• Revenue: $3.8 billion, up 8%.
• Volume Growth: 4% increase.
• Operating Ratio: 62.5%, a 150-basis point improvement.
• Earnings Growth: 14%, producing $1.06 of earnings per share.
• Freight Revenue Growth: 9% on a 4% increase in RTMs.
• Grain Revenue: Up 4% on 3% volume growth.
• Potash Revenue: Up 10% with 8% volume growth.
• Coal Revenue: Up 21% on 10% volume growth.
• Automotive Revenue: Up 18% with 24% volume growth.
• Domestic Intermodal Volume: Up 8%.
• Cash Provided by Operating Activities: Increased 14% to approximately $1.2 billion.
• Capital Expenditure (CapEx): $711 million in the quarter.
• Adjusted Free Cash Flow: $466 million for the quarter.
• Share Buyback Program: New 4% share repurchase program announced.
• Dividend Increase: 20% increase in quarterly dividend.

• Warning! GuruFocus has detected 6 Warning Signs with CP.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Canadian Pacific Kansas City Ltd (NYSE:CP) reported a strong revenue growth of 8% in the first quarter, reaching $3.8 billion.
• The company achieved a 150-basis point improvement in its operating ratio, now at 62.5%.
• CP experienced a record performance in safety, with significant improvements in train accidents and personal injuries.
• The company announced a 20% increase in its quarterly dividend, reflecting strong shareholder returns.
• CP is leveraging its unique three-nation network to create new trade opportunities, particularly between Canada and Mexico, which has resulted in over $100 million of new revenue.

Negative Points

• There is macroeconomic uncertainty, including trade policy and currency fluctuations, which has led CP to adjust its guidance.
• The company faces potential risks from tariffs, particularly in the automotive and steel sectors.
• CP's US grain volumes were down 5% due to reduced export volumes.
• The company is experiencing a headwind from a stronger Canadian dollar, impacting its earnings guidance.
• There are concerns about potential impacts on volume growth due to evolving trade policies and tariffs.

Q & A Highlights

Q: Are Canadian ports expected to gain share from US ports due to tariffs, and what percentage of your business is tariff-exposed? A: John Brooks, EVP and Chief Marketing Officer, explained that Canadian Pacific Kansas City Ltd (CPKC) is uniquely positioned with strong international volumes, benefiting from partnerships like Gemini. Less than 1% of their business is exposed to tariffs, and they continue to see strong growth at ports like Lazaro, which has not been impacted by tariffs.

Q: Why did you reduce EPS growth guidance while maintaining mid-single-digit RTM growth? A: Nadeem Velani, CFO, stated that the reduction in EPS growth guidance is primarily due to the appreciation of the Canadian dollar, which has a 2 percentage point impact on EPS. The company still anticipates mid-single-digit RTM growth.

Q: How do you view the potential impact of tariffs on your US-Mexico business, and what opportunities do you see? A: Keith Creel, CEO, emphasized that while tariffs may impact certain markets like autos and steel, CPKC is focused on creating solutions and new trade flows, particularly between Canada and Mexico. The company has identified over $100 million in new revenue opportunities from this crisis.

Q: What is the outlook for the OR (Operating Ratio) for 2025, and how do you plan to achieve it? A: Nadeem Velani, CFO, expects sequential improvement in the OR, aiming for a sub-60 OR for the year. This is supported by strong volume growth, efficient network operations, and favorable fuel prices.

Q: How is the Gemini partnership performing, and what is its potential impact? A: John Brooks, EVP and Chief Marketing Officer, expressed strong enthusiasm for the Gemini partnership, which is off to a faster start than anticipated. The company is moving towards two trains a day at Centerm, driven by Gemini, and expects continued growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.