Canadian Pacific Kansas City (CP) UBS Global Industrials and Transportation Conference summary

Business trends and growth drivers

• Unique growth position following a major merger, with strong demand across automotive, intermodal, and bulk segments, including record grain and potash volumes and improved cross-border fluidity with new infrastructure coming online.

• Automotive growth is driven by new facilities in Dallas and Bensenville, with expansion potential and ongoing negotiations with additional OEMs.

• Intermodal growth is supported by the 180/181 Midwest-Mexico Express and a new Gemini Alliance with Maersk and Hapag-Lloyd, leveraging strategic terminals in Vancouver, Saint John, and Lázaro Cárdenas.

• Bulk franchise benefits from normalized crop yields and export demand, with future upside from new potash investments.

• Integration risks are well managed, with the company ahead of schedule on synergy realization and network integration.

Financial performance and guidance

• Fourth quarter is tracking as the busiest, with RTMs up 6% in October and momentum recovering after a port strike; guidance was raised from low to mid-single digit RTM growth.

• Margin improvement and a significant sequential improvement in operating ratio (OR) are expected from Q3 to Q4, targeting high 50s OR.

• Synergy run rate is expected to exit 2024 at $800 million, up from $350 million at the start of the year, with a path to $1.1–$1.2 billion by 2026.

• Pricing is set above inflation (3–4%), with RTM growth expected to outpace carload growth due to longer hauls and the elimination of short-haul intermodal headwinds.

Strategic initiatives and infrastructure investments

• Major infrastructure projects include a second bridge at Laredo, double-tracking, and terminal expansions in Kansas City, Bensenville, and Wylie, enhancing capacity and network fluidity.

• Regulatory changes and technology adoption at the border are anticipated to further improve train fluidity and reduce costs, especially with a potential shift in U.S. administration.

• New partnerships and alliances, such as with Americold and Schneider, are creating unique cross-border refrigerated and intermodal services, with new facilities ramping up in 2025.

• The MB&R transaction opens a new interchange with CSX, enabling new automotive and intermodal growth between the Southeast, Texas, and Mexico.