Canadian Pacific Kansas City (CP) Investor presentation summary

Strategic transformation and network expansion

• The merger created the only rail network connecting Canada, the U.S., and Mexico, spanning 20,000 route miles and employing 20,000 people, enabling unparalleled market reach and service integration.

• Precision railroading and disciplined execution have driven industry-leading service, operational efficiency, and margin improvement since 2012.

• The network features 30+ ports, 30+ auto facilities, 200+ transloads, and 90+ shortlines, supporting a diversified and resilient business mix.

• Strategic land holdings and surplus acreage in key markets like Kansas City, Dallas, Chicago, Vancouver, and Toronto provide significant optionality for low-cost capacity expansion.

• The company leverages technology and predictive analytics to enhance safety, efficiency, and asset utilization, including remote inspection portals and advanced track monitoring.

Financial performance and outlook

• Combined total revenues for 2023 were $13.9B, with core adjusted combined operating income of $5.3B and a core adjusted combined operating ratio of 62.0%.

• Net income attributable to controlling shareholders was $3.9B, with core adjusted combined diluted EPS at $3.84.

• 2024 guidance targets double-digit core adjusted combined diluted EPS growth, mid-single digit RTM growth, and $2.75B in capital expenditures.

• Long-term (2024–2028) outlook projects high single-digit revenue growth, double-digit EPS growth, annual capex of $2.6–$2.8B, and ~90% free cash conversion.

• Balance sheet strength is maintained with a target leverage ratio of 2.5x net debt to adjusted EBITDA and significant liquidity through credit facilities and commercial paper.

Market positioning and growth drivers

• The business mix is diversified across bulk (34%), merchandise (47%), and intermodal (19%), with strong cross-border and international exposure.

• Grain is the largest segment, with investments in high-efficiency product trains and new hopper cars to boost capacity and reduce cycles.

• Potash, fertilizer, coal, metals, forest products, energy, chemicals, plastics, automotive, and intermodal all benefit from network reach and innovation.

• The Mexico advantage is driven by nearshoring trends, robust manufacturing, and trade agreements, with exclusive access to key ports and efficient cross-border service.

• Intermodal offerings include the flagship Mexico Midwest Express and exclusive access to the Port of Lázaro Cárdenas, providing alternatives to congested West Coast ports.