for potash and coal [3] - Domestic intermodal volume increased by 13%, supported by new refrigerated shipments and cross-border traffic [4] - International intermodal volumes grew by 10%, benefiting from traffic from the Gemini alliance through various ports [6] Strategic Developments - CPKC and CSX plan to raise track speed to 49 miles per hour, enabling competitive intermodal and merchandise service between Dallas and Atlanta [5] - The acquisition of the Meridian & Bigbee short line in 2024 facilitated new network connections [5] Market Positioning - CPKC continues to achieve differentiated growth despite challenges in the freight environment, with mid single-digit volume growth and strategic pricing [7] - The company is well-positioned to outperform the industry, leveraging its unique synergies and resilient North American franchise [7]

Core Financial Performance - For the quarter ended September 2025, Canadian Pacific Kansas City (CP) reported revenue of $2.66 billion, reflecting a 2.2% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $0.80, up from $0.73 in the same quarter last year [1] - The reported revenue was a surprise of -0.62% compared to the Zacks Consensus Estimate of $2.68 billion, while the EPS fell short by -1.23% against the consensus estimate of $0.81 [1] Key Metrics Analysis - Core adjusted operating ratio was reported at 60.7%, slightly above the five-analyst average estimate of 60.4% [4] - Revenue ton-miles (RTMs) for Intermodal reached 9.68 billion, exceeding the average estimate of 9.58 billion [4] - Total carloads were reported at 1.13 million, matching the four-analyst average estimate [4] Segment Performance - Carloads in the Energy, chemicals, and plastics segment totaled 139 thousand, slightly above the average estimate of 138.95 thousand [4] - Revenue ton-miles for Metals, minerals, and consumer products was 4.95 billion, surpassing the four-analyst average estimate of 4.75 billion [4] - Carloads for Grain were reported at 132.3 thousand, slightly below the average estimate of 133.62 thousand [4] Stock Performance - Shares of Canadian Pacific Kansas City have returned -0.2% over the past month, while the Zacks S&P 500 composite increased by +3.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Canadian Pacific Kansas City (CP) reported quarterly earnings of $0.8 per share, slightly missing the Zacks Consensus Estimate of $0.81 per share, but showing an increase from $0.73 per share a year ago, indicating a mixed performance in earnings [1][2] Financial Performance - The company posted revenues of $2.66 billion for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 0.62%, and an increase from $2.6 billion in the same quarter last year [2] - Over the last four quarters, Canadian Pacific Kansas City has surpassed consensus EPS estimates only once [2] Stock Performance - Since the beginning of the year, Canadian Pacific Kansas City shares have increased by approximately 2.8%, while the S&P 500 has gained 17.2%, indicating underperformance relative to the broader market [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $1.00 for the coming quarter and $3.39 for the current fiscal year [7] - The estimate revisions trend for Canadian Pacific Kansas City was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell), suggesting expected underperformance in the near future [6] Industry Context - The Transportation - Rail industry, to which Canadian Pacific Kansas City belongs, is currently ranked in the bottom 9% of over 250 Zacks industries, which may negatively impact stock performance [8]

Financial Performance - Total revenues for Q3 2025 were $3,661 million, a 3% increase from $3,549 million in Q3 2024[83] - Diluted EPS for Q3 2025 was $1.01, up 12% from $0.90 in Q3 2024[83] - Core adjusted diluted EPS increased to $1.10, an 11% rise compared to $0.99 in Q3 2024[83] - The company reported a net income attributable to controlling shareholders of $920 million for Q3 2025, up from $837 million in Q3 2024[90] - The reported Diluted EPS for Q3 2025 was $1.01, compared to $0.90 in Q3 2024; for the nine months ended September 30, 2025, it was $3.32, up from $2.69 in 2024[197] - The Core Adjusted Diluted EPS for Q3 2025 was $1.10, compared to $0.99 in Q3 2024; for the nine months ended September 30, 2025, it was $3.28, up from $2.96 in 2024[197] Revenue Breakdown - Freight revenues for Q3 2025 were $3,589 million, a 4% increase from $3,461 million in Q3 2024[92] - Coal freight revenues for Q3 2025 increased to $255 million, up 3% from $248 million in Q3 2024, driven by higher volumes of Canadian coal[104] - Potash freight revenues for Q3 2025 rose to $167 million, a 16% increase from $144 million in Q3 2024, primarily due to higher export volumes to Vancouver and the U.S. Pacific Northwest[106] - Fertilizers and Sulphur freight revenues for Q3 2025 reached $102 million, up 12% from $91 million in Q3 2024, attributed to higher volumes of wet and dry fertilizers[108] - Forest Products freight revenues for Q3 2025 decreased to $193 million, down 3% from $198 million in Q3 2024, mainly due to lower volumes of wood pulp[110] - Energy, Chemicals and Plastics freight revenues for Q3 2025 fell to $701 million, a 2% decrease from $712 million in Q3 2024, primarily due to lower volumes of plastics and fuel oil[112] - Metals, Minerals and Consumer Products freight revenues for Q3 2025 increased to $458 million, a 3% rise from $443 million in Q3 2024, driven by higher volumes of frac sand[114] - Automotive freight revenues for Q3 2025 grew to $343 million, up 3% from $333 million in Q3 2024, primarily due to higher volumes from Mexico to Canada[116] Operating Efficiency - Operating ratio improved to 63.5%, a 260 basis point improvement from 66.1% in Q3 2024[83] - Total operating expenses for the third quarter of 2025 were $2,325 million, a slight decrease of 1% from $2,346 million in 2024[120] - The Core Adjusted Operating Ratio for Q3 2025 was 60.7%, compared to 62.9% in Q3 2024; for the nine months ended September 30, 2025, it was 61.3%, down from 62.9% in 2024[199] Cash Flow and Investments - Net cash provided by operating activities increased by $220 million in the first nine months of 2025 compared to the same period in 2024, primarily due to higher cash generating operating income[167] - Net cash used in investing activities decreased by $181 million in the first nine months of 2025, mainly due to proceeds from the sale of an equity investment of $493 million[169] - Net cash used in financing activities increased by $676 million in the first nine months of 2025, primarily due to share repurchases of $1,805 million[171] Tax and Interest Expenses - Income tax expense for the first nine months of 2025 was $945 million, a 16% increase from $813 million in 2024, primarily due to higher taxable earnings[141] - Net interest expense for the first nine months of 2025 was $646 million, an 8% increase from $598 million in 2024[138] Foreign Exchange and Market Risks - The company anticipates continued integration benefits and synergies from the CP-KCS combination, with a focus on operational efficiency and market expansion[204] - Forward-looking statements indicate potential impacts from changes in foreign exchange rates and commodity prices on future performance[205] - The Company is subject to market risks related to foreign exchange and share price fluctuations, which could impact earnings and stock-based compensation[209] - The Company faces various risks including inflation, geopolitical instability, and changes in laws and regulations that could impact operations and financial performance[207] Debt and Equity - As of September 30, 2025, long-term debt stood at CAD 21,450 million, an increase from CAD 19,618 million as of December 31, 2024, representing an increase of approximately 9%[184] - The company had a total of 900,831,248 common shares issued and outstanding as of October 28, 2025, with no preferred shares issued[185] Employee and Operational Metrics - The average number of employees decreased by 1% to 20,067 in Q3 2025, attributed to efficient resource planning[88] - Carloads decreased by 3.1 thousand to 182.4 thousand in the first nine months of 2025, representing a 2% decline[117]

Financial Data and Key Metrics Changes - The company reported revenues of $3.7 billion, an increase of 3% year-over-year, with a strong volume growth of 5% [5][26] - The operating ratio improved by 220 basis points to 60.7%, while diluted earnings per share rose to $1.10, reflecting an 11% increase compared to the previous year [5][26] - Year-to-date cash provided by operating activities increased by 6% to $3.8 billion, with capital expenditures of $860 million in the quarter [30][26] Business Line Data and Key Metrics Changes - The automotive franchise achieved a revenue increase of 2% on a 9% volume growth, marking record performance [23] - Bulk revenues, particularly in grain, rose by 4% with a 6% volume growth, while potash revenues and volumes increased by 15% [18][19] - Intermodal revenue grew by 7% on an 11% volume increase, driven by strong domestic intermodal performance [24] Market Data and Key Metrics Changes - U.S. grain volumes were up 13% year-over-year, while Canadian grain volumes decreased by 2% due to lower carryout stocks [19] - The company noted challenges in the energy, chemicals, and plastics segment, with revenues and volumes down by 2% due to softer demand [20] - The international intermodal segment saw a 10% volume increase, supported by growth from Gemini through various ports [24] Company Strategy and Development Direction - The company remains focused on executing growth opportunities despite potential industry consolidation, emphasizing its unique three-country network [8][10] - The management highlighted the importance of the Meridian Speedway as a strategic asset to create market advantages and enhance service offerings [42][45] - The company plans to continue leveraging its network to drive efficiencies and maintain strong customer service [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 14% earnings growth for the year, despite macroeconomic challenges [8][10] - The company is optimistic about the strong grain harvest in Canada and the U.S., which is expected to support volume growth [30][26] - Management acknowledged the impact of recent supply chain challenges but remains focused on maintaining operational efficiency and cost control [66] Other Important Information - The company has repurchased 34 million shares, representing approximately 91% of its announced share repurchase program [30] - The management emphasized the importance of safety, reporting improvements in personal injuries and train accident frequencies [15] Q&A Session Summary Question: On the M&A topic regarding the UP and NS merger - Management indicated that the approval of the merger is not guaranteed and that significant conditions would likely be required to protect competition in the industry [33][34][36] Question: Strategy in the current landscape - Management confirmed that they are exploring alliances with non-applicants to leverage opportunities without the risks associated with mergers [41][42] Question: Insights on grain opportunities and customer behavior - Management noted that grain companies are currently pulling grain into elevators rather than pushing it out, indicating a cautious approach from customers [60][62] Question: Pricing trends and future growth potential - Management expects to see positive pricing trends in Q4 and remains confident in achieving double-digit EPS growth for the year [66][68] Question: Performance of the KCS network - Management discussed ongoing efforts to align KCS performance with CP operating levels and highlighted the importance of cost synergies [79]

Financial Data and Key Metrics Changes - The company reported revenues of CAD 3.7 billion, an increase of 3% year-over-year [5] - Operating ratio improved by 220 basis points to 60.7% [5][26] - Earnings per share increased by 11% to CAD 1.10 compared to the previous year [5][26] Business Line Data and Key Metrics Changes - Automotive franchise achieved a record quarter with revenue up 2% and volume up 9% [23] - Bulk revenues increased by 4% driven by a 6% volume growth in grain, with U.S. grain volumes up 13% [18][19] - Intermodal revenue rose by 7% with an 11% increase in volume, supported by domestic intermodal growth [24] Market Data and Key Metrics Changes - Canadian grain volumes decreased by 2% due to lower carryout stocks and demand for canola exports [19] - Potash revenues and volumes increased by 15% driven by strong demand fundamentals [19] - Energy, chemicals, and plastics revenue and volume declined by 2% due to softer demand and customs challenges [20] Company Strategy and Development Direction - The company remains focused on executing growth opportunities despite potential industry consolidation [8][10] - The management emphasized the importance of maintaining an industry-leading position and delivering strong results [10] - The company is exploring alliances with non-applicants to leverage regulatory requirements for merger-like benefits [42] Management Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges but expressed confidence in achieving 10%-14% earnings growth [8] - The company is well-positioned to handle strong grain harvests in Canada and the U.S. [16][30] - Management expects to maintain strong labor productivity and margin improvement in the fourth quarter [28] Other Important Information - The company has repurchased 34 million shares, representing approximately 91% of the announced program [30] - The company is on track to invest approximately CAD 2.9 billion in capital expenditures for 2025 [30] Q&A Session Summary Question: M&A implications of UP and NS merger - Management highlighted that the approval of the UP and NS merger is not guaranteed and will depend on regulatory scrutiny [34][35] Question: Strategy in light of potential merger impacts - Management confirmed they are actively engaging with other railroads to create alliances and leverage opportunities [42] Question: Volume trends and achieving guidance - Management expressed confidence in achieving mid-single-digit RTMs and double-digit EPS growth despite challenges [57][68]

Financial Data and Key Metrics Changes - The company reported revenues of $3.7 billion, an increase of 3% year-over-year, with earnings per share (EPS) of $1.10, reflecting an 11% increase compared to the previous year [5][25] - The operating ratio improved by 220 basis points to 60.7% [5][25] - Year-to-date cash provided by operating activities increased by 6% to $3.8 billion [29] Business Line Data and Key Metrics Changes - The automotive franchise achieved a record quarter with revenue up 2% and volume up 9% [22] - Bulk revenues, including grain and potash, saw growth with grain revenues up 4% on 6% volume growth, while potash revenues and volumes increased by 15% [19][20] - Intermodal revenue rose by 7% with an 11% increase in volume, driven by strong domestic intermodal growth [22][23] Market Data and Key Metrics Changes - U.S. grain volumes increased by 13%, while Canadian grain volumes decreased by 2% due to lower carryout stocks [18][19] - The company noted strong demand in Mexico and the U.S. South, unlocking new opportunities [18] - The automotive sector remains resilient despite trade policy uncertainties, contributing to overall growth [22] Company Strategy and Development Direction - The company is focused on executing unique growth opportunities and maintaining its industry-leading position despite potential industry consolidation [7][10] - The strategic development of the Meridian Speedway is highlighted as a critical advantage for creating markets and bridging traffic between key regions [43][45] - The company plans to continue leveraging its North American network to drive growth and improve service efficiency [30][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 14% earnings growth for the year, despite macroeconomic challenges [7][30] - The company remains committed to maintaining strong safety performance and operational efficiency [12][14] - Management anticipates a strong finish to the year, supported by solid grain harvests and improved operational metrics [15][30] Other Important Information - The company has repurchased 34 million shares, approximately 91% of its announced share repurchase program [29] - The removal of the Canadian federal carbon tax contributed to a decrease in fuel expenses [26] Q&A Session Summary Question: On the M&A topic regarding UP and NS merger implications - Management indicated that the approval of the merger is not guaranteed and that significant conditions would likely be required to protect competition in the industry [34][36] Question: Strategy in light of the merger discussions - Management confirmed ongoing engagement with non-applicants to explore alliances and leverage opportunities without the risks associated with mergers [42] Question: Insights on grain opportunities and customer behavior - Management noted that grain companies are currently pulling grain into elevators rather than pushing it out, indicating a cautious approach from customers [60] Question: Pricing trends and future growth expectations - Management expects pricing to turn positive in Q4 and anticipates mid-teens EPS growth potential in 2026, contingent on macroeconomic improvements [64][66]

Financial Highlights - Revenues reached $3.7 billion, a 3% increase compared to Q3 2024[20] - The operating ratio improved by 260 bps to 63.5%[20] - Core adjusted operating ratio improved by 220 bps to 60.7%[20] - Diluted EPS increased by 12% to $1.01[20] - Core adjusted diluted EPS increased by 11% to $1.10[20] Operational Performance - RTMs increased by 5%[20] - FRA personal injuries improved by 3%[26] - FRA train accident frequency improved by 20%[26] Revenue Breakdown - FX-Adjusted Revenue increased by 6% in Bulk[35] - FX-Adjusted Revenue increased by 7% in Intermodal[36] - Total operating expenses decreased by 1% to $2.325 billion[43] Cash Flow and Capital Allocation - The company expects $2.9 billion in capital expenditures for 2025[57] - Share repurchases amounted to 34.1 million shares since the program's announcement, with 91% completion by the end of Q3[57] Outlook - The company anticipates 10-14% Core Adjusted Diluted EPS growth vs 2024 Core adjusted diluted EPS of $4.25[62]

Financial Performance - CPKC reported third-quarter revenues of $3.7 billion, a 3% increase from $3.5 billion in Q3 2024[7] - Diluted earnings per share (EPS) rose to $1.01, up from $0.90 in Q3 2024, while core adjusted diluted EPS increased 11% to $1.10 from $0.99[7] - Net income for the quarter was $917 million, compared to $837 million in Q3 2024[15] - Comprehensive income attributable to controlling shareholders rose to CAD 1,571 million in Q3 2025, compared to CAD 430 million in Q3 2024[16] - For the three months ended September 30, 2025, net income attributable to controlling shareholders was CAD 920 million, compared to CAD 837 million for the same period in 2024, representing a 9.9% increase[36] - Total revenues for the three months ended September 30, 2025, were CAD 3,661 million, an increase from CAD 3,549 million in the same period of 2024, reflecting a growth of 3.2%[27] - For the nine months ended September 30, 2025, net income attributable to controlling shareholders was CAD 3,064 million, compared to CAD 2,517 million for the same period in 2024, indicating a 21.7% increase[36] - Total revenues for the nine months ended September 30, 2025, were CAD 11,155 million, up from CAD 10,672 million in 2024, reflecting a growth of 4.5%[27] Operational Efficiency - The operating ratio (OR) improved by 260 basis points to 63.5% from 66.1% in Q3 2024, while core adjusted OR decreased by 220 basis points to 60.7%[7] - Operating income for Q3 2025 was $1,336 million, reflecting an 11% increase from $1,203 million in Q3 2024[82] - Total operating expenses for Q3 2025 were $2,325 million, a slight decrease of 1% from $2,346 million in Q3 2024[82] - The operating ratio improved to 63.5% in Q3 2025 from 66.1% in Q3 2024, and 64.2% for the nine months ended September 30, 2025, compared to 66.1% in the same period last year[108] Revenue Breakdown - Freight revenues for the three months ended September 30, 2025, reached CAD 3,589 million, up from CAD 3,461 million in 2024, marking a 3.7% increase[27] - Total Freight Revenues for Q3 2025 reached $3,589 million, an increase of $128 million or 4% compared to Q3 2024[84] - Grain Freight Revenues rose to $702 million in Q3 2025, a 5% increase from $668 million in Q3 2024[84] - Intermodal Freight Revenues increased by $44 million or 7% to $668 million in Q3 2025[84] - Freight revenues increased by CAD 523 million, or 5%, from CAD 10,422 million in 2024 to CAD 10,945 million in 2025[114] Cash Flow and Debt - Net cash provided by operating activities for the nine months ended September 30, 2025, was CAD 3,785 million, an increase from CAD 3,565 million in the same period of 2024[19] - The company reported a net cash used in investing activities of CAD 1,903 million for the nine months ended September 30, 2025, compared to CAD 2,084 million in the same period of 2024[19] - Adjusted net debt as of September 30, 2025, was CAD 24,568 million, compared to CAD 22,423 million in 2024[120] - Long-term debt rose to CAD 21,590 million as of September 30, 2025, up from CAD 19,804 million at the end of 2024[17] - The company issued $500 million 4.00% 7-year unsecured notes and $600 million 4.40% 10.5-year unsecured notes, among others, totaling $2.1 billion in new debt issuance during the nine months ended September 30, 2025[41] Safety and Compliance - Federal Railroad Administration (FRA)-reportable personal injury frequency decreased to 0.92 from 0.95 in Q3 2024[7] - FRA-reportable train accident frequency improved to 1.15 from 1.43 in Q3 2024[7] - FRA train accidents per million train-miles decreased by 20% to 1.15 in Q3 2025, indicating improved safety performance[88] Strategic Initiatives - CPKC continues to explore strategic initiatives and investments to enhance operational performance and growth opportunities[10] - The company expects to deliver on its full-year 2025 guidance, focusing on leveraging its North American footprint[3] Shareholder Returns - Dividends paid in Q3 2025 amounted to CAD 205 million, compared to CAD 177 million in Q3 2024[19] - The company declared dividends of CAD 0.228 per share for the three months ended September 30, 2025, totaling CAD 205 million[36] Legal and Regulatory Matters - The company faced a legal claim for $409 million from Québec's Attorney General, which was later amended to $231 million[69] - The total damages related to the Remington Development Corporation legal claim were estimated to be approximately $232 million as of June 30, 2025[71] - The 2014 tax assessment from the Servicio de Administracion Tributaria amounted to Ps.6,471 million ($490 million) as of September 30, 2025[73]

Core Insights - Canadian Pacific Kansas City (CP) is expected to report quarterly earnings of $0.81 per share, reflecting an 11% year-over-year increase, with revenues projected at $2.68 billion, a 2.8% increase compared to the previous year [1] - The consensus EPS estimate has been revised upward by 0.6% over the past 30 days, indicating a reassessment by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3] Financial Metrics - Analysts predict an 'Adjusted Operating Ratio' of 60.4%, down from 62.9% in the same quarter last year [5] - 'Carloads - Total' are expected to reach 1.13 million, compared to 1.09 million in the same quarter last year [5] - The consensus estimate for 'Carloads - Automotive' is 63.13 thousand, slightly down from 63.70 thousand in the previous year [6] - 'Revenue ton miles (RTMs) - Total' is projected to be 54.58 billion, up from 51.52 billion in the same quarter last year [6] - 'Carloads - Grain' are expected to reach 133.62 thousand, compared to 127.00 thousand in the same quarter last year [7] - 'Carloads - Coal' are projected at 125.92 thousand, up from 121.70 thousand in the previous year [7] - 'Carloads - Potash' are expected to be 51.18 thousand, compared to 40.60 thousand last year [8] - 'Carloads - Fertilizers and Sulphur' are projected at 16.36 thousand, up from 15.60 thousand in the previous year [8] - 'Carloads - Forest Products' are expected to be 32.95 thousand, down from 33.90 thousand last year [9] - 'Carloads - Energy, Chemicals and Plastics' are projected at 138.95 thousand, down from 145.60 thousand in the previous year [9] - 'Carloads - Metals, Minerals and Consumer Products' are expected to reach 124.36 thousand, down from 127.90 thousand last year [10] - The expected 'Operating Ratio' is 59.7%, significantly improved from 66.1% in the previous year [10] Market Performance - Over the past month, Canadian Pacific Kansas City shares have returned +2.3%, outperforming the Zacks S&P 500 composite's +1.3% [11] - The company holds a Zacks Rank 4 (Sell), indicating a likely underperformance compared to the overall market in the upcoming period [11]