CPKC(CP) - 2025 Q4 - Annual Results

Financial Performance - Fourth-quarter revenues increased by 1% to $3.9 billion, with diluted EPS at $1.20 and core adjusted diluted EPS at $1.33, a 3% increase from Q4 2024[1][4] - For the full year 2025, total revenues rose to $15.1 billion, a 4% increase from $14.5 billion in 2024, with reported diluted EPS increasing to $4.51 from $3.98[4] - Net income for Q4 2025 was $1,077 million, a decrease of 10.2% from $1,199 million in Q4 2024[15] - Comprehensive income for the year 2025 was $2,647 million, down from $7,093 million in 2024, reflecting a significant decline[15] - Basic earnings per share for Q4 2025 were $1.20, down 7% from $1.29 in Q4 2024, while for the year, it increased by 14% to $4.52 from $3.98[26] - Net income for the year was $4,137 million, an 11% increase from $3,713 million[26] - Core adjusted income for the year ended December 31, 2025, was $4,226 million, compared to $3,973 million in 2024[48] - Diluted EPS as reported for the year ended December 31, 2025, was $4.51, up from $3.98 in 2024[51] - Core adjusted diluted EPS for the year ended December 31, 2025, was $4.61, compared to $4.25 in 2024[51] Operational Efficiency - The reported operating ratio (OR) improved to a record low of 58.9% in Q4 2025, a decrease of 80 basis points from the previous year, while the core adjusted OR reached 55.9%, a 120 basis point improvement[4] - Operating income for Q4 2025 was $1,613 million, a 3% increase from $1,560 million in Q4 2024, and for the year, operating income was $5,609 million, an 8% increase from $5,179 million[26] - The operating ratio improved to 58.9% in Q4 2025 from 59.7% in Q4 2024, and for the year, it improved to 62.8% from 64.4%[26] - CPKC's operational metrics in Q4 2025 set records in train weights, network speed, locomotive productivity, and car miles per car day[4] Safety and Compliance - CPKC achieved the lowest FRA-reportable train accident frequency among Class 1 railroads for the third consecutive year, continuing a legacy of 17 years of industry leadership[2] - The company reported a decrease in FRA-reportable personal injury frequency to 0.92 from 0.95 in 2024, and train accident frequency decreased to 0.85 from 1.01 in 2024[4] - FRA train accidents per million train-miles improved by 12% to 0.91 in Q4 2025, reflecting enhanced safety measures[32] Capital Expenditures and Investments - Capital expenditures for 2026 are projected at $2.65 billion, representing a reduction of approximately 15% from 2025[10] - The company plans to invest approximately $2.65 billion in capital programs in 2026, a reduction of about 15% from 2025[39] Debt and Cash Management - Long-term debt increased to $19,948 million in 2025 from $19,804 million in 2024, showing a rise of 0.7%[16] - Cash and cash equivalents at the end of Q4 2025 were $184 million, down from $739 million at the end of Q4 2024, representing a decline of 75%[17] - The company reported a net cash used in investing activities of $2,665 million for the year 2025, a decrease from $2,796 million in 2024[17] - Average long-term debt, including maturing debt, rose to CAD 22,906 million in 2025 from CAD 22,559 million in 2024, reflecting a 1.5% increase[60] - Long-term debt as of December 31, 2025, is CAD 23,188 million, an increase from CAD 22,623 million in 2024[72] - Adjusted net debt as of December 31, 2025, is CAD 24,023 million, compared to CAD 22,914 million in 2024[74] Shareholder Returns - Dividends paid in Q4 2025 were $204 million, compared to $177 million in Q4 2024, reflecting an increase of 15.3%[17] - The dividend declared per share increased to CAD 0.874 in 2025 from CAD 0.760 in 2024, resulting in a dividend payout ratio of 19.4%[69] - The core adjusted dividend payout ratio for 2025 was 19.0%, up from 17.9% in 2024, indicating a stronger commitment to shareholder returns[69] Revenue and Freight Performance - Total revenues for Q4 2025 reached $3,923 million, a 1% increase from $3,874 million in Q4 2024, while total revenues for the year were $15,078 million, up 4% from $14,546 million in 2024[26] - Freight revenues in Q4 2025 were $3,831 million, a 1% increase from $3,801 million in Q4 2024, with annual freight revenues totaling $14,776 million, up 4% from $14,223 million[26] - Grain freight revenues increased by $35 million (4%) in Q4 2025, totaling $984 million compared to $949 million in Q4 2024[28] - Coal freight revenues rose by $7 million (3%) in Q4 2025, reaching $257 million, while annual revenues increased by $82 million (9%) to $1,025 million[28] Employee Metrics - Total employees at the end of Q4 2025 decreased by 2% to 19,479 compared to the previous year[32] Miscellaneous - Acquisition-related costs of $72 million were incurred in 2025 due to the KCS acquisition, impacting diluted EPS by 6 cents[42] - The company recognized a gain on the sale of equity investment of $333 million for the year ended December 31, 2025[48] - The average foreign exchange rate for U.S.$ to Canadian$ was 0.72 in Q4 2025, a 1% increase from 0.71 in Q4 2024[26]