Canadian Pacific Kansas City Ltd. Q4 FY2024 earnings call

• Thanked the 20,000 railroaders for their efforts in the first year as a combined company. • Highlighted financial results for Q4 and full year. • Emphasized safety performance, leading the industry in personal injury and train accident frequency. • Mentioned investments in infrastructure like the Laredo Bridge's second span. • Spoke about synergies and unique network opportunities, such as MMX 180/181 service and being named GM Supplier of the Year for finished vehicles. • Discussed various segment performances including automotive growth and grain strength.

For the quarter, revenues were $3.9 billion (up 3%), volume growth 2%, operating ratio 57.1 (160 basis points improvement), core EPS $1.29 (up 9%). For the full year, total revenues were $14.5 billion (up 5%), volume growth 3%, operating ratio 61.3 (70 basis points improvement), core EPS $4.25 (up 11%). Segment-wise: Bulk - Grain revenues/RTMs up 11%, potash revenues down 4% (7% volume decline), coal revenue down 3% (8% volume decline). Merchandise - Energy, chemicals, plastics grew 2% (1% volume growth); forest products revenues up 1% (5% volume increase); Metals, Minerals, and Consumer Products revenue down 4% (5% volume decline); automotive revenue up 16% (23% volume growth); intermodal revenue down 6% (1% volume growth).

• Expect to deliver mid-single-digit volume growth and earnings growth of 12% to 18% in 2025. • Aligns with multi-year guidance set at 2023 Investor Day. • Highlights investments in safety, service, and capacity to support growth, including new locomotives and infrastructure upgrades.

• Macro uncertainties, trade policies. • Labor disruptions and work stoppages (e.g., Port of Vancouver strikes). • Weather impacts. • Uncertainty around tariffs and their effect on various segments like crude-by-rail.

Q: On RTM outlook, how to break out first-half vs second-half cadence and new opportunities?

A: John Brooks mentioned 2%-3% tied to synergies and 2%-3% to base organic business, with more weighted to back half, citing opportunities in international space, automotive, and intermodal.

Q: On tariffs and volume growth independence?

A: Keith Creel said trade between NAFTA countries is critical, and while uncertain, the range in guidance is responsible, with John Brooks adding customers are laser-focused on opportunities regardless of tariffs.

Q: On inflation and buyback expectations?

A: Nadeem Velani said inflation is moderating, expecting pricing in 4%-4.5% range, and the buyback will start as leverage is reduced closer to 2.5, with a balanced approach to returning cash to shareholders.

Q: On repeatability of disruptions in 2025?

A: Keith Creel mentioned negotiated agreements with unions, leading to labor stability and no expected work stoppages in 2025 with four-year labor contracts.

Q: On synergy capture and opportunities?

A: John Brooks expanded on various areas like automotive, reefer business, aluminum dynamics facilities, and Dallas market developments as opportunities for synergy capture.