Canadian Pacific Kansas City (CP) Bank of America’s 33th Annual Industrials, Transportation and Airlines Key Leaders Conference summary

Key presentations and strategic updates

• Executives highlighted strong volume and EPS growth since the merger, with successful integration and cultural alignment driving performance.

• Grain shipments are at record levels, with Canadian and U.S. crops supporting double-digit growth through August.

• Intermodal growth is supported by alliances and new facilities, while coal volumes face headwinds.

• A 17.5% dividend increase and a 5% share repurchase program were announced, reflecting confidence in cash generation and capital discipline.

• Ongoing network investments and operational improvements have led to record service metrics and operational synergies.

Market environment and industry analysis

• The company expects mid-single digit volume growth for the year, with positive trends in pricing and operating leverage.

• Management is optimistic about the end of the freight recession, anticipating potential for accelerated EPS growth if macro conditions improve.

• The competitive landscape is shaped by ongoing rail consolidation debates, with concerns about excessive market power and supply chain risks from further mergers.

• Strategic partnerships, such as with CSX and the Meridian & Bigbee acquisition, are extending network reach and improving service speed.

• The company is not concerned about market share loss, citing recent volume outperformance versus peers.

Operational and financial outlook

• Labor agreements in the U.S. are moving toward hourly pay, increasing flexibility and efficiency, with similar collaborative approaches in Canada and Mexico.

• Core pricing is trending above inflation, supported by improved service and long-term labor agreements.

• Operating ratio is expected to improve year-over-year, with a long-term goal of sustained margin gains and focus on return on invested capital.

• Synergy realization from the merger is on track, with CAD 1.3–1.4 billion in annualized EBITDA synergies expected by year-end.

• CapEx will remain steady at CAD 2.6–2.8 billion, with locomotive purchases balancing replacement and growth needs.

• Headcount is projected to rise slightly, and leverage is targeted to decline to 2.75x over the long term.

• Management remains positive on the impact of USMCA renegotiations, expecting continued trade benefits across North America.