Canadian Pacific Kansas City Limited · TSX:CP
Canadian Pacific Kansas City — Canadian Pacific — Q4 2014 Earnings Presentation
17 slides from Canadian Pacific Kansas City's earnings presentation, Jan 22, 2015
Slide 1: E. Hunter Harrison, Chief Executive Officer
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Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The following investor presentation contains certain forward- By its nature, CP’s forward-looking information involves floating rate notes; and various events that could disrupt looking information within the meaning of applicable securities numerous assumptions, inherent
Slide 3: Note on Non GAAP Measures
NOTE ON NON GAAP MEASURES Except where noted, all figures are in millions of Canadian It should be noted that CP’s non-GAAP earnings as dollars. described in this presentation, have no standardized meanings and are not defined by U.S. GAAP and, Financial statements are prepared in accordance with th
Slide 4: Keith Creel, President & Chief Operating Officer
Slide 5: Highlights Q4 and 2014
HIGHLIGHTS Q4 10% REVENUE GROWTH 59.8% OPERATING RATIO $2.68 ADJUSTED EPS(1) 2014 8% REVENUE GROWTH 64.7% OPERATING RATIO $8.50 ADJUSTED EPS(1) (1) For a full description and reconciliation of Non-GAAP Measures see CP’s Q4 2014 Earnings Release on www.cpr.ca
Slide 6: 2015 Guidance: Revenue Growth, Operating Ratio, Adjusted EPS
7 TO 8% REVENUE GROWTH BELOW 62% OPERATING RATIO 25% OR GREATER ADJUSTED EPS
Slide 7: Bart Demosky, Chief Financial Officer
Slide 8: Operational Performance
OPERATIONAL PERFORMANCE Fuel Efficiency Q4: 3% better Train Weight Q4: 6% better Train Length Q4: 2% better (US Gallons/000GTMs) FY: 3% better (tons) FY: 6% better (feet) FY: 2% better 1.06 1.06 8281 6819 8046 6668 6683 7844 7573 6530 1.03 1.03 Q4'13 Q4'14 FY 13 FY 14 Q4'13 Q4'14 FY 13 FY 14 Q4'13 Q
Slide 9: Q4 Revenue Performance
Q4 REVENUE PERFORMANCE TOTAL REVENUE FX-adjusted variance (1) +10% favorable/(unfavorable) Canadian Grain -1% US Grain 17% Coal -1% Potash 32% VS Q4 2013 Fertilizer & sulphur 2% Forest products 2% ▲ RTMs up 6% Chemicals & Plastics 14% ▲ Revenue per RTM up 4% Crude 12% ▲ Carloads up 1% Metals, minera
Slide 10: Revenue Outlook
REVENUE OUTLOOK 2015 REVENUE GROWTH 7-8% Merchandise • 140,000 carloads crude • double digit revenue growth for Forest Products, Chemicals & Plastics and Metals & Minerals Bulk ▲ 3-4% RTM growth ▲ 4% revenue per RTM • low single digit revenue growth ‒ Lower fuel surcharge offset by FX benefits Inter
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Slide 12: Q4 Highlights
Q4 HIGHLIGHTS Variance Fav/ (Unfav) In millions, except percentages and per share data 2014 2013 Reported FX Adj(1) Total revenues $ 1,760 $ 1,607 10% 5% Total operating expenses 1,052 1,493 30% 33% Compensation & benefits 314 335 6% 8% Fuel 255 262 3% 9% Materials 47 45 (4%) (4%) Equipment rents 38
Slide 13: Free Cash
FREE CASH In millions 2014 2013 Cash from operations 2,123 1,950 Capital expenditures (1,449) (1,236) Asset sales 52 73 Proceeds from the sale of the DM&E West 236 - Change in restricted cash & cash equivalents 411 (411) Other - (23) Cash from investing (750) (1,597) Change in restricted cash & cash
Slide 14: Outlook
OUTLOOK • Revenue growth: 7 to 8% • Operating ratio: below 62% • EPS growth: greater than 25% (1) Key Assumptions: • Capital expenditures: $1.5 billion • Exchange rate: C$1.20/USD • Defined benefit pension expense: $45 million • Tax rate: 27.5% • Average WTI price: US$46 • Average On Highway Diesel
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Slide 16: FX Adjusted Variances
FX ADJUSTED VARIANCES Fourth Quarter Full Year Reported FX Adj(1) Reported FX Adj(1) Variance Variance Variance Variance 2014 2013 Fav/(Unfav) Fav/(Unfav) 2014 2013 Fav/(Unfav) Fav/(Unfav) Canadian Grain 267 263 2% (1%) 988 869 14% 11% U.S. Grain 155 122 27% 17% 503 431 17% 9% Coal 158 157 1% (1%) 6
Slide 17: Modeling Assumptions & Sensitivities
MODELING ASSUMPTIONS & SENSITIVITIES Key sensitivities Exchange rate* For every $0.01 decline in the Canadian dollar, EPS increases by $0.07* • Revenues increase by $35 million • Expenses increase by $16 million • Other charges increase by $0.5 to $1 million • Interest expense increases by $3 millio