Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q2 2022 Earnings Presentation
19 slides from Canadian Pacific Kansas City's earnings presentation, Jul 28, 2022
Slide 1: Q2 2022 Earnings Review
Q2 2022 EARNINGS REVIEW JULY 28, 2022
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The following investor presentation certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of other relevant securities legislation, including applicable
Slide 3: Basis of Presentation & Non-GAAP Measures
BASIS OF PRESENTATION & NON-GAAP MEASURES BASIS OF PRESENTATION Except where noted, all figures are in millions of Canadian dollars. Financial information is prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), unless otherwise noted. NO
Slide 4: Keith Creel, President & Chief Executive Officer
KEITH CREEL PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 5: Highlights
HIGHLIGHTS Average train length Average terminal dwell (feet) (hours) Q1 to Q2 13% • Significant sequential improvement: Favourable ‒ OR improvement over 1,000 basis points despite fuel headwind ‒ Continued operating performance Q1 to Q2 6% Favourable momentum Average train weight Locomotive product
Slide 6: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 7: Revenue Highlights Q2
REVENUE HIGHLIGHTS Q2 FX-adjusted revenue variance(1) TOTAL REVENUE Grain -18% +7% Coal Potash -4% 26% VS Q2 2021 Fertilizers & sulphur 6% Forest products 12% • RTMs: -2% Energy, chemicals & plastics -10% • $/RTM: +10% Metals, minerals & consumer 23% Automotive 19% • Carloads: -1% • $/Carload: +9% I
Slide 8: Revenue Update
REVENUE UPDATE BULK: 40% MERCHANDISE: 38% INTERMODAL: 22% • Continued record performance in • Increased drilling activity driving • Record performance in international US grain frac sand volume growth and domestic intermodal by revenue and volume • Improved crop conditions in • New refined products
Slide 9: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 10: Financial Performance – Q2
FINANCIAL PERFORMANCE – Q2 Second Quarter FX Adjusted (in millions, except percentages and per share data) 2022 2021 Change % Change%(1) Total revenues $ 2,202 $ 2,054 7% 6% Total operating expenses 1,334 1,234 8% 7% Operating income 868 820 6% 4% Adjusted operating income(1) 887 919 (3)% Net income
Slide 11: Operating Expenses – Q2
OPERATING EXPENSES – Q2 $9 $8 - $146 Second Quarter FX Adjusted (in millions, except percentages) 2022 2021 Change % Change%(1) $1,334 ($45) Compensation and benefits 348 379 (8)% (9)% $17 $1,234 Fuel 370 218 70% 65% ($35) Materials 63 54 17% 15% Equipment rents 29 28 4% —% Depreciation and amortiza
Slide 12: Below the Line – Q2
BELOW THE LINE – Q2 Second Quarter (in millions, except percentages) 2022 2021 Change % Equity earnings of Kansas City Southern(1) $ (208) $ — 100% Other expense 7 157 (96)% Merger termination fee — (845) (100)% Other components of net periodic benefit recovery (101) (96) 5% Net interest expense 160
Slide 13: Wrap Up
WRAP UP • Strong operating momentum • Ready and resourced to move double- digit volume growth in the back half • Clarity on CP-KCS merger timeline; review on track for decision Q1 2023 • KCS and KCSM concession exclusivity 10-year extension to 2037 provides long- term certainty for proposed CPKC mer
Slide 14: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS MAEGHAN ALBISTON Vice President CHRIS DE BRUYN Managing Director REBECCA STEPHEN Director 403-319-3591 [email protected] https://investor.cpr.ca/
Slide 15: Appendix
APPENDIX CP
Slide 16: KCS Second Quarter Results
KCS SECOND QUARTER RESULTS(1) Q2 2022 Q2 2021 Improvement/ (Deterioration) Carloads/Units 602.8 584.8 3% (in thousands) Revenues $845.5 $749.5 13% (in millions, $ USD) Reported Operating Ratio 63.0% 157.6% 94.6 points (percent) Adjusted Operating Ratio(2) 61.5% 61.4% (0.1) points (percent) (1) KCS w
Slide 17: Sustainability Leadership
SUSTAINABILITY LEADERSHIP • Strong history of ESG disclosures and leading sustainability practices • Published our first TCFD Index in 2021 • Published our first Climate Strategy, including emissions reduction targets covering 100% of scope 1 & 2 emissions: ‒ Set locomotive GHG emissions intensity r
Slide 18: Ready for the Harvest
READY FOR THE HARVEST • Over the last five years, there have been significant investments in the grain supply CP’s 8,500-foot Capable chain Origin Elevators ‒ CP has invested over $500 million in new high capacity grain hoppers 55 47 ‒ Customers have invested in facility upgrades and greenfield elev
Slide 19: Q2 Operating Performance
Q2 OPERATING PERFORMANCE Average train speed Average train length FRA train accident frequency (miles per hour) (feet) (per million train-miles) 1.11 21.7 21.8 8,515 8,335 0.47 Flat 2% Favourable 136% Unfavourable Q2'22 Q2'21 Q2'22 Q2'21 Q2'22 Q2'21 Fuel efficiency Average train weight FRA personal
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