Canadian Pacific Kansas City (CP) 16th Annual Wells Fargo Industrials & Materials Conference summary

Market and volume trends

• Achieved record Q1 volumes with positive trends continuing into Q2, supporting mid single-digit volume growth and double-digit EPS guidance for the year.

• Grain shipments remain robust, with strong orders expected to continue into the new crop season; U.S. and Canadian grain outlooks are both positive.

• Automotive volumes have accelerated, with new network synergies enabling closed-loop service and further growth expected over the next 18 months.

• Intermodal business remains resilient, with international and domestic volumes steady and new SMX product expected to drive double-digit weekly gains in the second half.

• Potash and export coal are contributing to bulk franchise strength, with potential for further upside if coal volumes improve.

Operational performance and network investments

• Operational metrics have improved, with dwell car miles per car day 10-11% better year-over-year.

• Investments in Mexico, including twinning the Laredo Bridge and upgrading the Meridian & Bigbee line, have increased capacity and efficiency.

• Over 200 new locomotives are being added, improving utilization and fuel efficiency, with further deliveries scheduled.

• Integration of legacy networks and implementation of PSR principles have enhanced operational discipline and synergy realization.

• Capital spending has been moderated after significant recent investments, with the network positioned for further volume growth.

Financial outlook and pricing strategy

• Full-year guidance remains unchanged, targeting mid single-digit RTM growth, double-digit EPS, and a sub-60 operating ratio.

• Pricing discipline is emphasized, with 3.5%-4.5% price increases expected to continue.

• Trucking market dynamics are seen as a tailwind for pricing, with lagged transmission to rail but growing shipper interest in intermodal and boxcar solutions.

• Sequential RTM growth is anticipated in Q3 and Q4, with bulk and intermodal franchises expected to drive performance.

• Stock-based compensation and fuel costs are being monitored, but no major changes to financial targets are expected.