Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Q4 2022 Earnings Presentation
22 slides from Canadian Pacific Kansas City's earnings presentation, Jan 31, 2023
Slide 1: Q4 2022 Earnings Review
Q4 2022 EARNINGS REVIEW JANUARY 31, 2023
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 Q4 2022
HIGHLIGHTS Q4 2022 • Record year of hiring and further expansion of Revenues Revenues $2.5 billion | +21% $8.8 billion | +10% progressive hourly labour agreements Operating Ratio Operating Ratio • Final Environmental Impact Statement 59.8% | +60 bps 62.2% | +230 bps released; STB regulatory review p
Slide 6: John Brooks, Chief Marketing Officer
JOHN BROOKS CHIEF MARKETING OFFICER
Slide 7: Revenue Highlights Q4
REVENUE HIGHLIGHTS Q4 FX-adjusted revenue variance(1) TOTAL REVENUE Grain 42% +21% Coal Potash -13% 13% VS Q4 2021 Fertilizers & sulphur 6% Forest products 9% • RTMs: +8% Energy, chemicals & plastics -11% Metals, minerals & consumer 12% • FX: +5% Automotive 27% • Fuel: +10% Intermodal 29% • Price /
Slide 8: Bulk
BULK Q4’22 VS. Q4’21 MARKET DRIVERS Freight Revenue (FX-adj.) (1) 25% • Top 5 all-time Canadian grain crop RTMs • Assets and resources in place including 8% new high-capacity hopper fleet Freight Revenue per RTM (FX-adj.) (1) • Strong demand fundamentals in Potash; 15% well-positioned for another st
Slide 9: Merchandise
MERCHANDISE Q4’22 VS. Q4’21 MARKET DRIVERS Freight Revenue (FX-adj.) (1) 1% • New plastics business to provide tailwind to ECP volumes in 2023 RTMs 2% • DRU continues to provide steady volumes Freight Revenue per RTM (FX-adj.) (1) -1% • Seeing softer demand in Forest products 2022 REVENUE BREAKDOWN
Slide 10: Intermodal
INTERMODAL Q4’22 VS. Q4’21 MARKET DRIVERS Freight Revenue (FX-adj.) (1) 29% • Differentiated performance in intermodal driven by market wins RTMs 17% • Favourable compares through H1 2023 from new business in H2 2022 Freight Revenue 10% per RTM (FX-adj.) (1) • Port Saint John TEU increase of >70% vs
Slide 11: Nadeem Velani, Chief Financial Officer
NADEEM VELANI CHIEF FINANCIAL OFFICER
Slide 12: Financial Performance – Q4
FINANCIAL PERFORMANCE – Q4 Fourth Quarter FX Adjusted (in millions, except percentages and per share data) 2022 2021 Change % Change%(1) Total revenues $ 2,462 $ 2,040 21% 16% Total operating expenses 1,473 1,208 22% 18% Operating income 989 832 19% 13% Adjusted operating income(1) 1,006 868 16% Net
Slide 13: Operating Expenses – Q4
OPERATING EXPENSES – Q4 $35 $1,473 Fourth Quarter $13 $9 FX Adjusted $17 (in millions, except percentages) 2022 2021 Change % Change%(1) $153 Compensation and benefits 416 405 3% —% Fuel 399 231 73% 62% $37 $1 $1,208 Materials 69 51 35% 33% Equipment rents 43 29 48% 43% Depreciation and amortization
Slide 14: Free Cash
FREE CASH For the twelve months ended December 31 (in millions of Canadian dollars) 2022 2021 • More than $2.7B in Free cash(1) Cash provided by operating activities $ 4,142 $ 3,688 Cash used in investing activities (1,496) (13,730) generated Effect of foreign currency fluctuations on U.S. dollar- d
Slide 15: Keith Creel, President & Chief Executive Officer
KEITH CREEL PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 16: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS MAEGHAN ALBISTON Vice President CHRIS DE BRUYN Managing Director 403-319-3591 [email protected] investor.cpr.ca
Slide 17: Appendix
APPENDIX
Slide 18: Below the Line – Q4
BELOW THE LINE – Q4 Fourth Quarter (in millions, except percentages) 2022 2021 Change % Equity earnings (loss) of Kansas City Southern(1) $ (447) $ 141 (417)% Other expense (income) 4 (16) (125)% Other components of net periodic benefit recovery (107) (101) 6% Net interest expense 166 125 33% Income
Slide 19: KCS Fourth Quarter Results
KCS FOURTH QUARTER RESULTS(1) Q4 2022 Q4 2021 Improvement/ (Deterioration) Carloads/Units (in thousands) 590.7 565.6 +4% Revenues (in millions, $ USD) $864.5 $747.8 +16% Reported Operating Ratio (percent) 65.5% (8.4)% (7,390) bps Adjusted Operating Ratio(2) (percent) 64.4% 60.1% (430) bps (1) KCS wi
Slide 20: 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 21: Q4 Operating Performance
Q4 OPERATING PERFORMANCE Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 21.1 22.3 8,244 8,229 9,978 10,011 5% Decline Flat Flat Q4'22 Q4'21 Q4'22 Q4'21 Q4'22 Q4'21 Fuel Efficiency FRA personal injuries FRA train accident frequency (U.S. gallons of locomo
Slide 22: Full Year Operating Performance
FULL YEAR OPERATING PERFORMANCE Average train speed Average train length Average train weight (miles per hour) (feet) (tons) 21.4 21.6 8,350 8,200 10,064 9,967 1% Decline 2% Improvement 1% Improvement 2022 2021 2022 2021 2022 2021 Fuel Efficiency FRA personal injuries FRA train accident frequency (U
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